ENFORCEMENT DECREE OF THE ACT ON RESTRICTION ON SPECIAL CASES CONCERNING TAXATION

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ENFORCEMENT DECREE OF THE ACT ON RESTRICTION ON SPECIAL CASES CONCERNING TAXATION — 법갈피

Article 5(Tax Reductions or Exemptions for Small or Medium Start-Up Enterprises) #

(1)"Youth start-up small or medium enterprise prescribed by Presidential Decree" in the proviso to Article 6 (1) 1 (a) of the Act means an enterprise, the representative [in cases of a place of joint business referred to in Article 43 (1) of the Income Tax Act, referring to the business operator whose profit-and-loss distribution ratio under paragraph (2) of the same Article is the largest (where there are at least two business operators whose profit-and-loss distribution ratio is the largest, referring to them all; hereafter in this Article, the same shall apply)] of which meets the requirements classified as follows (hereafter in this Article, referred to as"youth start-up small or medium enterprise"): <Newly Inserted on Feb. 7, 2017; Aug. 28, 2018; Feb. 12, 2019>

1. Where a new enterprise is incorporated in the form of a sole proprietorship: A person between the ages of 15 and 34 at the time of incorporation: Provided, That, where the age of a person who has performed the military service specified in any item of Article 27 (1) 1, does not exceed 34, after subtracting the period of such military service (which shall not exceed six years) from his age at the time of incorporation, such person shall be deemed a youth;

2. Where a new enterprise is incorporated in the form of a corporation: A person who meets each of the following requirements:

(a) The person shall meet the requirement prescribed in subparagraph 1;

(b) The person shall be the controlling stockholder, etc. prescribed in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act and shall be either the largest stockholder or the largest investor of the corporation.

(2) For the purposes of Article 6 (1) 1 (a) of the Act, if the representative of a youth start-up small or medium enterprise who has commenced his/her business in an area outside the over-concentration control region of the Seoul Metropolitan area fails to meet the requirement prescribed in paragraph (1) 2 (b) or becomes a business operator whose profit-and-loss distribution ratio is no more the largest as a sole proprietor, during the period of tax reduction or exemption, the tax reduction or exemption provided for in Article 6 (1) 1 (a) of the Act shall not apply, but the reduction or exemption provided for in Article 6 (1) 1 (b) of the Act shall apply to the youth start-up small or medium enterprise for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises. <Newly Inserted on Feb. 7, 2017; Aug. 28, 2018; Feb. 12, 2019>

(3) For the purposes of Article 6 (1) 1 (b) of the Act, if the representative of a youth start-up small or medium enterprise who has commenced his/her business in the over-concentration control region of the Seoul Metropolitan area fails to meet the requirements prescribed in paragraph (1) 2 (b) or becomes a business operator whose profit-and-loss distribution ratio is no longer the largest as a sole proprietor, during the period of tax reduction or exemption, the tax reduction or exemption provided for in Article 6 (1) of the Act shall not apply for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises. <Newly Inserted on Aug. 28, 2018; Feb. 12, 2019>

(4)"Enterprise prescribed by Presidential Decree" in Article 6 (2) of the Act means any of the following enterprises: <Amended on Oct. 30, 1999; Dec. 29, 2000; Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012>

1. A small or medium enterprise which satisfies the requirements provided for in Article 2-2 of the Act on Special Measures for the Promotion of Venture Businesses (excluding small or medium enterprises that satisfy the requirements provided for in paragraph (1) 2 (b) of the same Article);

2. A small or medium enterprise whose expenses referred to in attached Table 6 for research and development and human resources development (hereafter in this Article, referred to as"research and development expenses"), are at least 5/100 of its turnover in the relevant taxable year.

(5) Paragraph (4) 2 shall apply only where a small or medium enterprise keeps maintaining its research and development expenses within the ratio prescribed in the same subparagraph from the taxable year in which whether it is qualified as a venture business pursuant to Article 25 of the Act on Special Measures for the Promotion of Venture Businesses, is verified. <Amended on Oct. 30, 1999; Feb. 19, 2005>

(6)"Businesses prescribed by Presidential Decree" in Article 6 (3) 2 of the Act means the businesses prescribed by Ordinance of the Ministry of Economy and Finance, which do not directly manufacture products, but outsourcing manufacturing products. <Newly Inserted on Feb. 7, 2017>

(7)"Logistics industry prescribed by Presidential Decree" in Article 6 (3) 6 of the Act means a line of business falling under any of the following subparagraphs (hereinafter referred to as"logistics industry"): <Amended on Feb, 11, 2020>

1. Land, water, and air transportation business;

2. Freight handling business;

3. Storage and warehousing business;

4. Land, water, and air transportation support services;

5. Freight forwarding brokerage and agency and related services;

6. Cargo packing, inspection and weighing services;

7. Towing business under the Act on the Arrival and Departure of Ships;

8. Pilotage business under the Pilotage Act;

9. Pallet leasing business, among other industrial machinery and equipment leasing businesses.

(8)"Business providing financial services by using an information communication system specified by Presidential Decree" in Article 6 (3) 9 of the Act means a line of business providing any of the following services as business: <Newly Inserted on Feb. 11, 2020>

1. Electronic financial service defined in subparagraph 1 of Article 2 of the Electronic Financial Transactions Act;

2. Crowdfunding brokerage service under Article 9 (27) of the Financial Investment Services and Capital Markets Act;

3. Small-amount overseas remittance service under Article 15-2 (1) of the Enforcement Decree of the Foreign Exchange Transactions Act;

(9)"Engineering business prescribed by Presidential Decree" in the provisions, with the exception of the items, of Article 6 (3) 10 of the Act means a business providing engineering services (hereinafter referred to as"engineering business") under the Engineering Industry Promotion Act (including engineering services of professional engineers under the Professional Engineers Act; hereinafter the same shall apply). <Amended on Oct. 30, 1999; Feb. 19, 2005; Feb. 4, 2009; Jan. 17, 2011; Feb 7, 2017; Feb. 11, 2020>

(10) "Tourist facilities business prescribed by Presidential Decree" in Article 6 (3) 16 of the Act means specialized resort business, general resort complex business, auto campground business, tourist excursion ship business, and tourist theater business, prescribed in Article 2 of the Enforcement Decree of the Tourism Promotion Act. <Amended on Feb. 4, 2009; Nov. 4, 2014; Feb. 11, 2020>

(11)"New energy technology small or medium enterprise prescribed by Presidential Decree" in Article 6 (4) of the Act means a small or medium enterprise manufacturing any of the following products (hereafter in this Article, referred to as"high efficiency products, etc."): <Newly Inserted on Feb. 18, 2010; Feb. 11, 2020>

1. Grade 1 energy efficiency products referred to in Article 15 of the Energy Use Rationalization Act, and products certified as high efficiency energy equipment and materials pursuant to Article 22 of the same Act;

2. Products certified as new and renewable energy equipment under Article 13 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy.

(12)"Enterprise...that engages in any of the new-growth service businesses prescribed by Presidential Decree" in Article 6 (5) of the Act means a small or medium enterprise that mainly engages in any of the following businesses (hereafter in this Article, referred to as"type of new-growth service business"). In such cases, if it engages in two or more different businesses, the business generating more revenue shall be deemed its principal business: <Newly Inserted on Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022; Feb. 17, 2022>

1. Computer programming, system integration and management services, software development and supply business, information service activities (excluding news agency activities), or telecommunications business;

2. Creative and arts-related services (excluding individual artists); business activities producing motion pictures, video, and broadcast programs; business activities of audio publishing and original master recording; or broadcasting;

3. Engineering business, specialized design services, security system service activities, or advertising preparation business among advertising businesses;

4. Business publishing books, magazines, and other printed matters; research and development business; business operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons; or business operating a vocational skill development training establishment under the National Lifelong Vocational Skills Development Act (limited to where the main business is vocational skill development training);

5. Logistic industry under paragraph (7);

6. Tourist accommodation business, international conference business, or amusement facility business under the Tourism Promotion Act, or tourist facilities business under paragraph (10);

7. Other new-growth service businesses prescribed by Ordinance of the Ministry of Economy and Finance.

(13) For the purposes of Article 6 (5) of the Act, if the principal business is changed to a type of business other than a new-growth service business during the period of tax reduction or exemption, the reduction or exemption under the same paragraph shall not apply, but the reduction or exemption under paragraph (1), (2) or (4) of the same Article shall apply for the remaining period of tax reduction or exemption from the taxable year in which the date relevant ground has occurred falls. <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(14)"Number of full-time employees prescribed by Presidential Decree by type of business" in the main clause of Article 6 (7) of the Act, with the exception of its subparagraphs, means the number of such employees classified as follows: <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

1. In cases of mining business, manufacturing business, construction business or logistics industry: Ten persons;

2. In cases of other types of business: Five persons.

(15) The income accrued from the relevant business under Article 6 (8) of the Act shall be calculated by the following formula: <Newly Inserted on Feb. 18, 2010; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

Income accrued from the manufacturing industry in the relevant taxable year × (Sales of high efficiency products, etc. in the relevant taxable year ÷ total sales accrued from the manufacturing industry in the relevant taxable year)

(16) For purposes of paragraph (15), the accounts of the sales of high efficiency products, etc. shall be kept separately from the accounts of the sales of other products in the field of the manufacturing industry. <Newly Inserted on Feb. 18, 2010; Feb. 13, 2018; Feb. 11, 2020>

(17) Articles 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and methods for calculating the number of full-time employees under Article 6 (9) of the Act. <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 12, 2019; Feb. 11, 2020>

(18) For the purpose of calculating the number of full-time employees under Article 6 (9) of the Act, in cases of a national who has been converted into a corporation or has conducted succession, etc. to a business, the number classified as follows shall be deemed the number of full-time employees in the immediately preceding taxable year or the relevant taxable year: <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

1. Number of full-time employees in the immediately preceding taxable year in cases falling under Article 6 (10) 2 of the Act: Number of full-time employees in the immediately preceding taxable year for the business before it is converted into a corporation;

2. Number of full-time employees in the immediately preceding taxable year or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by subtracting the number of full-time employees transferred by succession from the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the number calculated by adding the number of full-time employees acquired by succession to the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:

(a) Where such enterprise takes over full-time employees engaging in the previous business division by a merger, a split-off, an investment in kind, a transfer of business, or any similar event in the relevant taxable year;

(b) Where such enterprise takes over full-time employees from a related party referred to in Article 11 (1).

(19)"Business assets prescribed by Presidential Decree, including land, buildings, and machinery" in Article 6 (10) 1 (a) of the Act means land and depreciable assets prescribed in Article 24 of the Enforcement Decree of the Corporate Tax Act. <Newly Inserted on Feb. 19, 2005; Feb. 18, 2010; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(20)"Ratio prescribed by Presidential Decree" in Article 6 (10) 1 (a) of the Act means 30/100. <Newly Inserted on Feb. 19, 2005; Feb. 18, 2010; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(21)"Which meets the requirements prescribed by Presidential Decree" in Article 6 (10) 1 (b) of the Act means the cases where all of the following requirements are met: <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

1. A contract on the separation of business shall be concluded between the enterprise and the executive officers and employees of the relevant enterprise that commences the business;

2. An executive officer or employee who commences the business shall be, as the representative of the enterprise newly incorporated, the largest stockholder or the largest investor of the corporation, falling under the controlling stockholder, etc. prescribed in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act (referring to the representative in cases of a sole proprietor).

(22) For the purposes of Article 6 (10) 1 (b) of the Act, if a person who commences a business fails to meet the requirements prescribed in paragraph (21) 2, tax reduction or exemption shall not apply from the taxable year in which the relevant ground arises. <Newly Inserted on Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(23) For the purposes of Article 6 (10) of the Act, the same types of business shall be classified into the groups according to the standard classification formulated and publicly notified by the Commissioner of the Korea National Statistical Office under Article 22 of the Statistics Act (hereinafter referred to as"Korean Standard Industrial Classification"). <Newly Inserted on Feb. 4, 2009; Feb. 18, 2010; Feb. 3, 2015; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(24)"Any of the events prescribed by Presidential Decree" in Article 6 (11) of the Act means any of the events specified in subparagraphs of Article 2 (2). <Newly Inserted on Feb. 7, 2017; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

(25) For the purposes of Article 6 (1), (5), (6) and (7) of the Act, if any of the following grounds arises to a small or medium start-up enterprise that has commenced its business in an area outside of the over-concentration control region of the Seoul Metropolitan area after commencing its business, the relevant small or medium start-up enterprise shall be deemed a small or medium start-up enterprise that has commenced its business in the over-concentration control region of the Seoul Metropolitan area for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises: <Newly Inserted on Aug. 28, 2018; Feb. 11, 2020>

1. Where the small or medium start-up enterprise has relocated its place of business to the over-concentration control region of the Seoul Metropolitan area;

2. Where the small or medium start-up enterprise establishes (including merger, division, investment in kind or acquisition of business) a branch office or place of business in the over-concentration control region of the Seoul Metropolitan area.

(26) A person who wishes to be granted a reduction or exemption of income tax or corporate tax pursuant to Article 6 (1), (2), and (4) through (7) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Oct. 30, 1999; Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Jun. 3, 2011; Feb. 7, 2017; Feb. 13, 2018; Aug. 28, 2018; Feb. 11, 2020>

Article 6(Special Tax Reductions or Exemptions for Small or Medium Enterprises) #

(1)"Outsourced manufacturing business by OEM method prescribed by Presidential Decree" in Article 7 (1) 1 (v) of the Act means the business manufacturing and supplying goods by re-outsourcing the outsourced manufacture of goods from the consignor according to the OEM method. <Amended on Feb. 4, 2009>

(2)"Motor vehicle maintenance factory prescribed by Presidential Decree" in Article 7 (1) 1 (z) of the Act means a motor vehicle maintenance shop referred to in Article 54 (1). <Amended on Feb. 4, 2009>

(3) Deleted. <Feb. 4, 2009>

(4) Deleted. <Feb. 4, 2009>

(5)"Small enterprise prescribed by Presidential Decree" in Article 7 (1) 2 (a) of the Act means a small or medium enterprise whose turnover does not exceed the amount of turnover calculated by applying mutatis mutandis attached Table 3 to the Enforcement Decree of the Framework Act on Small and Medium Enterprises to each type of business. In such cases,"average turnover, etc." shall be construed as"turnover." <Amended on Feb. 5, 2016>

(6)"Petroleum retail business prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 7 (3) of the Act means a gas station defined in subparagraph 3 of Article 2 of the Enforcement Decree of thePetroleum and Alternative Fuel Business Act. <Amended on Feb. 28, 2023>

(7) Articles 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and methods for calculating the number of full-time employees under Article 7 (5) of the Act. <Newly Inserted on Feb. 13, 2018; Feb. 15, 2022; Feb. 28, 2023>

(8) Any person who wishes to be granted a reduction or exemption of income tax or corporate tax under Article 7 of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Dec. 9, 2006; Feb. 29, 2008; Feb. 4, 2009; Feb. 15, 2013>

[Title Amended on Dec. 29, 2000]

Article 6-4(Tax Credits on Payments through Mutually-Beneficial Settlement System) #

(1) "Middle-standing enterprise prescribed by Presidential Decree" in the main clause of Article 7-4 (1) of the Act means a middle-standing enterprise that meets each of the following requirements (hereinafter referred to as "middle-standing enterprise except in cases of Articles 9 and 93-4): <Amended on Dec. 17, 2021; Feb. 15, 2022; Feb. 28, 2023; Feb. 29, 2024>

1. That It shall not be a small or medium enterprise;

1-2. That it shall not be an institution defined in Article 2 (1) 1 or 2 of the Enforcement Decree of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises;

2. That it shall not operate any of the following business as its principal business. If an enterprise operates two or more different businesses in such cases, the business generating more business revenue shall be deemed the principal business:

(a) Consumer service business under Article 29 (3);

(b) A line of business referred to in any item of Article 2 (2) 2 of the Enforcement Decree of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises;

3. That substantial independence between ownership and management shall meet the criteria under Article 2 (2) 1 of the Enforcement Decree of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises;

4. That the average turnover for the immediately preceding three taxable years (turnover shall be calculated by the formula prescribed in Article 2 (4); if a taxable period is less one year, the turnover for such period shall be converted for one year) shall be less than 300 billion won.

(2)"Mutually-beneficial settlement system prescribed by Presidential Decree" in the main clause of Article 7-4 (1) of the Act, with the exception of its subparagraphs, means the settlement method that meets each of the following requirements: <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. The purchasing enterprise shall pay the purchase price by issuing new accounts-receivable bonds to the selling enterprise by offering accounts-receivable bonds that the purchasing enterprise, as a seller, has received in lieu of the sales price from another purchasing enterprise as security for such bonds;

2. Selling enterprises in multiple lower tiers of the industry shall pay sales prices by issuing accounts-receivable bonds at the same interest rate as the interest rate of the accounts-receivable bonds issued by purchasing enterprises;

3. The due date for payment of accounts-receivable bonds shall be within 60 days from the issue date of the tax invoice, etc. referred to in Article 7-2 (1) 2 of the Act (hereafter in this Article, referred to as"tax invoice, etc.");

4. An agreement shall be made with the relevant financial institution that the financial institution shall not exercise its right of recourse against the selling enterprise.

(3)"Price paid in cash or cash equivalents prescribed by Presidential Decree" in Article 7-4 (2) 1 of the Act means the amount paid by bill of exchange, etc. referred to in Article 7-2 (1) of the Act (amounts settled by bill of exchanges or a written request for the collection of proceeds from sale referred to in Article 7-2 (1) 1 of the Act shall be limited to those for which the payment due date is within 60 days from the issue date of the tax invoice, etc., and for which the relevant financial institution has agreed not to exercise its right of recourse against the selling enterprise). <Amended on Feb. 13, 2018; Feb. 15, 2022>

(4) A national who wishes to be granted an income tax or corporate tax credit under Article 7-4 of the Act shall file an application for tax credit and a statement of the amount of tax deductible, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on, Feb. 5, 2016]

Article 7-2(Scope of Small or Medium Enterprises Requiring Cooperation) #

(1)"Related parties prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 8-3 (1) of the Act and paragraph (2) of the same Article means the related parties provided for in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act, respectively. <Newly Inserted on Feb. 21, 2014; Feb. 7, 2017; Feb. 12, 2019>

(2)"Small or medium enterprise prescribed by Presidential Decree, such as a commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises" in Article 8-3 (1) 1 of the Act means any of the following small or medium enterprises: <Amended on Feb. 5, 2016; Jun. 21, 2016; Feb. 7, 2017>

1. A commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises;

2. A small or medium enterprise under a contractual relationship to directly or indirectly supply goods to the commissioned enterprise referred to in subparagraph 1;

3. A start-up company to which support is rendered jointly with the specialized agency designated under Article 16-4 (3) of the Framework Act on Science and Technology;

4. Other small or medium enterprises deemed in need of cooperation by a domestic corporation referred to in Article 8-3 (1) of the Act.

(3) Deleted. <Feb. 7, 2017>

(4) A domestic corporation that wishes to be eligible under Article 8-3 (1) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Amended on Feb. 21. 2014>

(5) The Credit Guarantee Fund and the Korea Technology Finance Corporation referred to in Article 8-3 (1) 1 of the Act and the Cooperation Foundation referred to in Article 8-3 (1) 2 of the Act shall submit a statement of disbursement of contributions in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when it files its tax return for the relevant business year. <Newly Inserted on Feb. 2, 2012; Feb. 21, 2014; May 31, 2016>

(6)"Tangible fixed assets prescribed by Presidential Decree" in Article 8-3 (2) of the Act means assets prescribed by Ordinance of the Ministry of Economy and Finance for research and testing for research and development. <Newly Inserted on Feb. 7, 2017>

(7) Where a domestic corporation gratuitously leases a tangible fixed asset pursuant to Article 8-3 (2) of the Act, the domestic corporation shall gratuitously lease the assets specified in paragraph (6) to a start-up business it supports jointly with the specialized agency referred to in paragraph (2) 3 or a business incubator designated under the Support for Small and Medium Enterprise Establishment Act (hereafter in this Article, referred to as"business incubator, etc.") continuously for at least five years. <Newly Inserted on Feb. 7, 2017>

(8) A domestic corporation that wishes to be eligible under Article 8-3 (2) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance and the certificate referred to in paragraph (9), to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Newly Inserted on Feb. 7, 2017>

(9) A business incubator, etc. that jointly supports a start-up business to whom an asset has been gratuitously leased under Article 8-3 (2) of the Act shall issue a certificate of gratuitous lease (hereafter in this Article, referred to as"certificate") to the relevant domestic corporation in the form prescribed by Ordinance of the Ministry of Economy and Finance, immediately upon commencing the gratuitous lease of the asset. <Newly Inserted on Feb. 7, 2017>

(10) A business incubator, etc. shall ascertain whether the gratuitous lease continues after the date of issuance of the certificate, and shall give notice to the head of the tax office having jurisdiction over the place of tax payment immediately upon finding that the gratuitous lease does not continue during the period specified in paragraph (7). <Newly Inserted on Feb. 7, 2017>

(11)"Facility prescribed by Presidential Decree" in the former part of Article 8-3 (3) of the Act means any inspection counter or research facility installed by an outsourcing enterprise at an outsourced enterprise under the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises; <Newly Inserted on Feb. 12, 2019>

(12) A person who wishes to be eligible under Article 8-3 (3) of the Act shall file an application for tax credits, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return, in the taxable year in which the investment is completed (referring to each taxable year in which the relevant investment is made, if the person wishes to be eligible under Article 25 (3) of the Act). <Newly Inserted on Feb. 12, 2019>

(13)"Asset prescribed by Presidential Decree, such as a facility for research and experiment" in the former part of Article 8-3 (4) of the Act means the facilities and equipment listed in attached Table 1 as those to be used directly in research and education on semiconductors. <Newly Inserted on Feb. 28, 2023>

(14)"Educational institution prescribed by Presidential Decree" in the former part of the Act means any of the following institutions: <Newly Inserted on Feb. 28, 2023>

1. A junior college referred to in subparagraph 4 of Article 2 of the Higher Education Act;

2. The Korea Advanced Institute of Science and Technology established pursuant to the Korea Advanced Institute of Science and Technology Act; the Gwangju Institute of Science and Technology established pursuant to the Gwangju Institute of Science and Technology Act; the DaeguGyeongbuk Institute of Science and Technology established pursuant to the DaeguGyeongbuk Institute of Science and Technology Act; or the Ulsan National Institute of Science and Technology established pursuant to the Ulsan National Institute of Science and Technology Act;

3. The industry-academic cooperation foundation established pursuant to Article 25 (1) of the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;

4. Any of the following schools:

(a) A high school tailored to industry demand, as designated pursuant to Article 90 (1) 10 of the Enforcement Decree of the Elementary and Secondary Education Act;

(b) A specialized high school designated pursuant to Article 91 (1) of the Enforcement Decree of the Elementary and Secondary Education Act;

(c) A general high school with departments established pursuant to Article 81 (7) 2 of the Enforcement Decree of the Elementary and Secondary Education Act;

5. A comprehensive strategic industry education center established pursuant to Article 38 (1) of the Act on Special Measures for Strengthening the Competitiveness of, And Protecting National High-Tech Strategic Industries.

(15) In applying Article 24 of the Corporate Tax Act to an asset donated pursuant to Article 8-3 (4) of the Act, its value shall be determined according to Article 36 (1) of the Enforcement Decree of that Act. <Newly Inserted on Feb. 28, 2023>

(16) A domestic corporation that wishes to be granted a tax credit under Article 8-3 (4) of the Act shall submit an application for the tax credit, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when filing a tax return. <Newly Inserted on Feb. 28, 2023>

[This Article Newly Inserted on Dec. 30, 2010]

Article 7-3(Special Cases of Tax Refund following Retroactive Deduction of Losses of Small or Medium Enterprise) #

(1)"Amount calculated as prescribed by Presidential Decree" in Article 8-4 means an amount determined according to either of the following subparagraphs: <Amended on Feb. 15, 2022>

1. Where the person engaging in a small or medium enterprise is a resident: An amount calculated by subtracting the amount of item (b) from the amount of item (a):

(a) An amount of global income tax on the small or medium enterprise, as calculated for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year;

(b) An amount of global income tax on the small or medium enterprise, as calculated by applying the tax rate for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year to the amount calculated by subtracting losses incurred in the taxable year in which December 31, 2021 falls and carried forward under Article 45 (3) of the Income Tax Act (excluding losses incurred from a real estate leasing business and carried forward under paragraph (2) of that Article), for which the person wishes to be granted a retroactive tax credit (limited to the global income tax base for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year), from the global income tax base for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year;

2. Where the person engaging in a small or medium enterprise is a domestic corporation: An amount calculated by subtracting the amount of item (b) from the amount of item (a):

(a) An amount of corporate tax, as calculated for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year;

(b) An amount calculated by applying the tax rate for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year to the amount calculated by subtracting losses incurred in the taxable year in which December 31, 2021 falls and defined in Article 14 (2) of the Corporate Tax Act, for which the person wishes to be granted a retroactive tax credit (limited to the tax base for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year), from the tax base for the immediately preceding taxable year or the taxable year before the immediately preceding taxable year;

(2) Where a retroactive tax credit is granted for losses under Article 8-4 of the Act, if there are amounts payable for income tax or corporate tax on the small or medium enterprise for the immediately preceding taxable year and the taxable year before the immediately preceding taxable year respectively, the losses shall be deducted first from the tax base of income tax or corporate tax on business income for the taxable year before the immediately preceding taxable year. <Amended on Feb. 15, 2022>

(3) A person who wishes to receive a refund of an amount for which a retroactive tax credit on losses is granted under Article 8-4 of the Act shall submit an application for special tax refund following retroactive tax credit for losses with the head of the tax office having jurisdiction over the place of tax payment, in the form prescribed by Ordinance of the Ministry of Economy and Finance, within the period set for filing a final return on the tax base under Article 70, 70-2 or 74 of the Income Tax Act or the period set for filing a tax return under Article 60 of the Corporate Tax Act. <Amended on Feb. 15, 2022>

(4) Deleted. <Feb. 15, 2022>

(5) Deleted. <Feb. 15, 2022>

(6) Deleted. <Feb. 15, 2022>

[This Article Newly Inserted on Jun, 2, 2020]

Article 9(Tax Credits for Research and Human Resources Development Expenses) #

(1)"Expenses specified by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 10 (1) of the Act means the expenses listed in attached Table 6 as expenses for research and development and human resources development: Provided, the following expenses shall be excluded herefrom: <Newly Inserted on Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023>

1. Amount spent for research and development expenses from contributions, etc. received for research and development under Article 10-2 (1) of the Act;

2. Amounts spent for research and development expenses or human resource development expenses from assets, such as contributions received from the State, local governments, public institutions under the Act on the Management of Public Institutions, and local public enterprises under the Local Public Enterprises Act.

(2)"Technologies specified by Presidential Decree" in the provisions, with the exception of the items, of Article 10 (1) 1 of the Act means the technologies listed on attached Table 7 (hereinafter referred to as"new growth or source technologies"). <Newly Inserted on Feb. 15, 2022>

(3) Research and development expenses incurred in acquiring new growth or source technologies under the provisions, with the exception of the items, of Article 10 (1) 1 of the Act (hereinafter referred to as"research and development expenses for new growth or source technologies") means the following expenses: <Amended on Feb. 2, 2012; Feb. 15, 2013; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15. 2022>

1. In cases of in-house research and development: The following expenses:

(a) Personnel expenses for researchers engaging in research and development of new growth and source technologies (hereafter in this Article referred to as"research and development of new growth and source technologies") at any of the research institutes or specialized departments prescribed by Ordinance of the Ministry of Economy and Finance and for persons who directly support research and development of such researchers: Provided, That personnel expenses for persons prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom;

(b) Expenses incurred in purchasing samples, parts, raw materials, and reagents used for research and development of new growth or source technologies, and expenses incurred in borrowing and purchasing software (limited to the software used for the purpose of manufacturing cultural products defined in subparagraph 2 of Article 2 of the Framework Act on the Promotion of Cultural Industries), fonts, sound sources, and images;

2. In cases of outsourced or joint research and development: Expenses incurred in outsourcing (including re-outsourcing) research and development of new growth or source technologies to any of the institutions prescribed by Ordinance of the Ministry of Economy and Finance (excluding expenses incurred in outsourcing the development of systems related to the operation, management and support of business operations of an enterprise, such as enterprise resource management facilities and point of sale information management system facilities) and expenses incurred in conducting joint research and development with any of such institutions.

(4)"Middle-standing enterprise prescribed by Presidential Decree" in Article 10 (1) 1 (a) (ii) of the Act means any enterprise that meets each of the following requirements: <Newly Inserted on Feb. 15, 2013; Nov. 29, 2013; Feb. 3, 2015; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020, Feb. 15, 2022; Feb. 28, 2023>

1. That It shall not be a small or medium enterprise;

2. That it shall not operate any of the following business as its principal business. In such cases, if it engages in two or more different businesses, the business generating more revenue shall be deemed its principal business:

(a) Consumer service business under Article 29 (3);

(5)"Multiplying factor prescribed by Presidential Decree" in the main clause of Article 10 (1) 1 (b) and Article 10 (1) 2 (b) of the Act means three times. <Newly Inserted on Feb. 15, 2022>

(6)"Technologies prescribed by Presidential Decree" in the provisions, with the exception of the items, of Article 10 (1) 2 of the Act means the technologies listed on attached Table 7-2 (hereinafter referred to as"national strategic technologies"). <Newly Inserted on Feb. 15, 2022>

(7) The research and development expenses for national strategic technologies under the provisions, with the exception of the items, of Article 10 (1) 2 of the Act (hereafter in this Article referred to as" research and development expenses for national strategic technologies") means the following expenses: <Newly Inserted on Feb. 15, 2022>

1. In cases of in-house research and development: The following expenses:

(a) Personnel expenses for researchers engaging in research and development of national strategic technologies (hereafter in this Article referred to as"research and development of national strategic technologies") at any of the research institutes or specialized departments prescribed by Ordinance of the Ministry of Economy and Finance and for persons who directly support research and development of such researchers: Provided, That personnel expenses for persons prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom;

(b) Expenses incurred in purchasing samples, parts, raw materials, and reagents used for the research and development of national strategic technologies;

2. In cases of outsourced or joint research and development: Expenses incurred in outsourcing (including re-outsourcing) research and development of national strategic technologies to any of the institutions prescribed by Ordinance of the Ministry of Economy and Finance (excluding expenses incurred in outsourcing the development of systems related to the operation, management and support of business operations of an enterprise, such as enterprise resource management facilities and point of sale information management system facilities) and expenses incurred in conducting joint research and development with any of such institutions.

(8)"Where a small or medium enterprise first ceases to be a small or medium enterprise, as prescribed by Presidential Decree" in Article 10 (1) 3 (b) of the Act means where the taxable year during which the ground making the small or medium enterprise cease to be a small or medium enterprise arises and the three subsequent taxable years thereafter elapse pursuant to the main clause of Article 2 (2), with the exception of its subparagraphs, and Article 2 (5). <Newly Inserted on Dec. 30, 2010; Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022>

(9) The annual average of general research and human resources development expenses incurred for the four years prescribed in Article 10 (2) of the Act shall be calculated by the following formula: <Amended on Feb. 2, 2012; Feb. 15, 2013; Feb. 11, 2020; Feb. 15, 2022>

(Aggregate of general research and human resources development expenses incurred for the four years retrospectively from the date the relevant taxable year commences ÷ Number of taxable years in which the general research and human resources development expenses incurred for the four years retrospectively from the date the relevant taxable year commences (four, if such number exceeds four)) × (Number of months in the relevant taxable year ÷ 12)

(10) When calculating the aggregate of general research and human resources development expenses incurred in the immediately preceding taxable year under Article 10 (1) 3 of the Act and general research and human resources development expenses incurred during the four years retrospectively from the date the relevant taxable year commences in the formula described in paragraph (9), the general research and human resources development expenses incurred by a merged corporation, a divided corporation, a business transferor, or an investor in kind (hereafter in this paragraph, referred to as “merged corporation, etc.”) before a merger, a split-off, a merger by division, a transfer of business, or an investment in kind in the manner prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this paragraph, referred to as "merger, etc."), shall be deemed to have incurred by the merging corporation, the corporation newly incorporated in the course of the split-off, the counterpart corporation to the merger by division, the business transferee, or the corporation that receives the investment in kind in the manner prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this paragraph, referred to as "merging corporation, etc."): Provided, That, if it is impracticable to separate the general research and human resources development expenses incurred by the merged corporation, etc. in connection with the transferred business before the merger, etc., where the business operated by the merged corporation, etc. is partially transferred, the amount calculated by multiplying the general research and human resources development expenses incurred by the merged corporation, etc. by the greater of the ratio of the turnover of the transferred business for each business year to the total turnover, and the ratio of the value of assets of the transferred business as at the end of each business year to the total assets, shall be deemed the general research and human resources development expenses incurred by the merged corporation, etc. <Amended on Dec. 30, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023>

(11) For the purposes of the formula described in paragraph (9), the number of months shall be calculated on the basis of calendar months, and if the number of days in the month during which a taxable year commences, is less than one full month, it shall be deemed one month, while the month during which a taxable year ends shall be disregarded in counting the number of months, if the number of days in that month is less than one full month. <Amended on Dec. 30, 2010; Feb. 15, 2013; Feb. 11, 2020; Feb. 15, 2022>

(12) A national who wishes to be eligible under Article 10 (1) 1 or 2 of the Act shall keep separate accounts for research and development expenses for new growth or source technologies, research and development expenses for national strategic technologies, and general research and human resource development expenses. If the research and development expenses for new growth or source technologies, the research and development expenses for national strategic technologies, and the general research and human resource development expenses are overlapped, the relevant expenses shall be calculated by dividing proportionally into the research and development expenses for new growth or source technologies, the research and development expenses for national strategic technologies, and the general research and human resource development expenses, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Dec. 30, 2010; Feb. 15, 2013; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(13) A national who wishes to be eligible under Article 10 (1) of the Act shall prepare and keep evidentiary documents, including a research and development plan, a research and development reports, and research notes, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(14) A national who wishes to be eligible under Article 10 (1) of the Act shall submit an application for tax credits, a statement of research and human resources development expenses, and evidentiary documents, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time he/she files a tax return. <Amended on Dec. 30, 2010; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(15) A deliberative committee on technologies eligible for tax credits on research and development shall be established under the joint jurisdiction of the Minister of Economy and Finance and the Minister of Trade, Industry and Energy to deliberate on the following matters: <Newly Inserted on Feb. 15, 2022>

1. Whether a technology for which a national conducts research and development is classifiable as national strategic technology;

2. Matters concerning the recognition of facilities for the commercialization of new growth engines under Article 21 (4) 1 (a);

3. Matters concerning the recognition of facilities for the commercialization of national strategic technologies under Article 21 (4) 2;

4. Other matters recognized by the Minister of Economy and Finance or the Minister of Trade, Industry and Energy as those on which deliberation is necessary in relation to new growth engines or source technologies or national strategic technologies.

(16) The composition and operation of the deliberative committee on technologies eligible for tax credits on research and development under paragraph (15) and other necessary matters shall be prescribed by Joint Ordinance of the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy. <Amended on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(17) A national who wishes to be eligible under Article 10 (1) of the Act may request the Commissioner of the National Tax Service to examine in advance whether the expenses he/she has spent qualify as research and human resources development expenses, before he/she files a tax return under paragraph (14). In such cases, examination methods and matters necessary for requesting procedures, etc. shall be determined by the Commissioner of the National Tax Service. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(18)"Ground prescribed by Presidential Decree, such as the cases referred to in subparagraphs of Article 14-3 of the Basic Research Promotion and Technology Development Support Act" in Article 10 (6) of the Act means any of the following cases: <Newly Inserted on Feb. 11, 2020; Feb. 15, 2022>

1. Where the recognition of a business-related research institute or a department exclusively dedidated to research and development is revoked on any of the grounds prescribed in Article 14-3 (1) of the Basic Research Promotion and Technology Development Support Act;

2. Where the recognition of a business-affiliated creative research institute or a department solely responsible for creation in a company is revoked on any of the grounds prescribed in Article 17-3 (4) of the Framework Act on the Promotion of Cultural Industries.

(19)"Date prescribed by Presidential Decree" in Article 10 (6) of the Act means the day specified in any of the following subparagraphs for the ground for revocation of recognition under each subparagraph of paragraph (18): <Newly Inserted on Feb. 11, 2020; Feb. 15, 2022>

1. Where recognition is revoked under Article 14-3 (1) 1 of the Basic Research Promotion and Technology Development Support Act or Article 17-3 (4) 1 of the Framework Act on the Promotion of Cultural Industries: The beginning date of the taxable year in which recognition was granted;

2. Where recognition is revoked under Article 14-3 (1) 2, 3, 5, 6, or 8 of the Basic Research Promotion and Technology Development Support Act: The date recognition is revoked.

3. Where recognition is revoked under Article 14-3 (1) 4 or 7 of the Basic Research Promotion and Technology Development Support Act or Article 17-3 (4) 2 of the Framework Act on the Promotion of Cultural Industries: The beginning date of the taxable year in which recognition is revoked.

[This Article Wholly Amended on Feb. 18, 2010]

Article 9-2(Special Taxation on Contributions Related to Research and Development) #

(1)"Act prescribed by Presidential Decree" in Article 10-2 (1) of the Act means any of the following Acts: <Amended on Feb. 29, 2008; Aug. 18, 2009; Feb. 18, 2010>

1. The Industrial Technology Innovation Promotion Act;

2. The Information and Communications Technology Industry Promotion Act;

3. The Act on the Promotion of Technology Innovation of Small and Medium Enterprises;

4. Other statutes that provide for the payment of contributions, etc. for the purpose of research, development, etc., as specified by Ordinance of the Ministry of Economy and Finance.

(2)"Where a national keeps separate accounts of research and development contribution, etc. in a manner prescribed by Presidential Decree" in Article 10-2 (1) of the Act means keeping separate accounts by applying mutatis mutandisArticle 113 of the Corporate Tax Act. <Amended on Feb. 18, 2010>

(3)"Including an amount equivalent to the disbursed amount in the gross income in a manner prescribed by Presidential Decree" in Article 10-2 (2) 2 of the Act means the following methods: <Amended on Feb. 18, 2010>

1. Depreciable assets under Article 24 of the Enforcement Decree of the Corporate Tax Act or Article 62 (2) and (3) of the Enforcement Decree of the Income Tax Act: Method of including the amount equivalent to the depreciation cost, which shall be included in deductible expenses in accordance with Article 25 of the Enforcement Decree of the Corporate Tax Act or Article 62 (1) and (4) of the Enforcement Decree of the Income Tax Act, in gross income, when calculating the income amount for the pertinent taxable year: Provided, That where the relevant asset is disposed of, the balance left over after including the amount in the gross income which was not included in the gross income in accordance with Article 10-2 (1) of the Act shall be entirely included in the gross income for the taxable year during which it was disposed of;

2. Assets other than those prescribed in subparagraph 1: Method of including the full amount, which has not been included in gross income in accordance with Article 10-2 (1) of the Act, in gross income, when calculating the income amount for the taxable year during which the relevant asset was disposed of.

(4) A national who wants to be eligible for the application of Article 10-2 (1) and (2) of the Act shall submit, along with the tax return, a statement of non-inclusion of contributions, etc. in gross income prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 28, 2007]

Article 11(Scope of Technical Knowhow) #

(1)"Related parties prescribed by Presidential Decree" in Article 12 (1), the former part of Article 12 (2), and Article 12 (3) of the Act means the related parties provided for in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act and Article 98 (1) of the Enforcement Decree of the Income Tax Act. In such cases,"1/100" in Article 50 (2) of the Enforcement Decree of the Corporate Tax Act shall be construed as"30/100" for determining a minority stockholder, etc. referred to in Article 2 (5) 2 of the Enforcement Decree of the Corporate Tax Act. <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005; Feb. 9. 2006; Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015; Feb. 12, 2019>

(2) Deleted. <Feb. 17, 2021>

(3)"Patent, utility model right, technical knowhow, or technology obtained as a result of its own research and development, as prescribed by Presidential Decree" in Article 12 (1) of the Act means any of the following: <Amended on Feb. 7, 2017>

1. A patent or utility model right first created and registered as a result of the relevant enterprise's own research and development in the Republic of Korea pursuant to the Patent Act or the Utility Model Act;

2. Technical knowhow (excluding industrial property rights and technical knowhow related to overseas construction engineering activities under the Overseas Construction Promotion Act or engineering activities under the Engineering Industry Promotion Act) that is developed as a result of the relevant enterprise's own research and development in the field of science and technology in the Republic of Korea and meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance for the amount of revenue, etc.;

3. Technology defined in subparagraph 1 of Article 2 of the Technology Transfer and Commercialization Promotion Act, that is developed as a result of the relevant enterprise's own research and development in the Republic of Korea and meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance for the amount of revenue, etc.

(4)"Patent, etc. prescribed by Presidential Decree" in the former part of Article 12 (2) of the Act, with the exception of its subparagraphs, means any of the things specified in the subparagraphs of paragraph (3). <Amended on Feb. 7, 2017>

(5)"Patent, etc. prescribed by Presidential Decree, obtained as a result of its own research and development" in Article 12 (3) of the Act means the patent or utility model right provided for in paragraph (3) 1 and the technical knowhow provided for in paragraph (3) 2. <Newly Inserted on Feb. 3, 2015; Feb. 7, 2017>

(6) A person who wishes to be eligible under Article 12 (1) through (3) of the Act shall file an application for tax reduction or exemption or an application for tax credits, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Dec. 29, 2000; Dec. 30, 2002; Feb. 9, 2006; Feb. 29, 2008; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015>

[Title Amended on Dec. 29, 2000]

Article 11-2(Reduction or Exemption of Corporate Tax for High-Tech Enterprises that Occupy Special Research and Development Zones) #

(1)"Business prescribed by Presidential Decree, such as the biotech industry or the information and communications industry" in Article 12-2 (1) of the Act means a business engaged in the any of the following industries: <Amended on Feb. 29, 2008; Aug. 18, 2009; Feb. 18, 2010; Feb. 2, 2012; Mar. 23, 2013; Jun. 21, 2016; Nov. 20, 2020>

1. Industries related to biotechnology defined in subparagraph 1 of Article 2 of the Biotechnology Support Act (including growing crop seeds and nursery products; and hatching and seeding aquatic animals and seaweeds);

2. The information and communications industry defined in subparagraph 2 of Article 2 of the Information and Communications Technology Industry Promotion Act;

3. Industries that provide information and communications services defined in Article 2 (1) 2 of the Act on Promotion of Information and Communications Network Utilization and Information Protection;

4. Industries related to advanced technology and products publicly notified by the Minister of Trade, Industry and Energy pursuant to Article 5 (1) of the Industrial Development Act.

(2)"If any event prescribed by Presidential Decree occurs, such as the revocation of designation or registration" in the proviso of Article 12-2 (2) of the Act means any of the following cases: <Newly Inserted on Feb. 28, 2023>

1. Where the designation of an advanced technology enterprise is revoked under Article 9-2 (1) of the Special Act on Promotion of Special Research and Development Zones;

2. Where the designation of a research-based spin-off company is revoked under Article 9-4 (1) of the Special Act on Promotion of Special Research and Development Zones;

3. Where the period of validity of the designation of an advanced technology enterprise under Article 12-4 (3) of the Enforcement Decree of the Special Act on Promotion of Special Research and Development Zones expires: Provided, That this shall not apply where a company is re-designated as an advanced technology enterprise before the end of the taxable year in which the period of validity expires.

(3)"Cumulative investments prescribed by Presidential Decree" in Article 12-2 (3) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable year in which a reduction or exemption of corporate tax or income tax is granted pursuant to Article 12-2 (2) of the Act. <Newly Inserted on Dec. 30, 2010; Feb. 28, 2023>

(4)"Service businesses prescribed by Presidential Decree" in Article 12-2 (3) 2 of the Act means the service businesses referred to in Article 23 (4). <Newly Inserted on Feb. 2, 2017; Feb. 12, 2019; Feb. 28, 2023>

(5) The amount of income tax or corporate tax payable under Article 12-2 (5) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive taxable years after the end of the taxable year in which tax reductions or exemptions are granted, such amount payable in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 28, 2023> The aggregate of amounts of tax reduced or exempted under Article 12-2 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees at the place of business eligible for reduction or exemption for the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and a service business referred to in Article 12-2 (3) 2 of the Act)]

The aggregate of amounts of tax reduced or exempted under Article 12-2 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees at the place of business eligible for reduction or exemption for the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and a service business referred to in Article 12-2 (3) 2 of the Act)]

(6) For the purposes of Article 12-2 (3) and (5) of the Act, the scopes of full-time employees and full-time youth employees shall be classified as follows: <Amended on Feb. 12, 2019; Feb. 28, 2023>

1. Scope of full-time employees: Full-time employees under Article 23 (10);

2. Scope of full-time youth employees: Persons falling under Article 26-8 (3) 1.

(7) For the purposes of Article 12-2 (3) and (5) of the Act, the number of full-time employees and the number of full-time youth employees shall be calculated by the following applicable formulas (a fraction of less than 1/100 shall be deemed nil). In such cases, the latter part of the provisions, with the exception of subparagraphs, of Article 23 (11) shall apply mutatis mutandis to the calculation of the number of full-time employees and the number of full-time youth employees: <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023>

1. Number of full-time employees: Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

2. Number of full-time youth employees: Aggregate of the number of full-time youth employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

(8)"Tax amount calculated as prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-2 (7) of the Act means any of the following amounts: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 12-2 (7) 1 of the Act: An amount by which the tax was reduced or exempted retroactively within three years from the date of business closure or the date of corporate dissolution;

2. In cases of Article 12-2 (7) 2 of the Act: An amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

(9)"Amount equivalent to the interest calculated as prescribed by Presidential Decree" in Article 12-2 (8) of the Act means an amount calculated by multiplying the amount equivalent to a tax amount in the relevant subparagraph of paragraph (8) by the period specified in subparagraph 1 and the rate specified in subparagraph 2: <Newly Inserted on Feb. 15, 2022>

1. The period from the day after the end of the taxable year for which a reduction or exemption is granted to the end of the taxable year in which the ground specified in any subparagraph of Article 12-2 (7) of the Act arises;

2. 22/100000 per day.

(10) A person who wishes to be granted a reduction or exemption of corporate tax or income tax under Article 12-2 (9) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment at the time of filing a tax return. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on Feb. 28, 2007]

[Moved from Article 11-3; previous Article 11-2 moved to Article 12 <Feb. 21, 2014>]

Article 11-3(Tax Credits for Technological Innovation-Oriented Mergers) #

(1)"Technological innovation-oriented small or medium enterprise prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-3 (1) of the Act means any of the following small or medium enterprises: <Amended on Feb. 5, 2016; Feb. 11, 2020; Feb. 15, 2022>

1. An enterprise confirmed as a venture business under Article 25 of the Act on Special Measures for the Promotion of Venture Businesses by no later than the date the merger is registered;

2. An enterprise selected as a technological innovation-oriented small or medium enterprise under Article 15 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises and Article 13 of the Enforcement Decree of that Act by no later than the date the merger is registered;

3. A small or medium business that has spent at least 5/100 of its turnover as research and human resources development expenses referred to in Article 10 (1) of the Act in the business year immediately preceding the business year in which the merger is registered;

4. A small or medium business that obtains any of the following certifications, etc. by no later than the date the merger is registered:

(a) Certification of a new technology under Article 15-2 (1) of the Industrial Technology Innovation Promotion Act;

(b) Certification of a new technology in health and medical service under Article 8 (1) of the Health and Medical Service Technology Promotion Act;

(d) Certification of an innovative pharmaceutical company under Article 7 (2) of the Special Act on Fostering and Support of Pharmaceutical Industry;

(e) Selection under Article 18 (1) of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises;

(f) Certification of an innovative medical devises company under Article 10 of the Act on Nurturing Medical Devices Industry and Supporting Innovative Medical Devices;

(g) Other certifications, etc. prescribed by Ordinance of the Ministry of Economy and Finance, similar to those listed in items (a) through (f).

(2)"Related party prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-3 (1) of the Act means any related party defined in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended on Feb. 12, 2019>

(3) "Technical value prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-3 (1) of the Act means either of the following amounts chosen by the merging corporation: <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

1. The total amount of patent rights, utility model rights, and technical knowhow or technology prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article and Article 11-4, referred to as"patents, etc.") held by the merged corporation within three months before and after the date the merger is registered, which is appraised by any of the agencies specified in any subparagraph of Article 4 of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses. In such cases, the total amount shall not exceed an amount calculated by subtracting the net asset value of the merged corporation as at the date the merger is registered, from the transfer value paid by the merging corporation to the merged corporation (if such amount calculated is a negative number, it shall be deemed zero);

2. An amount calculated by subtracting 120/100 of the net asset value of the merged corporation as at the date the merger is registered, from the transfer value paid by the merging corporation to the merged corporation.

(4) The transfer value referred to in the provisions, with the exception of the subparagraphs, of Article 12-3 (1) of the Act shall be an amount calculated under Article 80 (1) 2 of the Enforcement Decree of the Corporate Tax Act.

(5) The net asset value of the merged corporation referred to in Article 12-3 (1) 2 of the Act and paragraph (3) of this Decree shall be an amount calculated by subtracting total liabilities from total assets (excluding the value of patents, etc.) of the merged corporation as at the date the merger is registered. <Amended on Feb. 7, 2017>

(6) Deleted. <Feb. 15, 2022>

(7) Deleted. <Feb. 15, 2022>

(8)"Stockholders or investors of the merged corporation prescribed by Presidential Decree" in Article 12-3 (1) 3 of the Act and"stockholders, etc. of the merged corporation prescribed by Presidential Decree" in Article 12-3 (2) 1 of the Act mean controlling stockholders, etc. of the merged corporation referred to in Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act, except: <Amended on Feb. 13, 2018; Feb. 28, 2023>

1. Fourth-degree relatives by blood among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;

2. Persons whose equity ratio in the merged corporation is less than 1/100, and the value of the equity share appraised at the market price is less than one billion won as of the date the merger is registered.

(9) Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the scope of controlling stockholders, etc. of the merging corporation referred to in Article 12-3 (1) 3 and (2) 1 of the Act.

(10) Article 80-2 (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether the merging corporation continues or closes the business succeeded from the merged corporation under Article 12-3 (1) 4 and (2) 2 of the Act. <Amended on 2020. 2. 11>

(11)"Period prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-3 (2) of the Act means two years from the beginning date of the business year following the business year in which the merger is registered.

(12)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 12-3 (2) of the Act, with the exception of its subparagraphs, means an amount calculated by multiplying the amount of the tax credit under Article 12-3 (1) of the Act by the period of subparagraph 1 and the rate of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day after the end of the business year in which a tax credit is granted to the end of the business year in which a ground for payment arises;

2. The rate specified in Article 11-2 (9) 2.

(13)"In extenuating circumstances prescribed by Presidential Decree" in Article 12-3 (3) of the Act means where the merging corporation becomes bankrupt or disposes of the assets acquired by succession, with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act.

(14) A domestic corporation that wishes to be granted a tax credit under Article 12-3 (1) of the Act shall file an application for tax credits and calculation of tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.

[This Article Newly Inserted on Feb. 21, 2014]

[Previous Article 11-3 moved to Article 11-2 <Feb. 21, 2014>]

Article 11-4(Tax Credits for Acquisition of Technological Innovation-Oriented Stocks) #

(1) The date of first acquisition referred to in Article 12-4 (1) 1 of the Act (hereafter in this Article, referred to as "date of first acquisition"), shall apply where the acquiring corporation has not held any stocks or equity shares (hereafter in this Article, referred to as "stocks, etc.") of the acquired corporation during the period of two years immediately preceding the date the stocks, etc. are acquired: Provided, That the period during which the acquiring corporation becomes a minority stockholder, etc. provided for in Article 50 (2) of the Enforcement Decree of the Corporate Tax Act shall not be deemed the period of holding stocks, etc. <Amended on Feb. 29, 2024>

(2) "Technological innovation-oriented small or medium enterprise prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-4 (1) of the Act means any of the following small or medium enterprises: <Amended on Feb. 5, 2016; Feb. 11, 2020; Feb. 15, 2022; Feb. 29, 2024>

1. An enterprise confirmed as a venture business under Article 25 of the Act on Special Measures for the Promotion of Venture Businesses by no later than the date of first acquisition;

4. A small or medium business that obtains any of the following certifications, etc. by no later than the date of first acquisition:

(a) Certification of a new technology under Article 15-2 (1) of the Industrial Technology Innovation Promotion Act;

(b) Certification of a new technology in health and medical service under Article 8 (1) of the Health and Medical Service Technology Promotion Act;

(d) Certification of an innovative pharmaceutical company under Article 7 (2) of the Special Act on Fostering and Support of Pharmaceutical Industry;

(e) Selection under Article 18 (1) of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises;

(f) Certification of an innovative medical devises company under Article 10 of the Act on Nurturing Medical Devices Industry and Supporting Innovative Medical Devices;

(g) Other certifications, etc. prescribed by Ordinance of the Ministry of Economy and Finance, similar to those listed in items (a) through (f).

(3) "Related party prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-4 (1) of the Act means a person who has a relation defined in any subparagraph of Article 2 (5) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article referred to as "related party"). In such cases, whether a person is a related party shall be determined as at the date of first acquisition. <Amended on Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

(4) "Technical value prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 12-4 (1) of the Act means either of the following amounts chosen by the acquiring corporation: <Amended on Feb. 7, 2017; Feb. 15, 2022; Feb. 29, 2024>

1. An amount calculated by multiplying the total amount of patents, etc. held by the acquired corporation within three months before and after the date of first acquisition, as appraised by an agency falling under any subparagraph of Article 4 of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses by the equity ratio as at the end date of business year of satisfying the standards under Article 12-4 (1) of the Act (hereafter referred to as "business year of satisfying the standards" in this Article). In such cases, the amount so calculated shall not exceed an amount calculated by subtracting an amount calculated by multiplying the net asset value of the acquired corporation as at the business year satisfying the standards by the equity ratio from the purchase price paid by the acquiring corporation to the acquired corporation (if the amount so calculated is a negative number, it shall be deemed zero);

2. An amount calculated by subtracting an amount calculated by multiplying the amount of item (a) by the ratio of item (b) from the purchase price paid by the acquiring corporation to the acquired corporation:

(a) Amount equivalent to 120/100 of the net asset value of the acquired corporation in the business year of satisfying the standards;

(b) Equity ratio as at the end day of the business year of satisfying the standards.

(5) The net asset market value of the acquired corporation in the business year of satisfying the standards referred to in Article 12-4 (1) 3 (a) of the Act and paragraph (4) 1 and 2 (a) of this Article shall be an amount calculated by subtracting total liabilities from total assets (excluding the value of patents, etc.) of the acquired corporation as at the date the acquiring corporation acquires stocks, etc. of the acquired corporation; but if the acquiring corporation has acquired stocks, etc. of the acquired corporation twice or more, such net asset market shall be an amount calculated by dividing the aggregate of the amounts calculated by multiplying the net asset market value of the acquired corporation at each time of acquisition by the number of the stocks, etc. acquired each time by the total number of the stocks, etc. acquired from the date of first acquisition to the end date of the business year of satisfying the standards. <Amended on Feb. 15, 2022; Feb. 29, 2024>

(6) "Stockholders or investors of the acquired corporation prescribed by Presidential Decree" in Article 12-4 (1) 4 of the Act and "stockholders, etc. investors of the acquired corporation prescribed by Presidential Decree" in Article 12-4 (2) 1 of the Act respectively means controlling stockholders, etc. of the acquired corporation referred to in Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act, except: <Amended on Feb. 13, 2018; Feb. 28, 2023; Feb. 29, 2024>

1. Fourth-degree relatives by blood among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;

2. Persons whose equity ratio in the acquired corporation is less than 1/100, and the value of equity share appraised at the market value is less than one billion won as of the date of first acquisition.

(7) Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the scope of controlling stockholders, etc. of the acquiring corporation or the acquired corporation referred to in Article 12-4 (1) 4 and (2) 1 of the Act.

(8) Article 80-2 (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether the acquired corporation continues or closes the business it has been engaged in under Article 12-4 (1) 5 and (2) 2 of the Act. <Amended on 2020. 2. 11>

(9) "Period prescribed by Presidential Decree" in Article 12-4 (2) of the Act, with the exception of its subparagraphs, means two years from the beginning date of the business year following the business year of satisfying the standards: Provided, That in cases of Article 12-4 (2) 3, the period shall be four years from the beginning date of the business year following the business year of satisfying the standards. <Amended on Feb. 29, 2024>

(10)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 12-4 (2) of the Act, with the exception of its subparagraphs, means an amount calculated by multiplying the amount of the tax credit under Article 12-4 (1) of the Act by the period of subparagraph 1 and the rate of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day after the end of the business year in which a tax credit is granted to the end of the business year in which a ground for payment arises;

2. The rate specified in Article 11-2 (9) 2.

(11)"In extenuating circumstances prescribed by Presidential Decree" in Article 12-4 (3) of the Act means where the acquired corporation becomes bankrupt or disposes of the held assets, with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act.

(12) A domestic corporation that wishes to be granted a tax credit under Article 12-4 (1) of the Act shall file an application for tax credits and calculation of tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.

[This Article Newly Inserted on Feb. 21, 2014]

Article 12(Calculation of Gains from Transfer of Stocks and Dividend Income) #

(1) Gains from transfer of stocks or equity shares (hereafter referred to as "stocks, etc." in this Article), exempt from corporate tax under Article 13 (1) of the Act shall be computed by the following methods: <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Dec. 19, 2023>

1. Where some of the retained stocks, etc. are transferred by a venture investment company or a new technology business financier (hereafter referred to as "venture investment company, etc." in this Article) that concurrently holds stocks, etc. acquired by the methods described in the subparagraphs of Article 13 (1) of the Act and stocks, etc. acquired by other methods, stocks, etc. first acquired shall be deemed to have been first transferred;

2. The acquisition value of stocks, etc. acquired by a venture investment company, etc. shall be computed by the method reported by the relevant enterprise to the head of a tax office having jurisdiction over the place of tax payment among the methods prescribed under Article 74 (1) 1 (d) or (e) of the Enforcement Decree of the Corporate Tax Act;

3. Gains from the transfer of stocks, etc., exempt from corporate tax, shall be computed by the following formula based on the type classifiable at each transfer:

Total gains from transfer × (Number of stocks, etc. exempt from corporate tax ÷ Total number of stocks, etc. transferred)

(2)"Corporation prescribed by Presidential Decree" in Article 13 (1) 4 of the Act means a corporation that manages and operates the fund established under statutes, or operates the mutual-aid business under statutes, which is prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 4, 2009>

(3) "Person prescribed by Presidential Decree" in Article 13 (1) 7 of the Act means any of the following corporations. <Newly Inserted on Feb. 29, 2024>

1. A collective investment business entity referred to in Article 63-2 (1) 3 of the Venture Investment Promotion Act;

2. A corporation that has jointly become a managing partner pursuant to Article 63-2 (3) of the Act on the Promotion of Venture Investment.

(4) The dividend income exempted from corporate tax under Article 13 (4) of the Act shall be computed by the following formula based on the classifiable type: <Newly Inserted on Feb. 4, 2009; Feb. 21, 2014; Feb. 29, 2024>

Dividend income × (Number of stocks, etc. exempt from corporate tax ÷ Total number of stocks, etc. held)

[This Article Newly Inserted on Dec. 29, 2000]

[Moved from Article 11-2; previous Article 12 moved to Article 13 <Feb. 21, 2014>]

Article 12-2(Special Taxation for Investment by Domestic Corporations in Venture Businesses) #

(1) "Domestic corporation prescribed by Presidential Decree" in the main clause of Article 13-2 (1) of the Act, with the exception of its subparagraphs, means any domestic corporation, except: <Amended on Dec. 19, 2023; Feb. 29, 2024>

1. Venture investment companies and start-up planners under Article 13 (1) 1 of the Act;

2. A new technology venture capitalist referred to in Article 13 (1) 2 of the Act;

3. A limited-liability company investing in venture businesses referred to in Article 13 (1) 3 of the Act, with the exception of its items;

4. A fund management corporation, etc. referred to in Article 13 (1) 4 of the Act.

(2)"Related party prescribed by Presidential Decree" in the proviso to Article 13-2 (1) of the Act, with the exception of its subparagraphs, means any related party defined in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended on Feb. 12, 2019>

(3) An additional amount equivalent to interest referred to in Article 13-2 (3) of the Act means an amount calculated by multiplying the amount of tax credit by the period of subparagraph 1 and the rate of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the date following the filing date of the tax return for the tax-deducted business year, until the filing date of the tax return for the business year in which the ground specified in Article 13-2 (3) of the Act arises;

2. The rate specified in Article 11-2 (9) 2.

(4) The scope of controlling stockholders, etc. referred to in Article 13-2 (3) of the Act shall be as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act.

(5) A domestic corporation that wishes to be eligible under Article 13-2 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.

[This Article Newly Inserted on Feb. 7, 2017]

Article 12-3(Special Taxation for Domestic Corporation’s Investment in and Acquisition of Enterprises Specialized in Materials, Components, or Equipment) #

(1) "Small or medium enterprise or a middle-standing enterprise related to materials, components, or equipment prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 13-3 (1) of the Act means an enterprise classified as a small or medium enterprise or a middle-standing enterprise among specialization-leading enterprises, etc. under Article 16 of the Act on Special Measures for Strengthening the Competitiveness and Stabilization of Supply Chain of Materials, Components, and Equipment Industries. <Amended on Feb. 17, 2021; Dec. 5, 2023>

(2) A joint investment under Article 13-3 (1) of the Act (hereafter in this Article referred to as"joint investment") shall meet each of the following requirements:

1. That the investing enterprise under Article 13-3 (1) of the Act (hereafter in this Article referred to as"investing enterprise") shall jointly acquire stocks or equity shares (hereafter in this Article referred to as"stocks, etc.") according to an agreement concluded on joint investment with the invested enterprise (hereafter in this Article referred to as"invested enterprise");

2. That each domestic corporation participating in joint investment shall pay at least 25/100 of the price for new stocks, etc. issued by the invested corporation for capital increase.

(3)"Research and development, human resources development, and facility investment related to materials, components, and equipment...of the invested enterprise as prescribed by the Presidential Decree’ in Article 13-3 (1) 1 of the Act means any of the following: <Amended on Feb. 17, 2021>

1. Expenses for research and human resources development under Article 10 (1) of the Act;

2. Investment in assets eligible for deductions under Article 24 (1) 1 of the Act;

3. Deleted. <Feb. 17, 2021>

4. Deleted. <Feb. 17, 2021>

(4)"Affiliated person defined by Presidential Decree" in the main clause of Article 13-3 (1) 3 of the Act and the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act respectively means a"specially related person" defined in subparagraph 12 of Article 2 of the Corporate Tax Act.

(5) An amount equivalent to a tax credit that shall be paid as corporate tax under the provisions, with the exception of the subparagraphs, of Article 13-3 (2) of the Act in cases of Article 13-3 (2) 3 of the Act shall be calculated as follows:

1. Where the investing enterprise disposes of stocks, etc. within two years from the date of acquisition of stocks, etc.: The full amount of the tax credit granted under Article 13-3 (1) of the Act;

2. Where the investing enterprise disposes of stocks, etc. within two years after the lapse of two years from the date of acquisition of stocks, etc.:

The amount calculated by the following formula: Tax amount for which each domestic corporation was granted a tax credit under Article 13-3 (1) of the Act × Number of stocks, etc. disposed of during the relevant taxable period, out of stocks, etc. acquired by each domestic corporation through joint investment/Number of stocks, etc. acquired by each domestic corporation through joint investment

(6) An amount that shall be paid Article in addition to corporate tax as interest under the provisions, with the exception of the subparagraphs, of Article 13-3 (2) of the Act, the main clause of paragraph (4) of that Article, with the exception of the subparagraphs, and paragraph (5) of that Article shall be calculated by multiplying the tax amount deducted under paragraphs (1) and (3) of that Article (in cases of Article 13-3 (5) of the Act, referring to the amount calculated by the formula prescribed in that paragraph; and in cases of paragraph (5) 2, referring to the amount calculated by the formula prescribed in that subparagraph) by the period specified in subparagraph 1 and the rate specified in subparagraph 2: <Amended on Feb. 15, 2022>

1. The period from the day after the end of the business year in which a tax credit is granted to the end of the business year in which a ground for payment arises;

2. The rate specified in Article 11-2 (9) 2.

(7)"Foreign corporation related to materials, components, equipment, or national statistical technology prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act means any of the following foreign corporations (hereafter in this Article referred to as"acquired foreign corporation"): <Amended on Feb. 28, 2023>

1. A foreign corporation that produces materials, components, or equipment specified by Ordinance of the Ministry of Economy and Finance in consideration of the domestic industrial infrastructure for such materials, components, or equipment, whether or not the corporation holds a patent in the Republic of Korea, dependency on foreign countries, etc. In such cases, if a corporation is acquired by acquiring its stocks, etc., at least 50/100 of the total turnover of the foreign corporation to be acquired shall consist of turnover from materials, components, or equipment (referring to the average turnover for three immediately preceding business years in which stocks, etc. are acquired, as calculated by the formula prescribed in Article 2 (4); but if the business year is less than one year, referring to the turnover converted into that for one year; hereafter in this paragraph, the same shall apply):

2. A foreign corporation that has at least 50/100 of its total turnover generated from a business utilizing national strategy technology:

3. A foreign corporation that has at least 50/100 of the aggregate of the turnover from materials, components, or equipment and the turnover generated by utilizing national strategy technology.

(8) The acquisition of a business related to materials, components, equipment, or national strategic technology under the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act (hereafter in this Article referred to as"acquired business") means comprehensive or partial succession to rights and obligations related to the acquired business; and the acquisition of assets equivalent to the acquisition of a business means the purchase of assets to the extent that the acquired business operated by the acquired foreign corporation before the acquisition can be continued even after the acquisition. <Amended on Feb. 28, 2023>

(9)"Special purpose corporation established for the purposes of acquiring the acquired foreign corporation as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act (hereafter in this Article referred to as"acquisition purpose corporation") means a corporation that meets each of the following requirements: <Amended on Feb. 28, 2023>

1. That its purpose of business shall be to acquire the acquired foreign corporation;

2. That it shall be a corporation with the total number of its outstanding stocks or equity shares fully held by the domestic corporation referred to in the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act.

(10)"Acquisition price prescribed by Presidential Decree for each acquisition case" in the latter part of provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act means an amount calculated by aggregating acquisition prices, where there is an acquisition of an acquired business or assets from the foreign corporation within three years from the date of acquisition of the acquired business or assets of the acquired foreign corporation. <Amended on Feb. 28, 2023>

(11) In cases of an indirect acquisition under the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act, the shareholding ratio shall be the shareholding ratio of the domestic corporation in the acquisition purpose corporation multiplied by the shareholding ratio of the acquisition purpose corporation in the acquired foreign corporation. <Amended on Feb. 28, 2023>

(12)"Period prescribed by presidential decree" in the main clause of Article 13-3 (4), with the exception of the subparagraphs, of the Act means four years from the beginning date of the business year after the business year in which the acquisition date under the former part of the provisions, with the exception of the subparagraphs, of Article 13-3 (3) of the Act falls.

(13) A joint acquisition to which paragraphs (3) and (4) shall apply pursuant to Article 13-3 (6) of the Act shall be a case where a domestic corporation under paragraph (3) of that Article jointly makes an acquisition under that paragraph according to an agreement concluded for joint investment, etc.

(14) If a corporation that participated in a joint acquisition pursuant to Article 13-3 (6) of the Act falls under paragraph (4) 3 or (5) of that Article as a consequence of disposal of stocks, etc. to a third party who did not participate in the joint acquisition, the corporation shall pay corporate tax under paragraph (4) or (5) of that Article.

(15) A domestic corporation that wishes to be granted a tax credit pursuant to Article 13-3 (7) of the Act shall file an application for the tax credit and a statement of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with a tax return.

(16) Article 43 (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the scope of controlling stockholders, etc. under Article 13-3 (2) 1, (3) 1 (c), 2 (b), and (4) 1 of the Act.

(17) Article 80-2 (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to judgment on continuation or closure of a business under Article 13-3 (3) 1 (d), 2 (c), and (4) 2 of the Act.

[This Article Newly Inserted on Feb. 11, 2020]

[Title Amended on Feb. 28, 2023]

Article 13(Special Taxation on Investment in Business Starters) #

(1)"Stocks or equity shares prescribed by Presidential Decree" in Article 14 (1) 4 of the Act means stocks or equity shares acquired by making an investment that meets the requirements of subparagraphs 1 and 2, and three years have passed since the date of such investment: <Amended on Dec. 31, 2001; Feb. 19, 2005; Feb. 18, 2010; Feb. 2, 2012; Feb. 5, 2016; Feb. 12, 2019; Aug. 11, 2020; Feb. 15, 2022>

1. Such investment shall be made in a venture business for which five years have not passed since its establishment (referring to a venture business defined under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses and confirmed as a venture business under Article 25 of that Act; hereafter in this Article the same shall apply) or a business converted into a venture business not more than three years ago: Provided, That an investment shall be deemed to have been made in a venture business for which five years have not passed since its establishment, if an additional investment is made within three years from the date of initial investment in the venture business within five years after its establishment, and the sum of the initial investment and the additional investment does not exceed one billion won;

2. Such investment shall be made in any of the following venture businesses: Provided, That Article 2 (5) 2 of the Enforcement Decree of the Corporate Tax Act shall not apply where the proviso to subparagraph 1 is applicable:

(a) A venture business with no special relationship defined under Article 98 (1) of the Enforcement Decree of the Income Tax Act or Article 2 (5) of the Enforcement Decree of the Corporate Tax Act (hereafter referred to as"special relationship" in this paragraph);

(b) An investment made by an individual investment association established under subparagraph 8 of Article 2 of the Venture Investment Promotion Act in a venture business with which no member of the association has any special relationship.

(2)"Minority stockholder prescribed by Presidential Decree" in Article 14 (1) 7 of the Act means a stockholder who is not a shareholder falling under any subparagraph of Article 167-8 (1) of the former Enforcement Decree of the Income Tax Act (Presidential Decree No. 31442) as at the end of the business year immediately preceding the business year in which the date of transfer of the stocks falls. <Newly Inserted on Feb. 15, 2022>

(3)"Stocks or equity shares prescribed by Presidential Decree, acquired in return for an investment in an enterprise prescribed by Presidential Decree, such as a technologically innovative small or medium enterprise…within three years after its establishment" in Article 14 (1) 8 of the Act means stocks or equity shares (limited to those that have elapsed three years from the date of investment) invested in a company that meets the requirements prescribed in any of the following subparagraphs and does not have a special relationship under paragraph (1) 2 (a). <Newly Inserted on Feb. 11, 2020; Aug. 4, 2020; Feb. 17, 2021; Feb. 15, 2022>

1. An enterprise under Article 2-2 (1) 2 (c) of the Act on Special Measures for the Promotion of Venture Businesses;

2. An enterprise that spent at least 30 million won on research and human resources development expenses under Article 10 (1) of the Act in the taxable year immediately preceding the taxable year in which the investment is received: Provided, That if the period of the immediately preceding taxable year is less than six months, it shall be a small or medium enterprise that spent at least 15 million won on research and human resources development expenses pursuant to Article 10 (1) of the Act;

3. An enterprise whose technical rating evaluated by a corporate credit bureau engaged in technical credit evaluation under subparagraph 8-3 (c) of Article 2 of the Credit Information Use and Protection Act (referring to a rating of comprehensive evaluation of technical capabilities, marketability, business performance, etc. related to the technology of companies and corporations in accordance with that item) ranks in the top 50 out of 100 in the technical rating system.

[Title Amended on Feb. 18, 2010]

[Moved from Article 12 <Feb. 21, 2014>]

Article 14(Income Deduction for Contributions to Venture Investment Funds) #

(1)"Venture business investment trust prescribed by Presidential Decree" in Article 16 (1) 2 of the Act means any trust that meets all the following requirements (hereafter in this Article, referred to as"venture business investment trust"): <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 13, 2018; Feb. 12, 2019; Aug. 11, 2020; Feb. 17, 2021>

1. It shall be an investment trust established under the Financial Investment Services and Capital Markets Act (excluding special accounts of insurance companies under Article 251 of that Act; hereinafter referred to as"investment trust") and the contract period shall be at least three years;

2. It shall be transacted by a bankbook;

3. The aggregate of the following rates to the total amount of assets shall be at least 50/100 within six months (or within nine months where the investment trust does not fall under a privately placed fund defined Article 9 (19) of the Financial Investment Services and Capital Markets Act). In such cases, the ratio of assessed value of the property invested under item (a) (i) to the total amount of property of the investment trust shall be at least 15/100:

(a) The ratio of the aggregate of the assessed value of the property invested in venture businesses as follows:

(i) Investment under subparagraph 1 of Article 2 of the Venture Investment Promotion Act;

(ii) Investments made by the method of acquiring, through purchase, the stocks or contributed shares owned by other persons;

(b) The ratio of the aggregate of the assessed value of property invested under item (a) (i) and (ii) by an enterprise, which was a venture business but for which seven years have not passed since it ceased to be a venture business, in a small or medium enterprise or a middle-standing enterprise listed on the KOSDAQ market under the Financial Investment Services and Capital Markets Act;

4. The ratio calculated by dividing, every six months from the date of fulfilling the requirements of subparagraph 3, the ratio calculated by aggregating the ratios referred to in the former part and the latter part of that subparagraph, with the exception of its items, every day for six months (where the assessed value of investment trust property is smaller than the invested principal, and if the ratio under the same latter part is less than 15/100, it shall be deemed 15/100), by the total number of days of the same period, shall be at least 50/100 and 15/100, respectively: Provided, That this shall not apply to six months before the termination of the investment trust.

(2) Where an investment is made in beneficiary certificates of a venture business investment trust, the amount of investment (referring to the aggregate amount of all venture business investment trusts invested by the relevant resident) eligible for income deduction shall be 30 million won per resident. <Newly Inserted on Feb. 13, 2018>

(3)"Where the resident invests the amount…in a venture business or an equivalent small or medium enterprise prescribed by Presidential Decree and established not more than three years ago, as prescribed by Presidential Decree" in Article 16 (1) 3 of the Act means where an individual investment fund defined in subparagraph 8 of Article 2 of the Venture Investment Promotion Act (hereafter in this Article referred to as"individual investment fund") invests contributions from residents in any of the following businesses (hereafter in this Article and Article 14-5 referred to as"venture business, etc.") pursuant to that Act by the end of the taxable year immediately following the taxable year in which the contributions are made: <Amended on Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Aug. 4, 2020; Aug. 11, 2020; Feb. 15, 2022>

1. A venture business;

2. A small or medium enterprise established not more than three years ago and defined in Article 2-2 (1) 2 (c) of the Act on Special Measures for the Promotion of Venture Businesses;

3. A small or medium business for which three years have not passed since its incorporation and which spent at least 30 million won on research and human resources development expenses under Article 10 (1) of the Act in the taxable year immediately preceding the taxable year in which the date it received an investment from an individual investment fund falls (or in which the date it received an industrial property right as a contribution falls in cases of Article 16-5 of the Act): Provided, That, if the duration of the immediately preceding taxable year does not exceed six months, it shall be a small or medium business that spent at least 15 million won on research and human resources development expenses under Article 10 (1) of the Act.

4. A small or medium enterprise for which three years have not passed since its incorporation and whose technical rating evaluated by a corporate credit bureau engaged in technical credit evaluation under subparagraph 8-3 (c) of Article 2 of the Credit Information Use and Protection Act (referring to a rating of comprehensive evaluation of technical capabilities, marketability, business performance, etc. related to the technology of companies and corporations in accordance with that item) ranks in the top 50 out of 100 in the technical rating system.

(4) Where an investment is made in a venture business, etc. pursuant to paragraph (3), the investment eligible for income deduction shall be calculated by the following formula: <Amended on Feb. 21, 2014; Feb. 13, 2018>

{Amount contributed by a resident to a private investment fund × (Amount invested in a venture business, etc. by the private investment fund ÷ the total amount of the investment by the private investment fund)}

(5)" Where the resident invests in equity securities of an enterprise prescribed by Presidential Decree, as a small or medium enterprise for which seven years have not passed since its incorporation" in Article 16 (1) 6 of the Act means cases where the resident invests in equity securities of any enterprise prescribed in paragraph (3) 2 through 4. In such cases,"small or medium enterprise for which three years have not passed since its incorporation" shall be construed as"small or medium enterprise for which seven years have not passed since its incorporation." <Newly Inserted on Feb. 13, 2018; Feb. 12, 2019>

(6) A resident who wishes to be granted an income deduction under Article 16 of the Act shall file an application for income deductions in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the withholding agent, the tax association, or the head of the tax office having jurisdiction over the place of tax payment, along with a certificate of contribution or investment (hereafter in this Article referred to as “certificate of contribution or investment”) issued in the form prescribed by Ordinance of the Ministry of Economy and Finance by the manager of a venture investment fund under subparagraph 11 of Article 2 of the Venture Investment Promotion Act (hereinafter referred to as "venture investment fund"); the manager of the Korea Venture Fund established under the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as "Korea Venture Fund"); the manager of a new technology venture capital fund established under the Specialized Credit Finance Business Act (hereinafter referred to as "new technology venture capital fund"); the collective investment business entity of a venture business investment trust under the Financial Investment Services and Capital Markets Act; or a financial company that handles such investment trust; the executive partner of a private equity fund specialized in business start-ups and venture businesses under that Act or a financial company that handles a private equity fund specialized in business start-ups and venture business under that Act; a person to whom the Minister of SMEs and Startups has delegated his/her authority under Article 27 of the Act on Special Measures for the Promotion of Venture Businesses; or the manager of a specialized investment fund under the Act on Special Measures for Strengthening the Competitiveness and Stabilizing of Supply Chain of Materials, Components, and Equipment Industries (hereinafter referred to as "specialized investment fund") (hereafter in this Article referred to as "investment fund manager, etc.”) by the date specified as follows: <Amended on Dec. 31, 2001; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 29, 2008; Feb. 4, 2009; May 6, 2009; Jan. 14, 2014; Apr. 20, 2015; Feb. 7, 2017; Jul. 26, 2017; Feb. 13, 2018; Feb. 11, 2020; Mar. 31, 2020; Aug. 11, 2020; Feb. 15, 2022; Dec. 5, 2023; Feb. 29, 2024>

1. For a resident subject to Article 73 of the Income Tax Act: The date he/she receives wages or business income for one month of the year following the relevant year (or the date he/she receives wages or business income for the month in which the date of resignation or business closure falls, if he/she resigns or closes his/her business);

2. For any resident other than subparagraph 1: The filing deadline of the final return on global income tax base.

(7) Where a resident intends to apply for a change in the timing for deduction pursuant to the main clause of Article 16 (1), with the exception of its subparagraphs, of the Act, the resident shall file an application for the change in the timing for deduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the investment fund manager or the like at the time of receiving a certificate contribution or investment issued pursuant to paragraph (6) (referring to the time of investing in the relevant beneficiary certificates in cases of investment falling under Article 16 (1) (2) of the Act). <Newly Inserted on Feb. 11, 2020>

(8) Where any of the grounds for additional collection under Article 16 (2) of the Act arises, the investment fund manager, etc. shall submit a notice of changes in equity shares, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the withholding agent, the tax association, the Commissioner of the National Tax Service, or the head of the tax office having jurisdiction over the place of tax payment, with which the relevant resident has filed an application for income deductions pursuant to paragraph (6): Provided, That, where any of the following grounds arises, the investment fund manager, etc. shall submit a notice of changes in equity shares, etc. to the head of the tax office having jurisdiction over the place of tax payment: <Amended on Feb. 19, 2005; Feb. 29, 2008; Feb. 18, 2010; Feb. 13, 2018; Feb. 11, 2020>

1. Suspension or closure of business by the withholding agent;

2. Dissolution of the tax association;

3. Resignation of an employee;

4. Suspension or closure of business of a person with only business income referred to in Article 73 (1) 4 of the Income Tax Act.

(9) Upon receipt of a notice of changes in equity shares, etc. under paragraph (8), the withholding agent, the tax association, or the head of the tax office having jurisdiction over the place of tax payment shall additionally collect, without delay, the equivalent to the deducted tax amount imposed on the income of the relevant resident under Article 16 (1) of the Act (limited to the portion related to a transfer or recovery of the equity shares or investment shares or a transfer or repurchase of beneficiary certificates). <Amended on Feb. 13, 2018; Feb. 11, 2020>

(10)"Ground prescribed by Presidential Decree" in the proviso to Article 16 (2) of the Act, with the exception of its subparagraphs, means any of the following grounds: <Amended on Jan. 10, 2000; Dec. 31, 2001; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 4, 2009; May 6, 2009; Feb. 18, 2010; Apr. 20, 2015; Feb. 13, 2018; Feb. 11, 2020; Mar. 31, 2020; Aug. 11, 2020>

1. Emigration of all members of a household to a foreign country under the Emigration Act;

2. Occurrence of a serious loss to property due to a natural disaster;

3. Dissolution of a venture investment fund, a new technology venture capital fund, a specialized investment fund, or a collective investment business entity under the Financial Investment Services and Capital Markets Act.

(11) Notwithstanding paragraphs (8) and (9), if a ground for additional collection of a tax under Article 16 (2) 2 of the Act arises to a resident who has been granted an income deduction under paragraph (1) (hereafter in this paragraph referred to as"investor"), the financial institution that deals with the relevant venture business investment trust shall additionally collect an amount calculated by multiplying the amount of transfer or repurchase of beneficiary certificates of the venture business investment trust by 35/1000, subject to a ceiling of three million won per year, and shall pay it to the head of the tax office having jurisdiction over the withholding tax by the tenth day of the month following the month in which the ground arises and notify the details thereof to the investor in writing: Provided, That if it is confirmed that the amount of tax reduced by the applicable income deduction is different from the amount of tax to be collected, such as where the investor proves that the amount of tax reduced by the applicable deduction is less than the amount of tax to be collected, the amount equivalent to the tax amount actually reduced shall be additionally collected. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020>

(12) A person who falls under any subparagraph of Article 16 (2) of the Act because grounds referred to in the proviso to the same paragraph, with the exception of its subparagraphs, has occurred to him/her, shall submit a report on the ground for special termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the domicile of the relevant resident, the relevant withholding agent or the financial institution that deals with the venture business investment trust. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020>

(13) In determining whether the requirements under the provisions, with the exception of the items, of paragraph (1) 3 and subparagraph 4 of that paragraph are met, if a venture business investment trust sells stocks but it is unclear whether the stocks were acquired under either subparagraph 3 (a) (i) or (ii) of that paragraph, such stocks shall be deemed to be sold in proportion to the ratio of the appraised value of each stock to the total assets of the venture business investment trust. <Newly Inserted on Feb. 15, 2022>

(14) Where an investment is made in a venture investment fund falling under Article 51 (6) of the Venture Investment Promotion Act pursuant to Article 16 (1) 1 of the Act, the amount of investment eligible for income deduction shall be the amount calculated according to the following formula. <Newly Inserted on Feb. 29, 2024>

Amount invested by residents in venture investment fund x (Amount invested by venture investment fund in venture companies, etc./Total investment amount by venture investment fund)

[Title Amended on Feb. 11, 2020]

Article 14-3(Special Cases on Payment of Gains from Exercising Stock Options of Venture Businesses) #

(1)"Amount prescribed by Presidential Decree" in Article 16-3 (1) 2 of the Act means an amount calculated by the following formula. In such cases, in calculating the amount of global income and the amount of income from exercising a stock option for the relevant taxable period, the amount non-taxable under Article 16-2 of the Act shall be excluded therefrom: <Amended on Feb. 13, 2018>

Final tax amount on the global income of the relevant taxable year - The tax amount computed by excluding the amount of income from exercising stock options of venture businesses from the global income of the relevant taxable period.

(2) An executive officer or employee of a venture business who intends to pay income tax under Article 16-3 (1) of the Act (hereafter referred to as"executive officers, etc. of a venture business" in this Article) shall submit an application for special cases in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as"application for special cases" in this Article) to the withholding agent by no later than the fifth day of the month following the month in which the date he/she has exercised his/her stock option falls. <Amended on Feb. 13, 2018>

(3) A withholding agent, in receipt of an application for special cases under paragraph (2), shall submit a statement on the subjects of application of special cases in the form prescribed by Ordinance of the Ministry of Economy and Finance by no later than the tenth day of the month following the month in which the date he/she has exercised his/her stock option falls.

(4) Executive officers, etc. of a venture business who has submitted an application for special cases under paragraph (2) shall submit a copy of the application for special cases to the head of a tax office having jurisdiction over the place of tax payment when filing his/her final tax return of global income under Article 70 of the Income Tax Act for the taxable period in which the date he/she has exercised his/her stock option falls.

(5) Notwithstanding the provisions of paragraphs (2) through (4), executive officers, etc. of a venture business who fail to have submitted an application for special cases within the period prescribed in paragraph (2), but intends to pay income tax under Article 16-3 (1) of the Act shall submit an application for special cases when filing his/her final tax return of global income under Article 70 of the Income Tax Act for the taxable period in which the date he/she has exercised his/her stock option falls. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on Feb. 21, 2014]

[Moved from Article 14-2; previous Article 14-3 moved to Article 14-4 <Feb. 12, 2019>]

Article 14-4(Special Taxation for Gains from Exercising Stock Options of Venture Businesses) #

(1)"Enterprise acquired by a venture business as prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 16-4 of the Act means an enterprise in which a venture business has acquired at least 30/100 of the total number of outstanding stocks; and"person prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 16-4 (1) of the Act means an executive officer or employee granted a stock option under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses (excluding the following persons as at the date a resolution is passed at the stockholders’ general meeting under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses; hereafter in this Article, referred to as"executive officer or employee of a venture business"): <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. A person who holds more than 10/100 of the total number of outstanding stocks of the relevant corporation, if he/she exercises all of his/her stock options;

2. A stockholder of the relevant corporation, who is identified as a controlling stockholder, etc., as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;

3. A stockholder who holds more than 10/100 of the total number of outstanding stocks of the relevant corporation;

4. A person who is a relative of the stockholder referred to in subparagraph 3 or who has control over the management of such stockholder, as provided for in Article 1-2 (1) or (3) 1 of the Enforcement Decree of the Framework Act on National Taxes.

(2) An executive officer or employee of a venture business who wishes to be eligible under Article 16-4 (1) of the Act file an application for special taxation, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the venture business by the date immediately preceding the date he/she intends to exercise a stock option, along with a written confirmation of opening an account only for stock options in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 28, 2023>

(3) Upon receipt of an application for special taxation under paragraph (2), a venture business shall deposit the stocks issued by the exercise of a stock option in the account only for stock options under paragraph (10), and shall submit a statement of deposit of stocks by the exercise of a stock option in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"statement of delivery of stocks by the exercise of a stock option") and a statement of a person eligible for special taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"statement of a person eligible for special taxation"), to the head of the tax office having jurisdiction over withholding taxes, by no later than the tenth day of the month immediately following the month in which the person exercises the stock option. <Amended on Feb. 28, 2023>

(4) A financial investment business entity under Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as"financial investment business entity") shall submit a report on transactions through the accounts only for stock options in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as"report on transactions through the accounts only for stock options") to the head of the tax office having jurisdiction over its head office or principal place of business, by not later than the end of the month immediately following the end of each quarter. <Amended on Feb. 28, 2023>

(5)"Requirements prescribed by Presidential Decree" in Article 16-4 (1) 1 of the Act means the following requirements: <Amended on Dec. 1, 2016; Feb. 13, 2018>

1. A venture business shall make an agreement with its executive officers or employees after passing a resolution on the quantity of stock options, purchase price, eligible persons, duration, etc. at the stockholders’ general meeting before it grants stock options;

2. Stock options granted under subparagraph 1 shall be non-transferable;

3. Stock options shall be exercised after a person serves in or works for the relevant corporation for at least two years from the day a resolution is passed at the stockholders’ general meeting under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses, except in extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as death or reaching the statutory retirement age;

4. Deleted. <Feb. 15, 2022>

(6) When an executive officer or employee of a venture business files a tax return on capital gains tax under Articles 87-21 (1) and 87-23 (1) of the Income Tax Act to pay financial investment income tax under Article 87-5 of that Act (hereinafter referred to as"financial investment income tax") pursuant to Article 16-4 (2) of the Act, the executive officer or employee shall submit a written confirmation issued by the venture business for the submission of the application special taxation under paragraph (2), in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 13, 2018; Feb. 15, 2022>

(7)"Amount prescribed by Presidential Decree" in Article 16-4 (4) of the Act means the difference between the agreed purchase price and the market price of stocks at the agreed time to purchase the stocks: Provided, That if the actual purchase price at the time of exercising a stock option is lower than the market price at the time the stock option was granted, it refers to the amount specified in the main clause, less the gains from issuance at a price lower than the market price specified in the provisions, with the exception of the subparagraphs, of Article 16-4 (1) of the Act. <Amended on Feb. 13, 2018; Feb. 15, 2022>

(8)"Extenuating circumstances prescribed by Presidential Decree, such as where the venture business becomes bankrupt" in Article 16-4 (5) 1 of the Act means any of the following: <Amended on Feb. 7, 2017; Feb. 13, 2018>

1. Where the venture business that granted stock options becomes bankrupt;

2. Where stocks are disposed of with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act;

3. Where stocks of the relevant corporation are disposed of due to a merger, division, etc., and new stocks of the merging corporation or the corporation newly established as a consequence of the division are delivered in return.

(9)"Data prescribed by Presidential Decree" in Article 16-4 (6) of the Act means a statement of delivery of stocks by the exercise of a stock option, a statement of a person eligible for special taxation, and a report on transactions through the account only for stock options. <Amended on Feb. 13, 2018>

(10) An executive officer or employee of a venture business shall open a dedicated account that meets each of the following requirements: <Newly Inserted on Feb. 28, 2023>

1. That the account shall be opened under the name of the executive officer or employee of the venture business;

2. That the financial investment company shall open and manage a separate account in the name of 'stock option account' separately from other trading accounts of executive officers and employees of the venture business;

3. That only stocks acquired by exercising stock options shall be traded through the account;

4. That it shall be agreed in advance that if no stock is deposited within one month after opening the account, the account shall be closed.

[This Article Newly Inserted on Feb. 3, 2015]

[Moved from Article 14-3; previous Article 14-4 moved to Article 14-5 <Feb. 12, 2019>]

Article 14-5(Special Taxation for Gains from Investment of Industrial Property Rights in Kind) #

(1)"Patent, utility model right, design right, or trademark prescribed by Presidential Decree" in Article 16-5 (1) of the Act means the following: <Amended on Feb. 13, 2018>

1. A patent registered under the Patent Act;

2. A utility model right registered under the Utility Model Act;

3. A design right registered under the Design Protection Act;

4. A trademark registered under the Trademark Act.

(2)"Related party prescribed by Presidential Decree" in Article 16-5 (1) of the Act means the following: <Amended on Feb. 13, 2018>

1. A person who will hold more than 30/100 of the total number of outstanding stocks of the relevant corporation (including stockholders who already hold more than 30/100 of the total number of outstanding stocks of the relevant corporation before making an investment in kind), if the person receives stocks in return for an industrial property right invested in kind under Article 16-5 (1) of the Act (hereafter in this Article, referred to as"industrial property right");

2. A stockholder of the relevant corporation, who is identified as a controlling stockholder, etc., as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;

3. A person who is a relative of, or has an economic relationship with, or has control over the management of, a stockholder who holds more than 30/100 of the total number of outstanding stocks of the relevant corporation, as provided for in Article 1-2 (1), (2), or (3) 1 of the Enforcement Decree of the Framework Act on National Taxes.

(3) A person who wishes to be eligible under Article 16-5 (1) of the Act shall open an account prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"account only for stocks for the investment of an industrial property right") with a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as"financial investment business entity"), and shall file an application for special taxation (hereafter in this Article, referred to as"application for special taxation"), in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant venture business, etc. by the date immediately preceding the date the person receives stocks in return for the investment, along with a written confirmation of opening of an account only for stocks for the investment of an industrial property right in the form prescribed by Ordinance of the Ministry of Economy and Finance, which is issued by the financial investment business entity. <Amended on Feb. 7, 2017; Feb. 13, 2018>

(4) Upon receipt of an application for special taxation under paragraph (3), a venture business, etc. shall issue a certificate of the application for special taxation (hereafter in this Article, referred to as"certificate of the application for special taxation"), to the person who wishes to be eligible under Article 16-5 (1) of the Act, in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 7, 2017; Feb. 13, 2018>

(5) Upon receipt of an application for special taxation under paragraph (3), a venture business, etc. shall deposit the stocks issued in return for the investment of an industrial property right in the account only for stocks for the investment of an industrial property right, and shall submit a statement of the delivery of stocks for the investment of an industrial property right (hereafter in this Article, referred to as"statement of the delivery of stocks for the investment of an industrial property right") and a statement of a person eligible for special taxation (hereafter in this Article, referred to as"statement of a person eligible for special taxation"), in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over withholding taxes by the tenth day of the month immediately following the month in which the stocks are delivered in return for the investment of the industrial property right. <Amended on Feb. 7, 2017>

(6) A financial investment business entity shall submit a report on transactions through accounts only for stocks for the investment of an industrial property right prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"report on transactions through accounts only for stocks for the investment of an industrial property right"), to the head of the tax office having jurisdiction over its head office or principal place of business, by no later than the end of the month immediately following the end of each quarter.

(7) A person who intends to pay capital gains tax under Article 16-5 (2) of the Act shall file a certificate of an application for special taxation with the head of the tax office having jurisdiction over the place of tax payment, when filing the tax return on capital gains tax under Article 87-21 (1) or 87-23 (1) of the Income Tax Act. <Amended on Feb. 13, 2018; Feb. 15, 2022>

(8) The acquisition value of an industrial property right under Article 16-5 (3) of the Act shall be calculated by the method for calculating the acquisition value of an asset prescribed in Article 89 of the Enforcement Decree of the Income Tax Act. <Amended on Feb. 13, 2018>

(9)"Data prescribed by Presidential Decree" in Article 16-5 (4) of the Act means a statement of the delivery of stocks for the investment of an industrial property right, a statement of a person eligible for special taxation, and a report on transactions through accounts only for stocks for the investment of an industrial property right. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on, Feb. 5, 2016]

[Moved from Article 14-4 <Feb. 12, 2019>]

Article 16(Scope of Foreign Engineers) #

(1) "Foreign engineer prescribed by Presidential Decree" in the main clause of Article 18 (1) of the Act means a non-Korean national who falls under any of the following subparagraphs: <Amended on Jan. 10, 2000; Jun. 5, 2004; Dec. 3, 2004; Feb. 19, 2005; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 11, 2020; Feb. 17, 2021; Feb. 29, 2024>

1. A person who provides technology in the Republic of Korea under an engineering technology license agreement prescribed by Ordinance of the Ministry of Economy and Finance;

2. A person who meets all of the following requirements:

(a) That the person holds a bachelor’s or higher degree in national, scientific, engineering, or medical discipline;

(b) That the person has experience of at least five years (or two years, including experience prior to obtaining a doctoral degree, in cases of a person with a doctoral degree) in research and development at universities and research institutes abroad as prescribed by Ordinance of the Ministry of Economy and Finance;

(c) That the person does not have the relationship under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes or the management control relationship under paragraph (3) of that Article with the enterprise to which the person provides labor: Provided, That the requirement of Article 1-2 (4) 1 (b) of the Enforcement Decree of the Framework Act on National Taxes shall not apply in determining whether there is a management control relationship;

(d) A person who falls under any of the following:

i) A person who works for an institution or department specified in any subparagraph of Article 16-3 (2) as a researcher (excluding persons only in charge of administrative work);

ii) A person who falls under the status of sojourn as a professor (E-1) as referred to in subparagraph 14 of attached Table 1-2 of the Enforcement Decree of the Immigration Control Act, who is engaged in education or instructional activities in a specialized field at an institution specified in Article 16-3 (2) 4 located in a special research and development zone defined in subparagraph 1 of Article 2 the Special Act on Promotion of Special Research and Development Zones or in a high-tech medical complex under subparagraph 1 of Article 2 of the Special Act on the Promotion of High-Tech Medical Complexes.

2-2. Deleted; <Feb. 3, 2015>

3. Deleted; <Feb. 3, 2015>

4. Deleted. <Feb. 3, 2015>

(2) "Foreign engineer related to materials, components, and equipment prescribed by presidential decree" in the proviso of Article 18 (1) of the Act means a person who works for a specialization-leading enterprise or the like under Article 16 of the Act on Special Measures for Strengthening the Competitiveness and Stabilization of Supply Chain of Materials, Components, and Equipment Industries. <Newly Inserted on Feb. 11, 2020; Dec. 5, 2023>

(3) A person who intends to obtain an income tax reduction under Article 18 (1) of the Act shall file an application for tax reduction in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over withholding taxes via the relevant withholding agent, by no later than the tenth day of the month immediately following the month in which the person provided service. <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 3, 2015>

Article 16-2(Special Taxation for Foreign Workers) #

(1)"Foreign-capital invested corporations prescribed by Presidential Decree" in the main clause of Article 18-2 (2) of the Act means enterprises granted a reduction of, or exemption from, corporate tax, income tax, acquisition tax, and property tax under Article 121-2 of the Act, or enterprises that meet the requirements for tax reduction or exemption under Article 116-2 (3) through (10) as at the end of the relevant taxable year. <Newly Inserted on Feb. 21, 2014; Feb. 3, 2015>

(2) "Related person prescribed by Presidential Decree" in the main clause of Article 18-2 (2) of the Act means an enterprise that has relative relations or management control relationship defined under Article 1-2 (1) or (3) of the Enforcement Decree of the Framework Act on National Taxes, with the enterprise to which a foreign worker provides service: Provided, That the requirement of Article 1-2 (4) 1 (b) of the same Act shall not apply in determining of the management control relationship with the relevant enterprise. <Newly Inserted on Feb. 21, 2014; Feb. 3, 2015; Feb. 29, 2024>

(3)"Regional headquarters prescribed by Presidential Decree" in the proviso to Article 18-2 (2) of the Act means a local headquarters defined under Article 20-2 (5) 1 of the Enforcement Decree of the Foreign Investment Promotion Act. <Newly Inserted on Feb. 3, 2015; Aug. 5, 2020>

(4) A foreign worker (only applicable to foreign workers who do not have the nationality of the Republic of Korea as of the end of the relevant taxable year) who intends to obtain a tax deduction under Article 18-2 (2) of the Act shall submit a wage and salary income earner's return on income deductions and tax credits under Article 198 (1) of the Enforcement Decree of the Income Tax Act, and an application for single tax rate for foreign workers in the form stipulated by Ordinance of the Ministry of Economy and Finance to the withholding agent, taxpayers' union, or the head of a tax office having jurisdiction over the place of tax payment, when making a year-end settlement of earned income tax amount or filing a final return of global income tax base. <Amended on Feb. 19, 2005; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Feb. 21, 2014; Feb. 3, 2015>

(5) "Income prescribed by Presidential Decree" in Article 18-2 (3) of the Act means income referred to in subparagraph 1 of Article 17-4 of the Enforcement Decree of the Income Tax Act. <Newly Inserted on Feb. 29, 2024>

(6) A foreign worker (only applicable to foreign workers who do not have the nationality of the Republic of Korea as at the date of filing an application for withholding) who intends to be accorded tax treatment under Article 18-2 (4) of the Act shall submit an application for withholding applying single tax rate in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over withholding, through the withholding agent by the 10th of the month following the month in which the foreign worker provides service. <Newly Inserted on Dec. 30, 2010; Feb. 21, 2014, Feb. 3, 2015; Feb. 29, 2024>

(7) Where a foreign worker who has submitted an application for withholding applying single tax rate under paragraph (6) submits an application for renouncement of withholding applying single tax rate in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over withholding through the withholding agent, Article 18-2 (4) of the Act shall not apply, starting from the taxable period following the taxable period in which the date of submission of such application falls. <Newly Inserted on Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015; Feb. 29, 2024>

[This Article Wholly Amended on Dec. 30, 2003]

Article 16-3(Reduction of Income Tax for Returning of Talented National Human Resources to Korea) #

(1) "Talented national human resource as prescribed by Presidential Decree" in the former part of Article 18-3 (1) of the Act means a person that meets all of the following requirements: <Amended on Feb. 29, 2024>

1. That the person holds a doctor’s degree in national, scientific, engineering, or medical discipline;

2. That the person resided abroad for five taxable periods immediately preceding the taxable period in which the person began to work for an institution or department referred to in any subparagraph of paragraph (2) or in which the person was granted a reduction in income tax first. In such cases, a person shall be deemed to have resided abroad in a taxable period if the person has spent at least 183 days abroad in a single taxable period;

3. That the person shall have experience of at least five years in research and development and technology development at overseas universities and research institutes prescribed by Ordinance of the Ministry of Economy and Finance;

4. That the person is not a relative under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes or the management control relationship under paragraph (3) of that Article with the enterprise to which the person provides labor: Provided, That the requirement of Article 1-2 (4) 1 (b) of the Enforcement Decree of the Framework Act on National Taxes shall not apply in determining whether there is a management control relationship;

5. That the person shall be a national of the Republic of Korea as at the end of the relevant taxable period;

6. That the person works for an institution or department prescribed in any subparagraph of paragraph (2) as a researcher (excluding persons who are in charge only of administrative work);

(2)"Research institute, etc. prescribed by Presidential Decree" in the former part of Article 18-3 (1) of the Act means an institution or department falling under any of the following subparagraphs:

1. A business-affiliated research institute or a department exclusively dedicated to research and development as recognized by the Minister of Science and ICT pursuant to Article 14-2 (1) of the Basic Research Promotion and Technology Development Support Act;

2. A government-funded research institute established pursuant to Article 2 of the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes or a government-funded research institution in the field of science and technology under Article 2 of the Act on the Establishment, Operation and Fostering of Government-Funded Science and Technology Research Institutes and its affiliated research institutes;

3. A specific research institute under Article 2 of the Specific Research Institutes Support Act and its affiliated research institutes;

4. A university, an industrial college, a junior college, or a technical college under Article 2 of the Higher Education Act and its affiliated research institutes;

5. The Korea Institute of Ocean Science and Technology established pursuant to the Korea Institute of Ocean Science and Technology Act;

6. The Agency for Defense Development established pursuant to the Act on the Agency for Defense Development;

7. A specialized manufacturing technology research institute established pursuant to the Industrial Technology Innovation Promotion Act;

8. An industrial technology research cooperative established pursuant to the Industrial Technology Research Cooperatives Support Act.

(3) A person who wishes to be granted a reduction or exemption of income tax pursuant to Article 18 (3) (1) of the Act shall file an application for the reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over withhold through the withholding agent, by the tenth day of the month following the month in which the person provides labor.

(4) Except as prescribed in paragraphs (1) through (3), the method of determining experience in overseas research and development and technology development and other necessary matters shall be prescribed by the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 11, 2020]

Article 17(Tax Credits for Management Performance Bonuses of Achievement-Sharing Small and Medium Enterprises) #

(1)"Full-time employees prescribed by Presidential Decree" in the main clause of Article 19 (1) of the Act means employees with Korean nationality who have signed an employment contract under the Labor Standards Act: Provided, That any of the following persons shall be excluded herefrom: <Amended on Feb. 11, 2020; Jun. 2, 2020>

1. An employee whose employment contract term is less than one year (excluding employees whose total employment contract term is not less than one year due to consecutive renewal of an employment contract);

2. A part-time employee defined in Article 2 (1) 9 of the Labor Standards Act: Provided, That an employee whose contractual work hours per month are at least 60 hours shall be deemed a full-time employee;

3. An executive officer falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

4. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietorship), and his/her spouse;

5. A lineal ascendant or descendant (including the spouses) of a person referred to in subparagraph 4 or a relative as defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, of such person;

6. A person in whose case neither the fact that his/her earned income tax has been withheld nor the fact that any of the following amounts has been paid is verified by a book for tax withholding for earned income under Article 196 of the Enforcement Decree of Income Tax Act:

(a) An employer contribution or employee endowment defined in Article 3 (1) 11 or 12 of the National Pension Act;

(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.

7. An employer whose gross wage and salary income in the relevant taxable period exceeds 70 million won.

(2)"Management performance bonus prescribed by Presidential Decree" in the main clause of Article 19 (1) of the Act means the performance bonus under Article 26-2 (1) 1 of the Enforcement Decree of the Special Act on Support for Human Resources of Small and Medium Enterprises. <Amended on Feb. 15, 2022>

1. Deleted; <Feb. 15, 2022>

2. Deleted. <Feb. 15, 2022>

(3) For the purposes of Article 19 (1) of the Act, the number of full-time employees shall be calculated by the following formula (a fraction of less than 1/100 shall be deemed nil): Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year.

Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year.

(4) The latter part of Article 23 (11), with the exception of its subparagraphs, and subparagraph 2 of the same paragraph shall apply mutatis mutandis to the calculation of the number of full-time employees under paragraph (3).

(5) A person who wishes to be granted tax credits under Article 19 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.

(6)"Person prescribed by Presidential Decree, such as the largest stockholder of the relevant enterprise" in Article 19 (2) 2 of the Act means any of the following persons:

1. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative if the relevant enterprise is a sole proprietor), and his/her spouse;

2. A lineal ascendant or descendent (including his/her spouse) of a person falling under subparagraph 1, or a relative referred to in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes.

(7) The tax amount reduced under Article 19 (2) of the Act shall be calculated by the following formula:

Amount of global income tax calculated under Article 137 (1) 2 of the Income Tax Act (hereafter in this Article, referred to as "amount of tax calculated") × (Amount of earned income under Article 20 (2) of the Income Tax Act ÷ Amount of global income under Article 14 (2) of the Income Tax Act) × (Management performance bonus under Article 19 (1) of the Act ÷ Total wages of the relevant employee) × Reduction rate under Article 19 (2) of the Act.

(8) Notwithstanding paragraph (7), where a person who wishes to be granted a tax reduction or exemption under Article 19 (2) of the Act is granted a reduction or exemption under Article 30 (1) of the Act, the tax amount reduced or exempted under Article 19 (2) of the Act shall be calculated by the following formula:

[(Amount of tax calculated x Amount of earned income under Article 20 (2) of the Income Tax Act ÷ Amount of global income under Article 14 (2) of the Income Tax Act) - (Tax amount reduced under Article 30 (1) of the Act] x (Management performance bonus under Article 19 (1) of the Act ÷ Total amount of wages of the relevant employee) x Reduction rate under Article 19 (2) of the Act.

(9) A person who wishes to be granted a tax reduction or exemption under Article 19 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant withholding agent by not later than the end of the month immediately following the month in which he/she receives a management performance bonus.

(10) A withholding agent in receipt of an application for tax reduction or exemption under paragraph (9) shall submit a statement of subjects eligible for tax reduction or exemption prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the withholding tax by not later than the end of the month immediately following the month in which the application is received.

[This Article Newly Inserted on Feb. 12, 2019]

Article 18(Exemption of Corporate Tax on Interest Income from International Financial Transactions) #

(1) Deleted. <Feb. 22, 2008>

(2)"Finance companies, etc. prescribed by Presidential Decree" in Article 21 (1) 3 of the Act means the following finance companies, etc.: <Amended on Feb. 19, 2005; Feb. 4, 2009; Feb. 18, 2010; Nov. 15, 2010; Feb. 2, 2012; Feb. 7, 2017>

1. A bank authorized to engage in banking business under the Banking Act;

2. The Korea Development Bank incorporated under the Korea Development Bank Act;

3. The Export-Import Bank of Korea incorporated under the Export-Import Bank of Korea Act;

4. The Industrial Bank of Korea incorporated under the Industrial Bank of Korea Act;

5. Deleted; <Jan. 10, 2000>

6. The NongHyup Bank incorporated under the Agricultural Cooperatives Act;

7. The SuHyup Bank incorporated under the Fisheries Cooperatives Act;

8. Deleted. <Dec. 30, 2014>

9. A merchant bank incorporated under the Financial Investment Services and Capital Markets Act.

(3) Deleted; <Dec. 30, 2002>

(4)"Securities prescribed by Presidential Decree" in Article 21 (3) of the Act means the following: <Amended on Jan. 10, 2000; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013>

1. Securities denominated in a foreign currency or those prescribed by Ordinance of the Ministry of Economy and Finance which are payable in a foreign country among those issued outside the Republic of Korea: Provided, That excluded herefrom shall be where deposit certificates issued on the basis of stocks, investment certificates, or other securities (hereafter in this paragraph, referred to as"taxable stocks, etc.") are transferred, and where the owner of taxable stocks, etc. before the deposit certificates are issued keeps holding the relevant deposit certificates after the deposit certificates are issued until the deposit certificates are transferred;

2. Stocks or equity shares of domestic corporations listed or registered at a foreign securities market prescribed by Ordinance of the Ministry of Economy and Finance, that are transferred at the foreign securities market: Provided, That taxable stocks, etc. that have not been acquired in the foreign securities market and are first transferred in such foreign securities market, shall be excluded. The same shall not apply where taxable stocks, etc. offered and sold to meet the requirements for distribution of shares under the listing regulations of a foreign securities market, are acquired and transferred.

Article 21(Integrated Investment Tax Credit) #

(1)"National prescribed by Presidential Decree" in the main clause of Article 24 (1), with the exception of its subparagraphs, of the Act mean a national engaged in any business other than the following businesses:

1. Consumer service business under Article 29 (3);

2. Real estate leasing and supply business.

(2)"Assets prescribed by Presidential Decree" in the provision of Article 24 (1) 1 (b) of the Act means assets prescribed by Ordinance of the Ministry of Economy and Finance, such as land and buildings.

(3)"Assets prescribed by Presidential Decree, among tangible and intangible assets not falling under item (a)" in Article 24 (1) 1 (b) of the Act means the following assets: <Amended on Feb. 15, 2022>

1. Assets prescribed by Ordinance of the Ministry of Economy and Finance, among business assets used for research and testing, vocational training, energy saving, environmental conservation, or employees’ welfare;

2. assets prescribed by Ordinance of the Ministry of Economy and Finance, such as vehicles and carriers used directly by a person engaged in a transportation business for the business;

3. The following assets acquired by a small or medium enterprise (excluding assets acquired from a related party pursuant to Article 11 (1));

(a) A patent established and registered first under the Patent Act for research and development by a national in the Republic of Korea;

(b) A utility model right established and registered first under the Utility Model Act for research and development by a national in the Republic of Korea;

(c) A design right established and registered first under the Design Protection Act for research and development by a national in the Republic of Korea;

(4)"Facility prescribed by Presidential Decree" in Article 24 (1) 2 (a) (i) and (ii) means any of the following facilities: <Amended on Feb. 15, 2022>

1. Facilities under Article 24 (1) 2 (a) (i) of the Act: The following facilities:

(a) A facility jointly recognized by the Minister of Economy and Finance and the Minister of Trade, Industry and Energy after deliberation by the deliberative committee for technologies eligible for tax credits on research and development as a facility for commercializing new growth and source technologies (including facilities used for the production of products other than products produced using new growth and source technologies) as prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as"facility for commercialization of new growth engines");

(b) A facility for switching, transmission, or power supply under subparagraph 6 (a) (i) or (ii) of attached Table 7, among telecommunications facilities under Article 8 of the Regulations on Accounting and Reporting of Telecommunications Business, which are necessary for the operation of fifth-generation mobile communications base stations (including switching facilities interconnected therewith) equipped with the technologies in items (i) and (ii) of that subparagraph;

2. Facilities under Article 24 (1) 2 (a) (ii) of the Act: Facilities jointly recognized by the Minister of Economy and Finance and the Minister of Trade, Industry and Energy after deliberation by the deliberative committee for technologies eligible for tax credits on research and development, among facilities for commercializing national strategic technologies (including facilities used for the production of products other than the products produced using national strategic technologies) as prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as"facilities for commercialization of national strategic technologies")

(5)"Period prescribed by presidential decree" in the former part of Article 24 (3) of the Act means the period prescribed in any of the following subparagraphs: <Amended on Feb. 15, 2022>

1. For a building or structure prescribed by Ordinance of the Ministry of Economy and Finance as a business asset falling under any subparagraph of paragraph (3): Five years;

2. For a facility for commercialization of new growth engines or national strategic technologies, which is used also for the production of products other than those produced using the technology: The period until the end of three subsequent taxable years after the taxable year in which investments are completed;

3. For a business asset other than the assets under items 1 and 2: Two years.

(6)"Additional amount equivalent to interest calculated as prescribed by Presidential Decree" in the former part of Article 24 (3) of the Act shall be calculated by multiplying the deducted amount by the period specified in subparagraph 1 and the rate specified in subparagraph 2. <Amended on Feb. 15, 2022>

1. The period from the date following the filing date of the tax return for the tax-deducted taxable year to the filing date of the tax return for the taxable year in which the ground specified in Article 24 (3) of the Act arises;

2. The rate specified in Article 11-2 (9) 2.

(7) An investment amount under Article 24 (1) and (2) of the Act shall be calculated by subtracting the amount specified in subparagraph 2 from the amount specified in subparagraph 1:

1. An amount calculated according to the work progress rate under Article 69 (1) of the Enforcement Decree of the Corporate Tax Act or the amount actually disbursed until the relevant taxable year, whichever is greater;

2. The aggregate of the following amounts:

(a) Investment amount to which Article 24 of the Act was applied before the relevant taxable year;

(b) The amount calculated by applying mutatis mutandis subparagraph 1 to the portion invested before the relevant taxable year, except the amount of item (a).

(8) The average annual investment amount for three years under Article 24 (1) 2 (b) and 3 (b) shall be calculated according to the following formula: In such cases, if the period from the beginning of the taxable year in which a national initially made an investment to the beginning of the taxable year in which the person wishes to be granted a tax credit thereon is less than 36 months, an amount calculated by converting the aggregate of the amounts invested in that period into 36 months shall be deemed the amount invested for three years retroactively from the beginning of the relevant taxable year; and if the national is a merging corporation, a corporation established after a division, a counter-party corporation of a merge through a division, a corporation that acquired a business, or a corporation that received an investment in kind (hereafter in this paragraph referred to as"a merging corporation or the like"), the amount invested by the merged corporation, divided corporation, the person that transferred the business, or the person who made the investment in kind shall be deemed to have been invested by the merging corporation or the like: <Amended on Feb. 28, 2023; Jun. 7, 2023>

Aggregate of amounts invested for three years retroactively from the beginning of the relevant taxable year/3 × Number of months of the relevant taxable year/12

(9) For the purposes of Article 24 (1) 2 (b) and 3 (b) of the Act, if there is no average annual investment amount calculated for three years according to paragraph (8), there is no amount eligible for additional deduction. <Amended on Jun. 7, 2023>

(10) For the purposes of Article 24 (3) of the Act, if a facility under paragraph (5) 2 falls under any of the following subparagraphs, such facility shall be deemed to have been diverted to another purpose at the end of the period specified in that paragraph: Provided, That such facility shall not be deemed to have been diverted to another purpose if the facility has been extinguished by a natural disaster or there is any other ground prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 15, 2022>

1. In cases of a facility for commercialization of new growth engines: Where the ratio of the aggregate of the output of products produced using new growth or source technologies and the output of products produced using national strategic technologies to the total output of all products produced at the facility during the period from the date of completion of investments (referring to April 1, 2022 if the date of completion of investments is prior to April 1, 2022) to the date specified in paragraph (5) 2 is not more than 50/100;

2. In cases of a facility for commercialization of national strategic technologies: Where the ratio of the aggregate of the output of products produced using national strategic technologies to the total output of all products produced at the facility during the period from the date of completion of investments (referring to April 1, 2022 if the date of completion of investments is prior to April 1, 2022) to the date specified in paragraph (5) 2 is not more than 50/100;

(11) Where a facility for commercialization of new growth engines or national strategic technologies is deemed to have been diverted to another purpose under paragraph (10), the" amount equivalent to the tax credit amount so granted" under the former part of Article 24 (3) of the Act shall be calculated according to the following subparagraphs: <Newly Inserted on Feb. 15, 2022; Feb. 28, 2023>

1. In cases of a facility for commercialization of new growth engines: The amount of the tax credit granted minus the amount of the tax credit entitled to be granted if the facility is not a facility for commercialization of new growth engines or national strategic technologies (hereafter in this paragraph referred to as a"general facility");

2. In cases of a facility for commercialization of national strategic technologies: The amount of the tax credit granted minus the amount of the tax credit entitled to be granted if the facility is a general facility (or the amount of the tax credit entitled to be granted as a facility for commercialization of new growth engines if the ratio of the aggregate of the output of products produced using new growth or source technologies and the output of products produced using national strategic technologies to the total output of all products produced at the facility, if the facility is a general facility, exceeds 50/100).

(12) For the purposes of paragraphs (1) through (11), Article 23 (14) shall apply mutatis mutandis with respect to the timing of commencement of investments. <Amended on Feb. 15, 2022>

(13) A person who wishes to be granted a tax credit pursuant to Article 24 (1) of the Act shall submit an application for the tax credit in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the relevant taxable year. In such cases, the tax credit may be applied for as prescribed by Ordinance of the Ministry of Economy and Finance before the facility is recognized as a facility for commercialization of new growth engines or national strategic technologies under the condition that it shall be recognized as such facility. <Amended on Feb. 15, 2022; Feb. 28, 2023>

(14) A person who wishes to be granted a tax credit pursuant to Article 24 (1) of the Act for a facility used also for the production of products other than those produced using new growth engines or national strategic technologies, among facilities for commercialization of new growth engines or national strategic technologies, shall measure the volume of all products produced in that facility and keep records of the production volume, as prescribed by Ordinance of the Ministry of Economy and Finance, and shall submit the data about the actual production volume in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, when filing the tax return for the last taxable year of the period specified in Paragraph (5) 2. <Newly Inserted on Feb. 15, 2022>

[This Article Newly Inserted on Feb. 17, 2021]

Article 22-10(Tax Credit for Production Costs of Video Content) #

(1) "National prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 25-6 (1) of the Act means a person who is a video producer defined in subparagraph 14 of Article 2 of the Copyright Act, who meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as "video content producer"). <Amended on Feb. 29, 2024>

(2)"Video content prescribed by Presidential Decree" n the provisions, with the exception of the subparagraphs, of Article 25-6 of the Act means anything falling under any of the following subparagraphs (hereafter in this Article referred to as"video content"): <Amended on Feb. 11, 2020; Feb. 28, 2023>

1. A broadcast program falling under any of the following items, among those defined in subparagraph 17 of Article 2 of the Broadcasting Act:

(a) Broadcast programs on entertainment under Article 50 (2) of the Enforcement Decree of the Broadcasting Act;

(b) Documentaries among broadcast programs on culture under Article 50 (2) of the Enforcement Decree of the Broadcasting Act;

(c) Animation programs broadcast on television by a broadcasting business entity defined in subparagraph 3 of Article 2 of the Broadcasting Act, among animation programs defined in subparagraph 1 of Article 2 of Act on the Promotion of Animation Industry;

2. A movie defined in subparagraph 1 of Article 2 of the Promotion of the Motion Pictures and Video Products Act, which has been continuously screened in a movie theater for a certain period of time or more as prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as"movie");

3. A video product defined in subparagraph 12 of Article 2 of the Promotion of the Motion Pictures and Video Products Act, which has received a rating under any of the following items and has been made available for viewing through an online video service pursuant to subparagraph 12-2 of Article 2 of the Telecommunications Business Act:

(a) A rating by the Korea Media Rating Board under Article 50 of the Promotion of the Motion Pictures and Video Products Act;

(b) A rating by an independent rating business entity under Article 50-2 of the Promotion of the Motion Pictures and Video Products Act.

(3)"Cost prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 25-6 (1) of the Act means the cost expenses prescribed by Ordinance of the Ministry of Economy and Finance, including personnel expenses for the persons participating in the production of video content (hereafter in this Article referred to as"production cost of video content"): Provided, the following expenses shall be excluded herefrom: <Amended on Feb. 15, 2022; Feb. 28, 2023>

1. Amounts received from the State, local governments, public institutions under the Act on the Management of Public Institutions, and local public enterprises under the Local Public Enterprises Act and used for production cost of video content;

2. Expenses prescribed by Ordinance of the Ministry of Economy and Finance, such as advertising cost or public relations expenses;

3. Production cost of existing video content for which a tax credit has been already granted if another video content has been produced by utilizing the video content for which a tax credit has been already granted under Article 25-6 of the Act;

(4) "Video content that satisfies the requirements prescribed by Presidential Decree" in Article 25-6 (1) 2 (b) of the Act means video content that satisfies all of the following requirements. <Newly Inserted on Feb. 29, 2024>

1. The proportion of expenses incurred within the Republic of Korea is at least 80 out of 100 of the expenses for filming production prescribed by Ordinance of the Ministry of Economy and Finance;

2. At least three of the following requirements shall be satisfied:

(a) The ratio of labor costs paid to Koreans among the labor costs paid to writers and major staff prescribed by Ordinance of the Ministry of Economy and Finance shall be not less than 80/100;

(b) The ratio of the performance fees paid to Koreans out of the performance fees prescribed by Ordinance of the Ministry of Economy and Finance shall be not less than 80/100;

(c) The ratio of expenses incurred in Korea among the expenses incurred in post-production as prescribed by Ordinance of the Ministry of Economy and Finance shall be at least 80/100;

(d) The number of rights held by a video content producer shall be at least three among the reproduction rights, public performance rights, broadcasting rights, transmission rights, distribution rights, and derivative works under the Copyright Act. In such cases, specific criteria for determining possession of rights shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(5) Where any video content referred to in paragraph (2) 1 or 3 broadcast in a series or made available for viewing through an online video service during multiple taxable years, a tax credit may be applied to the production cost calculated as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 28, 2023>

(6) A person who intends to be granted a tax credit pursuant to Article 25-6 (1) of the Act shall submit an application for tax credit, a statement of tax deductible amount, and other necessary documents in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the competent tax office having jurisdiction over the place of tax payment, along with the return of tax base for the taxable year classified as follows: <Amended on Feb. 28, 2023; Feb. 29, 2024>

1. In cases of a video content referred to in paragraph (2) 1 or 3: The taxable year in it is first broadcast or made available for viewing through an online video service: Provided, That in cases of paragraph (5), it means either of the following taxable years:

(a) Each taxable year in which it is broadcast or made available for viewing through an online video service;

(b) The taxable year in which the last episode of such video content is broadcast or made available for viewing through an online video service;

2. In cases of a movie: the taxable year in which the movie began to be shown in a movie theater.

[This Article Newly Inserted on Feb. 7, 2017]

[Moved from Article 22-6 <Feb. 12, 2019>]

Article 23(Tax Credits for Employment-Creating Investment) #

(1)"Investment prescribed by Presidential Decree" in the main clause of Article 26 (1) of the Act, with the exception of its subparagraphs, means an investment made by a national who engages in any business activities other than the consumer service businesses specified in Article 29 (3), to acquire a new facility that is one of the business assets prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"business asset") and to use it for the relevant business. <Amended on Feb. 7, 2017>

(2) The amount invested under Article 26 (1) of the Act shall be the amount of subparagraph 1 minus the amount of subparagraph 2: <Amended on Feb. 2, 2012>

1. The greater of the amount calculated by multiplying the total amount invested, by the progress rate of work referred to in Article 69 (1) of the Enforcement Decree of the Corporate Tax Act, and the amount actually spent by the relevant taxable year;

2. The aggregate of the following amounts:

(a) The amount invested, subject to Article 26 (1) 1 of the Act before the relevant taxable year;

(b) The amount calculated by applying mutatis mutandis subparagraph 1 to the portion invested before the relevant taxable year, except the amount of item (a).

(3) Deleted. <Feb. 17, 2021>

(4)"Service businesses prescribed by Presidential Decree" in the main clause of Article 26 (1) 2 of the Act, with the exception of its items, means any business (hereafter in this Article, referred to as"service businesses"), except the following: <Newly Inserted on Feb. 3, 2015; May 10, 2016; Feb. 7, 2017>

1. Agriculture, forestry, and fisheries;

2. Mining;

3. Manufacturing;

4. Electricity, gas, steam, and water supply;

5. Construction;

6. Consumer service businesses provided for in Article 29 (3);

(5)"Schools prescribed by Presidential Decree" in Article 26 (1) 2 (a) of the Act means the following schools (hereinafter referred to as"high schools, etc. aligned to industry demand"): <Amended on Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015>

1. High schools aligned to industry demand under Article 90 (1) 10 of the Enforcement Decree of the Elementary and Secondary Education Act;

2. Specialized high schools under Article 91 (1) of the Enforcement Decree of the Elementary and Secondary Education Act;

3. Various kinds of schools defined in subparagraph 5 of Article 2 of the Elementary and Secondary Education Act (limited to schools that provide curricula for vocational education, among alternative schools defined in Article 60-3 of that Act, and schools that provide curricula for vocational education under entrustment to students enrolled in general high schools defined in subparagraph 1 of Article 76-2 of the Enforcement Decree of that Act).

(6) For the purposes of Article 26 (1) 2 of the Act, where a national engaging in at least two different businesses, acquires a business asset that may be used for both a service business and any other business, the business asset shall be deemed a business asset for the business for which the asset is mainly used. <Newly Inserted on Feb. 3, 2015; Feb. 7, 2017>

(7) The number of graduates from high schools, etc. aligned to industry demand mentioned in Article 26 (1) 2 (a) of the Act shall be determined with the number of full-time employees who have signed an employment contract before the lapse of two years since they graduated from high schools, etc. aligned to industry demand (the maximum number of such workers shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year from that number of full-time employees in the relevant taxable year). <Amended on Feb. 2, 2012; Feb. 3, 2015>

(8) The number of youth employees, employees with disabilities, and employees aged at least 60, as referred to in Article 26 (1) 2 (b) of the Act shall be calculated as follows: <Amended on Feb. 21, 2014; Feb. 3, 2015>

1. Number of youth employees: The number of full-time employees (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year and the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), from the number of full-time employees in the relevant taxable period) between the ages of 15 and 29 on the date an employment contract is entered into: Provided, That, if a person has performed the military service specified in any item of Article 27 (1) 1, and his age calculated by subtracting the period of such military service (which shall not exceed six years) from his age as on the date an employment contract is entered into, does not exceed 29 years, the person shall be deemed a youth;

2. Number of employees with disabilities: The aggregate of the number of full-time employees with disabilities subject to the Act on Welfare of Persons with Disabilities, and the number of full-time employees who are wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year, the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), and the number of youth employees referred to in subparagraph 1, from the number of full-time employees in the relevant taxable period);

3. Number of employees aged at least 60: The number of full-time employees who are aged at least 60 on the date an employment contract is entered into (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year, the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), the number of youth employees referred to in subparagraph 1, and the number of employees with disabilities referred to in subparagraph 2, from the number of full-time employees in the relevant taxable period).

(9) The amount of income tax or corporate tax payable under Article 26 (6) of the Act shall be calculated as follows (the amounts of subparagraphs 1 and 2 (referring to the aggregate of items (a) and (b)) shall not exceed the aggregate of tax credits granted under Articles 26 (1) 2 and 144 (3) of the Act within the immediately preceding two taxable years to the taxable year in which the number of full-time employees decreased); and such amount shall be paid as income tax or corporate tax, at the time of filing the tax return for the taxable year in which the number of full-time employees decreased: <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012; Feb. 3, 2015>

1. Where the number of full-time employees decreased only in one taxable year: The number of full-time employees decreased compared to that in the tax-credit granted taxable year under Article 26 (1) 2 or 144 (3) of the Act (referring to the second taxable year, if tax credits were granted for two consecutive taxable years) × Ten million won;

2. Where the number of full-time employees decreased for two consecutive taxable years:

(a) The first taxable year in which the number of full-time employees decreased: An amount calculated under subparagraph 1;

(b) The second taxable year in which the number of full-time employees decreased: The decreased number of full-time employees between the immediately preceding taxable year and the relevant taxable year × Ten million won.

(10) For the purposes of paragraphs (7) through (9), full-time employees shall be nationals who have concluded an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Newly Inserted on Feb. 2, 2012; Aug. 31, 2012; Feb. 3, 2015; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Jun. 2, 2020>

3. An executive officer falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

4. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietorship), and his/her spouse;

(a) An employer contribution or employee endowment defined in Article 3 (1) 11 or 12 of the National Pension Act;

(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.

(11) For the purposes of paragraphs (7) and (8), the number of full-time employees shall be calculated by the formula provided for in subparagraph 1. In such cases, one worker provided for in the proviso to paragraph (10) 2 shall be calculated as 0.5 person; where all of the requirements for support provided for in the items of subparagraph 2 are met, one worker shall be calculated as 0.75 person: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016>

1. Formula:

Number of full-time employees = Sum of the number of full-time employees as at the end of each month in the relevant taxable year ÷ the number of months in the relevant taxable year

2. Requirements for support:

(a) The number of full-time employees in the relevant taxable year (excluding the workers provided for in the proviso to paragraph (10) 2) shall not be decreased as compared with that in the immediately preceding taxable year (excluding the workers provided for in the proviso to paragraph (10) 2);

(b) They shall have entered into an indefinite employment contract;

(c) They shall not be given discriminatory treatment defined in subparagraph 3 of Article 2 of the Act on the Protection of Fixed-Term and Part-Time Employees, in their hourly wages (including wages defined in Article 2 (1) 5 of the Labor Standards Act, regularly paid bonuses, such as regular bonuses and holiday bonuses, and performance-based incentives) and other matters concerning the terms and conditions of employment, welfare, etc.;

(d) The hourly wage shall be at least 130/100 (or 120/100, in cases of a small or medium enterprise) of the minimum wage prescribed under Article 5 of the Minimum Wage Act.

(12) The fraction of less than 1/100 of the number of full-time employees calculated under paragraph (11) shall be deemed nil. <Newly Inserted on Feb. 2, 2012; Feb. 3, 2015>

(13) For the purposes of paragraphs (7) and (8), if a national starts a business, etc. in the relevant taxable year, the number according to the following classification shall be deemed the number of full-time employees in the immediately preceding taxable year or relevant taxable year: <Newly Inserted on Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 13, 2018; Feb. 12, 2019>

1. Number of full-time employees in the immediately preceding taxable year where the national starts a business (excluding cases falling under Article 6 (10) 1 through 3 of the Act): 0;

2. Number of full-time employees in the immediately preceding taxable year in any case falling under Article 6 (10) 1 (excluding succession to a previous business through a merger, split-off, investment in kind, or acquisition of business) through 3 of the Act: Number of full-time employees in the immediately preceding taxable year of the previous business, business before conversion into a corporation, or business before closure of business;

3. Number of full-time employees in the immediately preceding taxable year or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by subtracting the number of full-time employees transferred by succession from the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the number calculated by adding the number of full-time employees acquired by succession to the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:

(b) Where such enterprise takes over full-time employees from a related party referred to in Article 11 (1).

(14) For the purposes of paragraphs (1) and (2), the commencement date of an investment shall be any of the following applicable dates: <Amended on Oct. 7, 2008; Jun. 19, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 3, 2015>

1. The date a person placing an order sends the first order sheet when placing orders under a domestic or international manufacturing contract;

2. The date a down payment or a part of prices is paid (the date facilities are actually taken over, if such facilities have been taken over before a down payment or a part of prices is paid) where the purchases are made not by the order referred to in subparagraph 1, but under a sales and purchase agreement;

3. The date an import license is obtained where a license is to be obtained to import the relevant facilities, notwithstanding subparagraphs 1 and 2;

4. The date construction or manufacturing is actually started where he/she directly engages in construction or manufacturing. In such cases, those for the validity of business and preliminary preparation thereof shall not imply the time such construction or manufacturing is started;

5. The date construction is actually started where construction is entrusted to any third person. In such cases, those for the validity of business and preliminary preparation thereof shall not imply the time when such construction is started.

(15) Any person who wishes to be granted a tax credit under Article 26 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 29, 2008; Jun. 19, 2009; Feb. 2, 2012; Feb. 3, 2015>

(16) Any person who wishes to be granted a tax credit under Article 26 (2) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, when making an interim tax prepayment. <Newly Inserted on Aug. 14, 2001; Feb. 29, 2008; Jun. 19, 2009; Dec. 30, 2010; Feb. 2, 2012; Feb. 3, 2015; Feb. 7, 2017>

(17) Any person who wishes to file a return of an interim tax prepayment under Article 26 (3) of the Act shall submit an application for tax credits and a return of the interim tax pre-payment in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment. <Newly Inserted on Aug. 14, 2001; Feb. 29, 2008; Jun. 19, 2009; Dec. 30, 2010; Feb. 2, 2012; Feb. 3, 2015; Feb. 7, 2017>

(18) Paragraphs (2) and (4) through (17) shall also apply mutatis mutandis to investments made under paragraph (1) in the Gaeseong Industrial District defined in subparagraph 1 of Article 2 of the Act on the Support of Gaeseong Industrial District. <Newly Inserted on Mar. 10, 2008; Jan. 19, 2009; Feb. 3, 2015; Feb. 17, 2021>

[Title Amended on Dec. 30, 2010]

Article 24(Special Taxation on Investors in Specific Infrastructure Funds) #

(1)"Kind of the collective investment scheme prescribed by Presidential Decree" in Article 26-2 (1) 1 of the Act means a collective investment scheme referred to any of the following subparagraphs:

1. A real estate investment company defined in subparagraph 1 of Article 2 of the Real Estate Investment Company Act;

3. Collective investment schemes under Article 9 (18) of the Financial Investment Services and Capital Markets Act.

3. A real estate fund under subparagraph 2 of Article 229 of the Financial Investment Services and Capital Markets Act;

4. A special asset fund under subparagraph 3 of Article 229 of the Financial Investment Services and Capital Markets Act.

(2)"objects of investment prescribed by Presidential Decree" in Article 26-2 (1) 2 of the Act means assets related to infrastructure and real estate (hereafter in this Article referred to as"specific infrastructure") that are recognized as related to the industry of item 2, among the assets of item 1, as prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as"investment objects"). <Amended on Mar. 25, 2022>

1. Specific infrastructure-related assets

(a) Stocks, equity shares, and bonds (including loan claims) under Article 43 (1) (1) and (2) of the Act on Public-Private Partnerships in Infrastructure;

(b) Assets acquired pursuant to Article 43 (1) 3 or 4 of the Act on Public-Private Partnerships in Infrastructure;

(c) Assets prescribed by Ordinance of the Ministry of Economy and Finance, such as real estate can be defined as infrastructure under subparagraph 1 of Article 2 of the Act on Public-Private Partnerships in Infrastructure;

2. Specific infrastructure-related industries:

(a) Information and communications industry defined in subparagraph 2 of Article 2 of the Information and Communications Technology Industry Promotion Act;

(b) (b) Green industry under the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis;

(3)"Proportion prescribed by Presidential Decree" in Article 26-2 (1) 2 of the Act means 50/100.

(4) The proportion prescribed in paragraph (3) shall be the annual average ratio of the value of the investment objects in total assets of a specific infrastructure fund under Article 26-2 (1) of the Act (hereafter in this Article referred to as"specific infrastructure fund"), which shall be calculated according to the following formula. In such cases, the period for determining the annual average ratio shall be the period of one year from the date of creation, establishment date, or business license (hereafter this paragraph referred to as"establishment date or the like").

Annual average ratio + A + B

A: Aggregate of daily investment ratio Investment ratio = Value of investment objects in assets/Total assets of the specific infrastructure fund

B: Total number of days during each year from the establishment date or the like

(5) Where a specific infrastructure fund invests an investment object in assets through another collective investment scheme, the value of the investment object in the formula of paragraph (4) shall be calculated according to following formula:

Value of investment assets in assets = A + B

A: Value of target investment assets held by the specific infrastructure fund

B: Value of equity securities or beneficiary certificates of another collective investment scheme held by the specific infrastructure fund × (Value of investment objects held by the other specific infrastructure fund/Total assets of the other collective investment scheme)

(6) When calculating the daily investment ratio under paragraphs (4) and (5), if the value of target investment assets is less than the principal of investment amounts, the value of the target investment assets shall be calculated according to the following formula:

Value of investment assets in assets = A + B

A: Principal of investment amounts in target investment assets held by the specific infrastructure fund

B: Principal of investment amounts in equity securities or beneficiary certificates of another collective investment scheme held by the specific infrastructure fund × (Value of investment objects held by the other specific infrastructure fund/Total assets of the other collective investment scheme)

(7) Notwithstanding the formula of paragraph (4), the period falling under any of the following subparagraphs and the daily investment rate for that period shall be excluded from the calculation of the annual average rate:

1. Three months from the establishment date of the specific infrastructure fund;

2. Three months prior to the termination or dissolution of the specific infrastructure fund;

3. Other period prescribed by Ordinance of the Ministry of Economy and Finance, such as a period of delay in an infrastructure project.

(8) The specific requirements for a dedicated account under Article 26-2 (2) of the Act (hereafter in this Article referred to as"dedicated account") are as follows:

1. The name of the account shall be a dedicated account of a specific infrastructure fund;

2. The contract period shall be at least one year.

(9) Dividend income and financial investment income paid to a dedicated account and reinvested amounts shall not be included in the maximum limit for deposit under Article 26-2 (2) 2 of the Act. <Amended on Feb. 15, 2022>

(10) If a resident holding a dedicated account (hereinafter referred to as"account holder") withdraws any amount from the dedicated account, it shall be treated as a withdrawal from the principal of investment amounts.

(11) Even where a contract is terminated during the contract period for any of the following reasons, the special taxation under Article 26-2 (1) of the Act shall apply to dividend income and financial investment income received at the time of termination. <Amended on Feb. 15, 2022>

1. Where the account holder is dead or emigrates to a foreign country;

2. Where the event referred to in any subparagraph of Article 81 (6) occurs to the account holder within six months prior to the date of termination;

(12) A resident who intends to terminate the contract for any of the reasons listed in paragraph (11) shall submit a report on the special reason for termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the financial company that manages the dedicated account (hereafter in this Article referred to as"financial company or the like").

(13) The Ministry of Economy and Finance may establish a committee to review specific infrastructure projects.

(14) A person who wishes to be granted special treatment under Article 26-2 (3) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

(15) The management of dedicated accounts, the composition and operation of the committee under paragraph (13), and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on Feb. 17, 2021]

Article 24-2(Special Taxation for Investors in Collective Investment Schemes Specializing in Investment and Financing) #

(1) The specific requirements for a dedicated account under Article 27 (1) 1 of the Act (hereafter in this Article referred to as"dedicated account") are as follows:

1. The name of the dedicated account shall be a dedicate account for a collective investment scheme for investment and financing under the provisions, with the exception of the subparagraphs, of Article 27 (1) of the Act;

2. The contract period shall be at least one year.

3. The account shall be only for investments in collective investment securities under Article 9 (21) of the Financial Investment Services and Capital Markets Act (hereinafter referred to as"collective investment securities") of collective investment schemes for investment and financing;

4. The account shall be subject to restriction on the transfer of collective investment securities of collective investment schemes held prior to opening the dedicated account.

(2) Dividend income and financial investment income paid to a dedicated account and reinvested amounts shall not be included in the maximum limit on deposit under Article 27 (1) 3 of the Act. <Amended on Feb. 15, 2022>

(3) If an account holder withdraws any amount from the dedicated account, it shall be treated as a withdrawal from the principal of investment amounts.

(4) Article 24 (11) and (12) shall apply mutatis mutandis to termination of a dedicated account during the contract period.

(5) Deleted. <Feb. 15, 2022>

(6) A person who wishes to be granted special treatment under Article 27 (2) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

(7) Except as otherwise expressly prescribed in paragraphs (1) through (6), matters necessary for the management of dedicated accounts, etc. shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on Feb. 17, 2021]

Article 25(Special Taxation for Including Depreciation Cost of Service Businesses in Deductible Expenses) #

(1)"Service businesses prescribed by Presidential Decree" in Article 28 (1) of the Act, with the exception of its subparagraphs, means the service businesses specified in Article 23 (4).

(2)"Fixed assets prescribed by Presidential Decree" in Article 28 (1) of the Act, with the exception of its subparagraphs, means the assets specified in Article 28 (6) of the Enforcement Decree of the Corporate Tax Act and the subparagraphs of Article 63 (5) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as"assets invested in plant and equipment").

(3)"Amount calculated by the formula prescribed by Presidential Decree" in Article 28 (1) of the Act, with the exception of its subparagraphs, means an amount (hereafter in this Article referred to as"allowable limit for depreciation") calculated by the method described in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article referred to as"depreciation method") based on the reported service life under paragraph (4), notwithstanding the main clause of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act and Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act. In such cases, the depreciation method shall be based on the method reported by the relevant national in accordance with Article 26 (3) of the Enforcement Decree of the Corporate Tax Act or Article 64 (2) of the Enforcement Decree of the Income Tax Act; and Article 26 (2) and (4) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (3) and (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the deprecation methods and calculating a specific allowable limit for depreciation.

(4) The service life applicable to calculating the allowable limit for depreciation shall be the number of useful years (hereafter in this Article, referred to as"reported service life") that the relevant national chooses within the range (a fraction of less than one year shall be deemed nil) determined by adding or subtracting 40/100 of the number of the standard service life specified in Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as"standard service life") to or from the standard service life and reports to the head of the tax office having jurisdiction over the place of tax payment. If the business year of a corporation is less than one year in such cases, Article 28 (2) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the calculation of the service life.

(5) A national shall continue to apply the reported service life which has been applied to each type of asset invested in plant and equipment and each type of business under paragraph (4), to subsequent taxable years.

(6) Article 23 (2) of the Corporate Tax Act shall not apply to the assets invested in plant and equipment eligible under Article 28 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply only where the merging corporation, the corporation newly established as a consequence of a split-off, or the other corporation subject to a merger by division, engages in any of the businesses referred to in paragraph (1), and uses such assets for the relevant business, if the corporation acquires such assets through a qualified merger or a qualified split-off. <Amended on Feb. 13, 2018>

(7) Where a national changes the depreciation method pursuant to Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, the national shall calculate the allowable limit for depreciation for assets invested in plant and equipment by applying the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the method for calculating the allowable limit for depreciation.

(8) Articles 30 through 32 of the Enforcement Decree of the Corporate Tax Act and Articles 62 (5) through (8), 67, 68, and 73 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis for the purposes of Article 28 (1) of the Act.

(9) A person who intends to be accorded special taxation under Article 28 (1) of the Act shall separate assets invested in plant and equipment from other assets; prepare and keep statements of adjustment of depreciation cost in the form prescribed by Ordinance of the Ministry of Economy and Finance; submit a sum table of statements of adjustment of depreciation cost and statements of adjustment of depreciation cost in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return; and file an application for special taxation for service life in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing a tax return for the taxable year in which the person acquires such assets invested in plant and equipment (including filing through the national tax information communications network under subparagraph 19 of Article 2 of the Framework Act on National Taxes (hereinafter referred to as the "Home Tax Service Network")).

(10) Except as provided in paragraphs (1) through (9), matters necessary for calculating the depreciation cost of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 3, 2015]

Article 25-2(Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment of Small or Medium and Middle-Standing Enterprises in Deductible Expenses) #

(1) Deleted. <Feb. 17, 2021>

(2)"Fixed assets prescribed by Presidential Decree" in Article 28-2 (1) of the Act means the assets specified under Article 28 (6) of the Enforcement Decree of the Corporate Tax Act or Article 63 (5) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as"assets invested in plant and equipment").

(3)"Amount calculated, as prescribed by Presidential Decree" in Article 28-2 (1) of the Act means an amount (hereafter in this Article referred to as"allowable limit for depreciation") calculated by the method prescribed in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article referred to as"depreciation method") by applying the reported service life under paragraph (4), notwithstanding the main clause of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act. In such cases, Article 26 (2) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (2) through (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the depreciation method and calculating a specific allowable limit for depreciation.

(4) The service life applicable to calculating the allowable limit for depreciation shall be the service life that a small or medium enterprise or a middle-standing enterprise chooses within a range (a period of less than one year shall be deemed nil) determined by adding or subtracting 50/100 of the standard service life to/from the standard service life under Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as"standard service life") and reports to the head of the tax office having jurisdiction over the place of tax payment. If the business year of a corporation is less than one year in such cases, the service life shall be calculated by applying mutatis mutandisArticle 28 (2) of the Enforcement Decree of the Corporate Tax Act.

(5) The service life that a small or medium enterprise or a middle-standing enterprise applies to assets invested in plant and equipment for each asset and for each type of business in accordance with paragraph (4), shall be continuously applied to subsequent taxable years.

(6) Article 23 (2) of the Corporate Tax Act shall not apply to assets invested in plant and equipment subject to Article 28-2 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply to such assets invested in plant and equipment, if they are acquired through a qualified merger or a qualified division. <Amended on Feb. 13, 2018>

(7) Where a small or medium enterprise or a middle-standing enterprise changes the depreciation method in accordance with Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, it shall calculate the allowable limit for depreciation for assets invested in plant and equipment by the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for calculating the allowable limit for depreciation.

(9) A person who wishes to be eligible under Article 28-2 (1) of the Act shall prepare and keep a statement of adjustment of depreciation costs separately for assets invested in plant and equipment from other assets in the form prescribed by Ordinance of the Ministry of Economy and Finance; file (including filing through the Home Tax Service Network; hereafter in this paragraph, the same shall apply) an aggregate table of statements of adjustment of depreciation costs in the form prescribed by Ordinance of the Ministry of Economy and Finance and statements of adjustment of depreciation costs in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return; and file an application for special taxation on the service life in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing the tax return for the taxable year in which the person acquires the relevant assets invested in plant and equipment.

(10) Except as provided in paragraphs (1) through (9), matters necessary for calculating the depreciation costs of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 17, 2021>

[This Article Newly Inserted on Feb. 7, 2017]

Article 25-3(Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment) #

(1) Deleted. <Feb. 17, 2021>

(2)"Fixed business assets" in Article 28-3 (1) 1 of the Act means any of the following assets:

1. Motor vehicles and transportation equipment: Provided, That they shall be limited to those used for transportation business or lease business for the purpose of lease;

2. Ships and aircraft: Provided, That they shall be limited to those used for transport business or for lease business for the purpose of lease;

3. Tools, instruments and furnishings;

4. Machinery and equipment.

(3)"Investment assets for innovative growth prescribed by Presidential Decree" in Article 28-3 (1) 2 of the Act means any of the following facilities: <Amended on Jul. 30, 2019; Feb. 11, 2020; Feb. 17, 2021>

1. Facilities for commercialization of new growth engines;

2. Facilities for research and testing and those for vocational training facilities, which fall under any of the following:

(a) Facilities designated by Ordinance of the Ministry of Economy and Finance as research and testing facilities for research and development;

(b) Facilities designated by Ordinance of the Ministry of Economy and Finance as facilities for vocational training for human resources development;

3. An energy-saving facility that falls under any of the following:

(a) Energy saving facilities specified by Ordinance of the Ministry of Economy and Finance, such as energy saving facilities, etc. under the Energy Use Rationalization Act (including those installed by companies specialized in energy saving under that Act under the condition of acquiring ownership after repaying the consideration in installments);

(b) A gray water system defined in subparagraph 4 of Article 2 of the Act on Promotion and Support of Water Reuse, water-saving fixtures under subparagraph 30 of Article 3 of the Water Supply and Waterworks Installation Act, and water-saving devices under subparagraph 31 of that Article;

(c) Facilities designated by Ordinance of the Ministry of Economy and Finance as those for manufacturing parts, intermediate materials, or finished products for facilities that produce new energy defined in subparagraph 1 of Article 2 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy and renewable energy defined in subparagraph 2 of that Article;

4. Productivity-enhancing facilities that fall under any of the following:

(a) Facilities specified by Ordinance of the Ministry of Economy and Finance as those in which investments are made to improve processes or automate and informatize facilities (including intelligent factory facilities for the management or improvement of production and manufacturing process of products based on data);

(b) Facilities designated by Ordinance of the Ministry of Economy and Finance as those established by using or applying advanced technology;

(c) Computers and their peripherals, software, communication facilities, and other tangible and intangible facilities used to electronically manage the supply chain, including material procurement, production planning, and inventory management, with a depreciation period of two years or more.

(4) Notwithstanding the main clause of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act and Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act, the amount calculated according to the method under Article 26 (1) of the Enforcement Decree of the Corporate Tax Act and Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article referred to as the"depreciation method") shall be the amount (hereafter in this Article referred to as the"allowable limit for depreciation") calculated by applying the service life declared pursuant to paragraph (5). In such cases, Article 26 (2) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (2) through (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the depreciation method and calculating a specific allowable limit for depreciation.

(5) The service life applicable to calculating the allowable limit for depreciation shall be the number of useful years (hereafter in this Article, referred to as"reported service life") that the relevant national chooses within the range (a fraction of less than one year shall be deemed nil) determined by adding or subtracting 50/100 (or 75/100 in cases of assets under each subparagraph of paragraph (2), as acquired by a small or medium enterprise) of the number of the standard service life specified in Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as"standard service life") to or from the standard service life and reports to the head of the tax office having jurisdiction over the place of tax payment. If the period of business of a corporation is less than one year in such cases, the service life shall be calculated by applying mutatis mutandisArticle 28 (2) of the Enforcement Decree of the Corporate Tax Act. <Amended on Jul. 30, 2019; Feb. 11, 2020; Feb. 17, 2021>

(6) A national shall continue to apply the reported service life which has been applied to each type of asset invested in plant and equipment and each type of business under paragraph (5), to subsequent taxable years.

(7) Article 23 (2) of the Corporate Tax Act shall not apply to the assets invested in plant and equipment subject to Article 28-3 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply to such assets invested in plant and equipment, if they are acquired through a qualified merger or a qualified division.

(8) Where a national changes the depreciation method pursuant to Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, the national shall calculate the allowable limit for depreciation for assets invested in plant and equipment by applying the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the method for calculating the allowable limit for depreciation.

(9) Articles 30 through 32 of the Enforcement Decree of the Corporate Tax Act and Articles 62 (5) through (8), 67, 68, and 73 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis for the purposes of Article 28-3 (1) of the Act.

(10) A person who wishes to be eligible under Article 28-3 (1) of the Act shall separate assets invested in plant and equipment from other assets; prepare and keep depreciation adjustment statements in the form prescribed by Ordinance of the Ministry of Economy and Finance; submit a summary sheet of deprecation adjustment statements and deprecation adjustment statements in the forms prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment (including filing through the Home Tax Service Network; hereafter in this paragraph, the same shall apply), along with a tax return; and file an application for special taxation for service life in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing a tax return for the taxable year in which the person acquires such assets invested in plant and equipment.

(11) Except as provided in paragraphs (2) through (10), matters necessary for calculating the depreciation cost of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 17, 2021>

[This Article Newly Inserted on Feb. 12, 2019]

Article 25-4(Special Taxation for Including Depreciation Cost of Energy Saving Facilities in Deductible Expenses) #

(1)"Energy saving facility prescribed by Presidential Decree" in Article 28-4 (1) of the Act means a facility under any item of Article 25-3 (3) 3 (hereafter in this Article referred to as"energy saving facility").

(2)"Amount calculated as prescribed by Presidential Decree" in Article 28-4 (1) of the Act means an amount (hereafter in this Article referred to as"allowable limit for depreciation") calculated by the method prescribed in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article referred to as"depreciation method") by applying the reported service life under paragraph (3), notwithstanding the main clause of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act. In such cases, Article 26 (2) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (2) through (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the depreciation method and calculating a specific allowable limit for depreciation.

(3) The service life applicable to calculating the allowable limit for depreciation shall be the number of useful years (hereafter in this Article, referred to as"reported service life") that the relevant national chooses within the range (a fraction of less than one year shall be deemed nil) determined by adding or subtracting 50/100 (or 75/100 in cases of energy saving facilities acquired by a small or medium enterprise) of the number of the standard service life specified in Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article referred to as"standard service life") to or from the standard service life and reports to the head of the tax office having jurisdiction over the place of tax payment. If the period of business of a corporation is less than one year in such cases, the service life shall be calculated by applying mutatis mutandisArticle 28 (2) of the Enforcement Decree of the Corporate Tax Act.

(4) A person who intends to report the service life pursuant to paragraph (3) shall submit an application for the special application of the service life prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the tax return for the taxable year in which the relevant energy-saving facility is acquired.

(5) A national shall continue to apply the reported service life which has been applied to each type of asset and each type of business for energy saving facilities under paragraph (3) to subsequent taxable years.

(6) Article 23 (2) of the Corporate Tax Act shall not apply to the energy saving facilities subject to Article 28-4 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply to such energy saving facilities, if they are acquired through a qualified merger or a qualified division.

(7) Where a national changes the depreciation method pursuant to Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, the national shall calculate the allowable limit for depreciation for energy saving facilities by applying the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the method for calculating the allowable limit for depreciation.

(9) A person that wishes to be eligible under Article 28-4 (1) of the Act shall separate energy saving facilities from other assets and prepare and keep a depreciation adjustment statement in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(10) A person who wishes to be eligible under Article 28-4 (1) of the Act shall submit a depreciation adjustment statement under paragraph (9) and a summary sheet of the depreciation adjustment statement in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment when filing a tax return.

(11) Except as provided in paragraphs (2) through (10), matters necessary for calculating the depreciation cost of energy saving facilities shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 28, 2023]

Article 26-3(Tax Credits for Enterprises Employing Career-Interrupted Women) #

(1)"Labor cost prescribed by Presidential Decree" in the provisions, with the exception of its subparagraphs, Article 29-3 (1) of the Act and the main clause of paragraph (2) of the same Article, with the exception of its subparagraphs, means the expenses paid as consideration for service provided, excluding the following labor costs: <Amended on Feb. 12, 2019>

1. The amount of retirement income under Article 22 of the Income Tax Act;

2. The allowances for severance benefits under Article 29 of the Income Tax Act and Article 33 of the Corporate Tax Act;

3. The amount of charge paid to a retirement pension account under subparagraph 2 of Article 40-2 of the Enforcement Decree of the Income Tax Act and the amount of charge paid to a retirement pension, etc. under Article 44-2 (2) of the Enforcement Decree of the Corporate Tax Act.

(2)"Classification prescribed by Presidential Decree" in Article 29-3 (1) 1 of the Act means divisions in the Korean Standard Industrial Classification. <Newly Inserted on Feb. 11, 2020>

(3) The cases where it is verified that an enterprise withheld income tax on earned income of a career-interrupted woman or a person returning from child care leave pursuant to Article 29-3 (1) 1 and (2) 1 of the Act shall be limited to the cases where it is verified that income tax on the earned income of the career-interrupted woman was withheld by the book for tax withholding for earned income under Article 196 (1) of the Enforcement Decree of the Income Tax Act. <Amended on Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020>

(4)"Marriage, pregnancy, childbirth, childcare, and education of children, as prescribed by Presidential" in Article 29-3 (1) 1 of the Act means any of the following cases: <Amended on Feb. 5, 2016; Feb. 11, 2020>

1. Where a woman gets married within one year from the date of resignation (limited to cases confirmed by a certificate on family relationship records);

2. Where a woman becomes pregnant or has an infertility surgery prescribed by Ordinance of the Ministry of Economy and Finance, within two years from the date of resignation (limited to cases where the fact the woman has had the infertility surgery is confirmed by a medical report or certificate issued by a medical institution);

3. Where a woman is pregnant as at the time of resignation (limited to cases where her pregnancy is confirmed by a medical report issued by a medical institution);

4. Where a woman has a child aged 8 years or less as at the time of resignation;

5. Where a woman has a child enrolled in a school defined in Article 2 of the Elementary and Secondary Education Act as at the time of resignation.

(5)"Related person of the largest stockholder or the largest investor, as prescribed by Presidential Decree" in Article 29-3 (1) 3 and (2) 3 of the Act means a person who is a relative defined under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes. <Amended on Feb. 12, 2019; Feb. 11, 2020>

(6) A person who intends to obtain a tax credit under Article 29-3 of the Act shall file an application for tax credit in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with a tax return. <Amended on 2020. 2. 11>

(7) Deleted. <Feb. 17, 2021>

(8) For the purposes of Article 29-3 (2) of the Act, Article 23 (10) through (13) shall apply mutatis mutandis to full-time employees and method for calculating the number of full-time employees. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020>

[This Article Newly Inserted on Feb. 3, 2015]

[Title Amended on Feb. 11, 2020]

Article 26-4(Tax Credits for Enterprises Increasing Earned Income) #

(1) Deleted. <Feb. 17, 2021>

(2)"Full-time employees prescribed by Presidential Decree" in Article 29-4 (1) 1 of the Act means workers who have signed an employment contract pursuant to the Labor Standards Act (excluding the following persons; hereafter in this Article, referred to as"full-time employees"): <Amended on Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Jun. 2, 2020; Feb. 28, 2023>

1. Executive officers specified under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

2. Workers whose total earned income referred to in Article 20 (1) 1 and 2 of the Income Tax Act (excluding non-taxable income) amounts to at least 70 million won;

3. The largest stockholder or the largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise, as prescribed by Ordinance of the Ministry of Economy and Finance, and a worker who is a relative of such stockholder or investor, as defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes;

4. Workers in whose cases it is not confirmed, by the book for tax withholding for wage and salary income defined under Article 196 of the Enforcement Decree of the Income Tax Act, that income tax on earned income has been withheld;

5. Workers whose employment contract is for less than one year (excluding workers whose employment contract exceeds one year in total as a consequence of consecutive renewal of the employment contract);

6. Part-time workers defined in Article 2 (1) 9 of the Labor Standards Act.

(3) For the purposes of Article 29-4 (1) through (6) of the Act, the number of full-time employees shall be calculated by the following formula. In such cases, a fraction of less than 1/100 shall be deemed nil: <Amended on Feb. 5, 2016; Feb. 7, 2017>

Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

(4) For the purposes of Article 29-4 (1) through (6) of the Act,"wages" means the aggregate of the incomes referred to in Article 20 (1) 1 and 2 of the Income Tax Act (excluding non-taxable income). <Amended on Feb. 5, 2016; Feb. 7, 2017; Feb. 28, 2023>

(5) For the purposes of Article 29-4 (1), (2), (5), and (6) of the Act, the average wages shall be calculated by the following formula. In such cases, a fraction of less than 1,000 won shall be deemed nil: <Amended on Feb. 7, 2017>

Total wages of full-time employees in the relevant taxable year ÷ Number of full-time employees in the relevant taxable year calculated under paragraph (3)

(6) For the purposes of Article 29-4 (1), (2), and (5) of the Act, the increase rate of average wages shall be calculated by the following formula, but a fraction of less than 1/10,000 shall be deemed nil: <Amended on Feb. 7, 2017>

(Average wages in the relevant taxable year ? Average wages in the immediately preceding taxable year) ÷ Average wages in the immediately preceding taxable year

(7) For the purposes of Article 29-4 (1) and (2) of the Act, the mean increase rate of average wages for the immediately preceding three taxable years (hereafter in this Article, referred to as"mean increase rate of average wages for the immediately preceding three years"), shall be calculated by the following formula, but a fraction of less than 1/10000 shall be deemed nil. If the increase rate of average wages for the immediately preceding two taxable years or for the immediately preceding three taxable years is negative, the rate shall be deemed zero for the purposes of calculation:

(Increase rate of average wages in the immediately preceding taxable year + Increase rate of average wages in the immediately preceding two taxable years + Increase rate of average wages in the immediately preceding three taxable years) ÷ 3

(8) Notwithstanding paragraphs (5) through (7), if the increase rate of average wages for the immediately preceding taxable year is negative or less than 30/100 of the mean increase rate of average wages for the immediately preceding three years (only where the average is positive), the average wages, the increase rate of average wages, the mean increase rate of average wages for the immediately preceding three years, and an increase of wages in excess of the average wages for the immediately preceding three years under Article 29-4 (2) of the Act shall be calculated by the formula prescribed by Ordinance of the Ministry of Economy and Finance, respectively.

(9) If there is a full-time employee whose working period in the relevant taxable year is less than one year for the purposes of calculating the amount of earned income referred to in paragraph (2) 2, the amount calculated by dividing the amount of his/her earned income by the number of months for which he/she has worked in the relevant taxable year, and then multiplying the amount by 12, shall be deemed the amount of earned income of the full-time employee. <Amended on Feb. 29, 2024>

(10) If a worker resigns or falls under any subparagraph of paragraph (2) during the five-year period before the end of the taxable year for which his/her employer wishes to be granted a tax credit under Article 29-4 (1) and (5) of the Act, the worker must be disregarded for the purposes of calculating the number of full-time employees under paragraph (3) and the average wages under paragraph (5); and if a worker was employed during the five-year period before the end of the taxable year for which his/her employer wishes to be granted a tax credit, the worker must be disregarded for the purposes of calculating the increase rate of average wages for the taxable year in which the worker was newly employed, as referred to in paragraph (6). <Amended on Feb. 5, 2016; Feb. 7, 2017>

(11) Where full-time employees who have worked in a previous business division, are transferred to the merging corporation, the corporation newly established as a consequence of a merger, the invested corporation, etc. (hereafter in this Article, referred to as"merging corporation, etc.") due to a merger, a split-off, an investment in kind, a transfer of business, or any similar event, the full-time employees shall be deemed to have worked for the merging corporation, etc.

(12) Article 29-4 (1) and (5) of the Act shall not apply where impracticable to calculate the mean increase rate of average wages for the immediately preceding three years under paragraph (7) or (8) due to such event as a startup or suspension of business. <Amended on Feb. 5, 2016; Feb. 7, 2017>

(13)"Employees whose status has been changed to regular employees and who meet the requirements prescribed by Presidential Decree" in Article 29-4 (3) of the Act, with the exception of its subparagraphs, means workers who have entered into an employment contract under the Labor Standards Act and meet all the following requirements (hereafter in this Article, referred to as"employees changed to regular employees"): <Newly Inserted on Feb. 5, 2016>

1. The employees have continuously provided service from the commencement date of the immediately preceding taxable year to the end of the relevant taxable year; and it is confirmed, by the book for tax withholding for wage and salary income defined under Article 196 of the Enforcement Decree of the Income Tax Act, that income tax on their earned income for each month has been withheld;

2. The status of irregular employees (referring to fixed-term workers and part-time workers defined under the Act on the Protection of Fixed-Term and Part-Time Employees; hereafter in this subparagraph, the same shall apply) has been changed to regular employees during the relevant taxable year;

3. The employees shall not fall under paragraph (2) 1 through 3 during the relevant taxable year.

(14) For the purposes of Article 29-4 (3) of the Act, the aggregate of increased wages of employees changed to regular employees shall be calculated by subtracting the total wages of employees changed to regular employees in the immediately preceding taxable year from the total wages of such workers in the relevant taxable year. In such cases, if the immediately preceding taxable year or the relevant taxable year is less than one year in length, such aggregate shall be calculated by dividing the aggregate of wages by the number of months in the taxable year (if the number of days less than a month shall be deemed one month) and then multiplying the amount by 12. <Newly Inserted on Feb. 5, 2016>

(15) The amount of tax payable under Article 29-4 (4) of the Act shall be calculated by the following formula: <Amended on Feb. 17, 2021>

Tax amount deducted under Article 29-4 (3) of the Act × Number of employees whose employment relationship has been terminated, among employees changed to regular employees in the taxable year for which the tax credit is granted/Number of employees changed to regular employees in the taxable year for which the tax credit is granted

(16)"Rate prescribed by Presidential Decree, based upon the increase rate of wages of all small or medium enterprises" in Article 29-4 (5) 1 and (6) of the Act means the rate prescribed by Ordinance of the Ministry of Economy and Finance, based upon the increase rate of average wages of all small or medium enterprises for the immediately preceding three years, respectively. <Newly Inserted on Feb. 7, 2017>

(17) A person who wishes to be granted a tax credit under Article 29-4 (1), (3), or (5) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 5, 2016; Feb. 7, 2017>

[This Article Newly Inserted on Feb. 3, 2015]

Article 26-5(Tax Credits for Enterprises Increasing Jobs for Youths) #

(1)"Types of business prescribed by Presidential Decree, such as consumer service business" in Article 29-5 (1) of the Act means any consumer service business provided for in Article 29 (3).

(2)"Regular employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means national employees hired under an employment contract entered into under the Labor Standards Act (hereafter in this Article, referred to as"all regular employees"), except the following:

1. Fixed-term workers and part-time workers defined under the Act on the Protection of Fixed-Term and Part-Time Employees;

2. Temporary agency workers defined under the Act on the Protection of Temporary Agency Workers;

3. Workers specified in Article 23 (10) 3 through 6;

4. Youth defined in subparagraph 1 of Article 2 of the Youth Protection Act, who work in any business establishment specified under subparagraph 5 of Article 2 of that Act.

(3)"Regular youth employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means regular employees provided for in paragraph (2), between the ages of 15 and 29 (hereafter in this Article, referred to as"regular youth employees"): Provided, That, if the age of an employee who has performed any military service specified under Article 27 (1) 1, does not exceed 29 years, when the period of such military service (which shall not exceed six years) is subtracted from his current age, the employee shall be deemed a regular youth employee.

(4)"Full-time employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means full-time employees defined in Article 23 (10) (hereafter in this Article referred to as"full-time employees").

(5) Deleted. <Feb. 17, 2021>

(6) The amount of income tax or corporate tax payable under Article 29-5 (2) of the Act shall be the amount of subparagraph 1 (which shall not exceed the aggregate of tax credits granted under Article 29-5 (1) of the Act for up to two years immediately preceding the relevant taxable year) minus the amount of subparagraph 2 (if the amount calculated is a negative figure, it shall be deemed zero), and shall be paid as income tax or corporate tax, at the time of filing the tax return for the relevant taxable year: <Amended on May 8, 2017>

1. The amount calculated by multiplying the greatest number, of the decreased number of regular youth employees, the decreased number of all regular employees, and the decreased number of full-time employees between the taxable year for which a tax credit was granted under Article 29-5 (1) of the Act (it shall be the most recent taxable year for which a tax credit was granted, if the person was granted tax credits for at least two consecutive taxable years; hereafter in this Article, referred to as"tax credit-granted taxable year"), and the relevant taxable year by three million won (or ten million won in cases of a small or medium enterprise; or seven million won in cases of a middle-standing enterprise in the tax credit-granted taxable year);

2. The amount calculated by multiplying the greatest number, of the decreased number of regular youth employees, the decreased number of all regular employees, and the decreased number of full-time employees between the tax credit-granted taxable year and the immediately preceding taxable year by three million won (or ten million won in cases of a small or medium enterprise; or seven million won in cases of a middle-standing enterprise in the tax credit-granted taxable year) (the amount calculated shall be deemed zero, if the tax credit-granted taxable year is the immediately preceding taxable year).

(7) For the purposes of paragraph (6), a person aged 29 years or under at the end of the tax credit-granted taxable year (including persons specified in the proviso to paragraph (3)), shall be deemed a person aged 29 years or under, even for the following taxable year. <Amended on 2020. 2. 11>

(8) For the purposes of Article 29-5 (1) and (2) of the Act, the number of regular youth employees, the number of all regular employees, or the number of full-time employees, shall be calculated by the following applicable formulas (a fraction of less than 1/100 shall be deemed nil):

1. The number of regular youth employees: Aggregate of the number of regular youth employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

2. The number of all regular employees: Aggregate of the number of all regular employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

3. The number of full-time employees: Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

(9) The latter part of Article 23 (11), with the exception of its subparagraphs, and Article 23 (11) 2 shall apply mutatis mutandis to calculating the number of full-time employees under paragraph (8) 3.

(10) For the purposes of paragraph (8), Article 23 (13) shall apply mutatis mutandis to any national who commences a business during the relevant taxable year. In such cases, "the number of full-time employees" shall be construed as "the number of regular youth employees, the number of all regular employees, or the number of full-time employees," and "full-time employees" as "regular youth employees, all regular employees, or full-time employees," respectively.

(11) A person who wishes to be granted a tax credit under Article 29-5 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.

[This Article Newly Inserted on, Feb. 5, 2016]

Article 26-6(Income Tax Reductions or Exemptions on Payments Received from Performance Compensation Fund for Youth Employees and Core Personnel of Small and Medium Enterprises) #

(1)"Persons prescribed by Presidential Decree, such as the largest stockholder, of the relevant enterprise" in the provisions, with the exception of the subparagraphs" of Article 29-6 (1) of the Act means persons falling under any of the following subparagraphs: <Amended on Feb. 13, 2018; Feb. 28, 2023>

1. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative if the relevant enterprise is a sole proprietor), and his/her spouse;

(2)"Youth employees prescribed by Presidential Decree" in the provisions, with the exception of the items" of Article 29-6 (1) 1 of the Act means persons falling under Article 26-8 (3) 1. <Newly Inserted on Feb. 28, 2023>

(3) A tax amount reduced or exempted under Article 29-6 (1) of the Act shall be calculated by the following formula: <Amended on Feb. 13, 2018; Feb. 28, 2023>

Tax amount calculated for global income under Article 137 (1) 2 of the Income Tax Act × Amount of earned income under Article 20 (2) of the Income Tax Act/Amount of global income under Article 14 (2) of the Income Tax Act × Contributions paid under Article 29-6 (1) of the Act/Gross salary and wage of the relevant employee × Reduction rate / Reduction rate: The rate under Article 29-6 (1) 1 or 2

(4) An employee who intends to apply for a tax reduction under Article 29-6 (1) of the Act shall file an application for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant withholding agent by no later than the end of the month immediately following the month in which he/she receives a mutual aid payment under Article 29-6 (1) of the Act. <Amended on Feb. 13, 2018>

(5) If an employee is granted a tax reduction under Article 29-6 (1) of the Act, the relevant withholding agent shall submit a statement of the person eligible for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, 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 immediately following the month in which the application for tax reduction was filed. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on, Feb. 5, 2016]

[Title Amended on Feb. 11, 2020]

Article 26-7(Tax Credits for Enterprises Increasing Jobs) #

(1)"Types of business prescribed by Presidential Decree, such as a consumer service business" in Article 29-7 (1) of the Act, with the exception of its subparagraphs, means the types of business under Article 29 (3).

(2)"Full-time employees prescribed by Presidential Decree" in Article 29-7 (1) of the Act, with the exception of its subparagraphs, means the full-time employees under Article 23 (10) (hereafter in this Article, referred to as"full-time employees").

(3)"Full-time employees prescribed by Presidential Decree, such as regular youth employees, employees with disabilities, and employees aged 60 or older" in Article 29-7 (1) 1 of the Act means any of the following persons among full-time employees (hereafter in this Article referred to as"full-time youth employees, etc.). <Amended on Feb. 12, 2019; Feb. 17, 2021; Apr. 6, 2021; Feb. 15, 2022>

1. Persons aged between 15 and 29 years, excluding any of the following persons: Provided, That if the relevant employees have completed military service that falls under any item of Article 27 (1) 1, the employees whose age calculated by deducting the period of military service from the present age does not exceed 29 shall be included therein:

(a) Fixed-term employees and part-time employees defined in the Act on the Protection of Fixed-Term and Part-Time Employees;

(b) Temporary agency workers defined in the Act on the Protection of Temporary Agency Workers;

(c) Youth defined in subparagraph 1 of Article 2 of the Youth Protection Act, who work in any business establishment specified in items of subparagraph 5 of Article 2 of that Act;

2. Persons with disabilities eligible under the Act on Welfare of Persons with Disabilities; wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State; persons wounded during their participation in the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement and Establishment of Related Organizations; and persons having received disability ratings as patients suffering from potential aftereffects of defoliants defined in subparagraph 3 of Article 2 of the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations;

3. Persons aged 60 or older as at the date of conclusion of an employment contract.

(4) Deleted. <Feb. 17, 2021>

(5) The amount of income tax or corporate tax payable under Article 29-7 (2) of the Act shall be calculated as follows and shall be paid as income tax or corporate tax at the time of filing a tax return for the relevant taxable year: <Amended on Feb. 12, 2019; Feb. 11, 2020>

1. Where the number of full-time employees or full-time youth employees, etc. decreases from the number of full-time employees in the taxable year in which the tax was first deducted under Article 29-7 (1) of the Act during the period beginning at the end of the taxable year in which the tax was first deducted and ending at the end of the taxable year in which the first anniversary of the end of the taxable year in which the tax was first deducted falls: The amount calculated according to the following subparagraphs (limited to the tax amount deducted under Article 29-7 (1) of the Act in the taxable year within one year immediately preceding the relevant taxable year):

(a) Where the number of full-time employees decreases: An amount calculated as follows:

(i) Where the reduced number of full-time youth employees, etc. is not less than the reduced number of full-time employees:

[Increased number of full-time youth employees, as compared to the number during the taxable year in which the tax was first deducted (limited to the increased number of full-time youth employees, etc., during the taxable year in which the tax was first deducted) ? Reduced number of full-time employees] × (Amount under Article 29-7 (1) 1 of the Act ? Amount under subparagraph 2 of that paragraph) + (Reduced number of full-time employees × Amount under Article 29-7 (1) 1 of the Act)

(ii) In other cases: An amount calculated by the following formula:

[Reduced number of full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the reduced number of full-time employees) × (Amount under Article 29-7 (1) 1 of the Act)] + [Reduced number of full-time employees other than full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the reduced number of full-time employees) × Amount under Article 29-7 (1) 2 of the Act]

(b) Where the number of full-time employees does not decrease but the number of full-time youth employees, etc., decreases:

An amount calculated according to the following formula: Reduced number of full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the increased number of full-time youth employees, etc. during the taxable year in which the tax was first deducted) × (Amount under Article 29-7 (1) 1 of the Act) - Amount under Article 29-7 (1) 2 of the Act)

2. Where the number of full-time employees or full-time youth employees, etc., decreases from the number of full-time employees in the taxable year in which the tax was first deducted under Article 29-7 (1) of the Act during the period beginning on the day following the period under subparagraph 1 and ending at the end of the taxable year in which the second anniversary of the end of the taxable year in which the tax was first deducted: An amount calculated as follows (excluding the amount calculated under subparagraph 1, if any, and limited to the total amount of the tax deducted under Article 29-7 (1) of the Act in the taxable years within two years immediately preceding the relevant taxable year):

(a) Where the number of full-time employees decreases: An amount calculated as follows:

(i) Where the reduced number of full-time youth employees, etc. is not less than the reduced number of full-time employees:

An amount calculated according to the following formula: [Increased number of full-time youth employees, as compared to the number during the taxable year in which the tax was first deducted (limited to the increased number of full-time youth employees, etc., during the taxable year in which the tax was first deducted) ? Reduced number of full-time employees] × (Amount under Article 29-7 (1) 1 of the Act ? Amount under subparagraph 2 of that paragraph) + (Reduced number of full-time employees × Amount under Article 29-7 (1) 1 of the Act)

(ii) In other cases: The aggregate of tax amounts deducted in the taxable years within two immediately preceding years for the decrease in the number of full-time youth employees, etc. and full-time employees other than full-time youth employees, etc. (limited to the decrease in the number of full-time employees), as compared to the number in the taxable year in which the deduction was first made;

(b) Where the number of full-time employees does not decrease but the number of full-time youth employees, etc., decreases:

(6) For the purposes of paragraph (5), persons classified as full-time youth employees, etc. under paragraph (3) 1 for the taxable year in which the tax was first deducted shall be deemed full-time youth employees, etc. for subsequent taxable years thereafter in counting the number of full-time youth employees, etc. <Amended on Feb. 11. 2020>

(7) For the purposes of Article 29-7 (1) and (2) of the Act, the number of full-time employees and the number of full-time youth employees, etc., shall be calculated according to the following formula (a fraction of less than 1/100 shall be deemed nil): <Amended on Feb. 12, 2019>

1. The number of full-time employees:

Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

2. The number of full-time youth employees, etc.:

Aggregate of the number of full-time youth employees, etc. as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

(8) The latter part of Article 23 (11), with the exception of its subparagraphs, and Article 23 (11) 2 shall apply mutatis mutandis to calculating the number of full-time employees under paragraph (7).

(9) For the purposes of paragraph (7), Article 23 (13) shall apply mutatis mutandis to a national who commences a business, etc. in the relevant taxable year.

(10) A person who wishes to be granted a tax credit under Article 29-7 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 12, 2019>

[This Article Newly Inserted on Feb. 13, 2018]

Article 26-8(Integrated Tax Credit for Employment) #

(1)"Types of business prescribed by Presidential Decree, such as a consumer service business" in the provisions, with the exception of the subparagraphs, of Article 29-8 (1) of the Act means the consumer service business under Article 29 (3).

(2)"Full-time employees prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 29-8 (1) of the Act means the full-time employees under Article 23 (10) (hereafter in this Article referred to as"full-time employees").

(3)"Full-time employees prescribed by Presidential Decree, such as regular youth employees, employees with disabilities, and employees aged 60 or older" in Article 29-8 (1) 1 of the Act means any of the following persons among full-time employees (hereafter in this Article referred to as"full-time youth employees, etc.):

1. Persons aged between 15 and 34 years (referring to the age calculated by deducting the period of military service of not more than six years from the present age if the relevant employees have completed military service under any item of Article 27 (1) 1, excluding any of the following persons:

(a) Fixed-term employees and part-time employees defined in the Act on the Protection of Fixed-Term and Part-Time Employees;

(b) Temporary agency workers under the Act on the Protection of Temporary Agency Workers;

(c) Youth defined in the Youth Protection Act and working in any place designated pursuant to that Act as harmful to youth;

2. Persons with disabilities eligible under the Act on Welfare of Persons with Disabilities; wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State; persons wounded during their participation under subparagraph 2 of Article 2 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement and Establishment of Related Organizations; and persons having received disability ratings as patients suffering from potential aftereffects of defoliants defined in the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations;

3. Persons aged 60 or older as at the date of conclusion of an employment contract;

4. Carrier-interrupted women under Article 29-3 (1) of the Act.

(4) The amount of income tax or corporate tax payable under the latter part of 29-8 (2) of the Act shall be calculated as follows and shall be paid as income tax or corporate tax at the time of filing a tax return for the relevant taxable year.

1. Where the number of all full-time employees or the number of full-time youth employees, etc. decreases, as compared to the number in the taxable year in which the deduction was first made under Article 29-8 (1) of the Act during the period beginning at the end of the taxable year in which the deduction was first made and ending at the end of the taxable year in which the first anniversary of the end of the taxable year in which the deduction was first made falls: An amount calculated as follows (limited to the amount of tax deducted under Article 29-8 (1) of the Act for the taxable year within one year immediately preceding the relevant taxable year);

(a) Where the number of all full-time employee decreases: An amount calculated as follows:

(i) Where the reduced number of full-time youth employees, etc. is not less than the reduced number of all full-time employees: An amount calculated according to the following formula:

[Reduced number of full-time youth employees, as compared to the number during the taxable year in which the tax was first deducted (limited to the increased number of full-time youth employees, etc., during the taxable year in which the tax was first deducted) ? Reduced number of all full-time employees] × (Amount under Article 29-8 (1) 1 of the Act ? Amount under subparagraph 2 of that paragraph) × Number of deductions for taxable years within immediately preceding two years +(Reduced number of all full-time employees × Amount under Article 29-8 (1) 1 of the Act × Number of deductions for taxable years within immediately preceding two years)

(ii) In other cases: An amount calculated by the following formula:

[Reduced number of full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the reduced number of full-time employees) × (Amount under Article 29-8 (1) 1 of the Act)] + [Reduced number of full-time employees other than full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the reduced number of full-time employees) × Amount under Article 29-8 (1) 2 of the Act]

(b) Where the number of full-time employees does not decrease but the number of full-time youth employees, etc., decreases: An amount calculated according to the following formula:

Reduced number of full-time youth employees, etc., as compared to the number during the taxable year in which the tax was first deducted (limited to the increased number of full-time youth employees, etc. during the taxable year in which the tax was first deducted) × (Amount under Article 29-8 (1) 1 of the Act - Amount under Article 29-8 (1) 2 of the Act)

2. Where the number of full-time employees or full-time youth employees, etc., decreases from the number of full-time employees in the taxable year in which the tax was first deducted under Article 29-8 (1) of the Act during the period beginning on the day following the period under subparagraph 1 and ending at the end of the taxable year in which the second anniversary of the end of the taxable year in which the tax was first deducted: An amount calculated as follows (excluding the amount calculated under subparagraph 1, if any, and limited to the total amount of the tax deducted under Article 29-8 (1) of the Act in the taxable years within two years immediately preceding the relevant taxable year):

(a) Where the number of all full-time employee decreases: An amount calculated as follows:

(i) Where the reduced number of full-time youth employees, etc. is not less than the reduced number of all full-time employees: An amount calculated according to the following formula:

(ii) In other cases: The aggregate of tax amounts deducted in taxable years within two immediately preceding years for the decrease in the number of full-time youth employees, etc. and full-time employees other than full-time youth employees, etc. (limited to the decrease in the number of full-time employees), as compared to the number in the taxable year in which the deduction was first made;

(b) Where the number of full-time employees does not decrease but the number of full-time youth employees, etc., decreases: An amount calculated according to the following formula:

(5) For the purposes of paragraph (4), persons classified as full-time youth employees, etc. under paragraph (3) 1 for the taxable year in which the tax was first deducted shall be deemed full-time youth employees, etc. for subsequent taxable years thereafter in counting the number of full-time youth employees, etc.

(6) For the purposes of Article 29-8 (1) through (4) of the Act, the number of full-time employees and the number of full-time youth employees shall be calculated by the following applicable formulas (a fraction of less than 1/100 shall be deemed nil).

1. The number of full-time employees:

Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

2. The number of full-time youth employees, etc.:

Aggregate of the number of full-time youth employees, etc. as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year

(7) The latter part of Article 23 (11) shall apply to the calculation of the number of full-time workers and young full-time workers pursuant to paragraph (6), and when applying Article 29-8 (3) and (4) of the Act, if there is a full-time worker who replaces a full-time worker on maternity leave pursuant to Article 74 of the Labor Standards Act, the full-time worker who is on maternity leave shall be excluded from the number of full-time workers and young full-time workers pursuant to paragraph (6). <Amended on Feb. 29, 2024>

(8) For the purposes of paragraph (6), Article 23 (13) shall apply mutatis mutandis to a national who commences a business, etc. in the relevant taxable year. In such cases, "the number of full-time employees" shall be construed as "the number of full-time employees or the number of full-time youth employees, etc."

(9)"Special relationship prescribed by Presidential Decree" in the main clause of Article 29-8 (3) and Article 29-8 (4) 3 of the Act means kinship under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes.

(10) Whether or not earned income tax for a returnee from childcare leave has been withheld by an enterprise pursuant to Article 29-8 (4) 1 of the Act shall be verified by the book for tax withholding for earned income under Article 196 (1) of the Enforcement Decree of the Income Tax Act.

(11) A person who wishes to be granted a tax credit under Article 29-8 (1), (3) or (4) of the Act shall submit an application for the tax credit and a statement of the amount of the tax credit, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment when filing a tax return.

[This Article Newly Inserted on Feb. 28, 2023]

Article 27(Income Tax Reduction or Exemption for Employees of Small or Medium Enterprises) #

(1)"Youth prescribed by Presidential Decree, a person aged 60 or older, a person with a disability, or a career-interrupted woman" in the former part of Article 30 (1) of the Act means any of the following persons: <Amended on Feb. 21, 2014; Nov. 20, 2015; Nov. 29, 2016; Feb. 7, 2017; Aug. 28, 2018; Feb. 12, 2019>

1. Youth: A person aged between 15 and 34 years as at the conclusion date of an employment contract: Provided, That persons whose age calculated by deducting the period of military service from the present age does not exceed 34 shall be included therein if such persons have completed military service that falls under any of the following items:

(a) Active duty servicemen under Article 16 or 20 of the Military Service Act (including full-time reserve servicemen, auxiliary police officers, and obligatory firefighters who completed their service under Articles 21 and 25 of that Act);

(b) Social service personnel under Article 26 (1) of the Military Service Act;

(c) Officers, warrant officers, and noncommissioned officers under subparagraph 1 of Article 2 of the Military Personnel Management Act;

2. A person aged 60 or older: A person aged 60 or older as at the conclusion date of an employment contract;

3. A person with a disability: Any of the following persons:

(a) Persons eligible under the Act on Welfare of Persons with Disabilities;

(b) Wounded persons defined in the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State;

(c) Persons wounded in the May 18 Democratization Movement, as defined in subparagraph 2 of Article 4 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement and Establishment of Related Organizations;

(d) Persons having received disability ratings as patients suffering from potential aftereffects of defoliants defined in subparagraph 3 of Article 2 of the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations;

4. Carrier-interrupted women: Carrier-interrupted women under Article 29-3 (1) of the Act.

(2) The following persons shall be disregarded for the purposes of paragraph (1): <Newly Inserted on Feb. 2, 2012; Aug 31, 2012; Feb. 3, 2015; Feb. 5, 2016; Feb. 13, 2018; Feb. 12, 2019>

1. Executive officers specified under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

2. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietorship), and his/her spouse;

3. Lineal ascendants and descendants (including their spouses) of the persons referred to in subparagraph 2, and relatives defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, of such persons;

4. Daily employed workers defined in Article 14 (3) 2 of the Income Tax Act;

5. Persons regarding whom it is not confirmed whether they have ever paid either of the following: Provided, That excluded herefrom are the persons who are not eligible to be insured under the National Pension Scheme under the proviso to Article 6 of the National Pension Act and the persons who are not eligible for the coverage of the National Health Insurance under the proviso to Article 5 (1) of the National Health Insurance Act:

(a) An employer contribution or employee endowment defined in Article 3 (1) 11 or 12 of the National Pension Act;

(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.

(3) "Enterprise prescribed by Presidential Decree" in the former part of Article 30 (1) of the Act means an enterprise mainly engaging in any of the following businesses: Provided, That the State, local governments (including associations of local governments), public institutions under the Act on the Management of Public Institutions, and local public enterprises under the Local Public Enterprises Act shall be excluded herefrom: <Amended on Feb. 11. 2020; Feb. 29, 2024>

1. Agriculture, forestry, and fisheries;

2. Mining;

3. Manufacturing;

4. Electricity, gas, steam, and water supply;

5. Waterworks, sewage and waste disposal, and raw material recycling business;

6. Construction;

7. Wholesale and retail businesses;

8. Storage and warehousing business;

9. Lodging and restaurant business (excluding pubs and non-alcoholic beverage shops);

10. Information and communications service business (excluding business operating rooms for viewing video products);

11. Real estate business;

12. Research and development business;

13. Advertising business;

14. Market research and opinion survey business;

15. Architectural technology, engineering, and other scientific and technological service business;

16. Other specialized, scientific, and technological service business;

17. Business facility management, business support and rental service business;

18. Technical and occupational training institutes;

18-2. Computer academy;

19. Social welfare service business;

20. Maintenance and repair services for personal and consumer goods;

21. Creative or art-related service business;

22. Libraries, historical sites, and similar service business related to leisure;

23. Sport service business.

(4)"Military service prescribed by Presidential Decree" in the former part of Article 30 (1) of the Act means any military service prescribed under paragraph (1) 1. <Newly Inserted on Feb. 2, 2015>

(5) A worker who intends to apply for a reduction of income tax under Article 30 (2) of the Act shall file an application for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the withholding agent, along with a document, etc. evidencing the period of military service, by no later than the end of the month immediately following the month in which the date of employment falls. In such cases, the withholding agent may withhold income tax on earned income for each month by applying the reduction or exemption rate specified in Article 30 (1) of the Act, notwithstanding Article 134 (1) of the Income Tax Act. <Amended on Feb. 2, 2012; Feb. 3, 2015; Feb. 5, 2016>

(6) A withholding agent shall also submit a statement of the persons eligible for tax red+P9191:P9194uction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, when submitting a list of employees who have applied for tax reduction under Article 30 (3) of the Act to the head of the tax office having jurisdiction over the withholding. <Amended on Feb. 2, 2012; Feb. 3, 2015>

(7) A withholding agent shall submit a statement of retirees ineligible for tax reduction in the form prescribed by Ordinance of the Ministry of Economy and Finance, when notifying the head of the tax office having jurisdiction over the withholding of the fact that an employee has resigned under the proviso of Article 30 (5) of the Act. <Amended on Feb. 2, 2012; Feb. 3, 2015>

(8) Where a person has earned income paid by a small or medium enterprise under Article 30 (1) of the Act (hereafter in this Article referred to as"tax-exempted or reduced income") and other global income, the amount of tax to be exempted or reduced for the relevant taxable period shall be calculated by the following formula, subject to a ceiling of two million won for each taxable period: <Amended on Feb. 5, 2016; Feb. 17, 2021; Feb. 28, 2023>

Reduced or exempted amount of tax = A × (B/C) × (D/E) × F

A: Tax amount calculated on global income under Article 55 (1) of the Income Tax Act

B: Amount of earned income under Article 20 (2) of the Income Tax Act

C: Amount of global income under Article 14 (2) of the Income Tax Act D: Gross salary received from a small or medium enterprise under Article 30 (1) of the Act E: Gross salary of the relevant employee F: Reduction rate under Article 30 (1) of the Act

(9) For the purpose of granting a tax credit on earned income under Article 59 (1) of the Income Tax Act, if a person has tax-exempted or reduced income and other earned income (including cases where a person has no earned income in addition to tax-exempted or reduced income), the amount calculated by the following formula shall be determined as the amount of the tax credit on earned income: <Amended on Feb. 5, 2016; Feb. 17, 2021>

Amount of tax credit on earned income = A × [1 ? (B/C)]

A: Amount of tax credit on earned income as calculated pursuant to Article 59 (1) of the Income Tax Act

B: Reduced or exempted amount of tax

C: Tax amount calculated on global income under Article 55 (1) of the Income Tax Act × (Amount of earned income under Article 20 (2) of the Income Tax Act/Amount of global income under Article 14 (2) of the Income Tax Act)

[This Article Wholly Amended on Mar. 26, 2010]

[Title Amended on Feb. 21, 2014]

Article 27-3(Special Taxation for Small or Medium Enterprises Maintaining Employment) #

(1) The hourly rate of a full-time employee in the immediately preceding taxable year or the relevant taxable year referred to in Article 30-3 (1) 1 and (2) 2 of the Act (excluding full-time employees who enter into an employment contract in the relevant taxable year; hereafter in this paragraph and paragraph (5), the same shall apply), shall be calculated by dividing the total wages referred to in subparagraph 1 by the total working hours referred to in subparagraph 2: <Amended on Feb. 21, 2014; Feb. 7, 2017; Feb. 12, 2019>

1. Total wages: The aggregate of ordinary wages and the amount of fixed payments, such as regular bonuses, paid to full-time employees in the immediately preceding taxable year or the relevant taxable year;

2. Total working hours: Total working hours stipulated in the employment contracts of full-time employees in the immediately preceding taxable year or the relevant taxable year (or total actual working hours in cases of a part-time worker defined in Article 2 (1) 9 of the Labor Standards Act, who works for at least 60 hours for one month).

(2)"Rate prescribed by Presidential Decree" in Article 30-3 (1) 2 of the Act means 0/100.

(3) A small or medium enterprise which intends to be accorded special taxation for maintaining employment pursuant to Article 30-3 of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents verifying an agreement between the business operator and the employees' representative, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for income tax or corporate tax. <Amended on Jun. 19, 2009; Feb. 21, 2014; Feb. 12, 2019>

(4) For the purposes of Article 30-3 (1) through (3) of the Act, the full-time employees mean workers who enter into an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Newly Inserted on Feb. 2, 2012; Aug 31, 2012; Feb. 21, 2014; Feb. 13, 2018; Feb. 12, 2019; Jun. 2, 2020>

1. Any person whose employment contract is for less than one year: Provided, That for the purposes of Article 30-3 (3) of the Act, an employee whose employment contract is not less than one year in total as a consequence of consecutive renewal of the employment contract shall be deemed a full-time employee;

2. Executive officers specified under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

3. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietorship), and his/her spouse;

4. Lineal ascendants and descendants of the persons referred to in subparagraph 3 and their spouses;

5. Persons regarding whom it is not verified by the book for tax withholding for earned income under Article 196 of the Enforcement Decree of the Income Tax Act whether or not income tax on earned income has been withheld and whether or not insurance premiums. etc. falling under any of the following have been paid:

(a) An employer contribution or employee endowment defined in Article 3 (1) 11 or 12 of the National Pension Act;

(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.

6. A part-time employee defined in Article 2 (1) 9 of the Labor Standards Act: Provided, That an employee whose contractual work hours per month are at least 60 hours shall be deemed a full-time employee.

(5) For the purposes of Article 30-3 (1) 3 and (2) of the Act, the total annual wages per full-time employee of the immediately preceding or relevant taxable year, shall be calculated by dividing the total wages prescribed in subparagraph 1 by the number of full-time employees calculated by the formula prescribed in subparagraph 2: <Newly Inserted on Feb. 2, 2012>

2. The number of full-time employees:

Aggregate of the number of full-time employees as at the end of each month in the immediately preceding or relevant taxable year ÷ Number of months in the immediately preceding or relevant taxable year

(6) Where the number of full-time employees has reduced because the labor relationship is terminated due to a death, mandatory retirement, or other similar reasons in the immediately preceding or relevant taxable year, the reduced number of employees shall be disregarded for the purposes of calculating the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they did not work from the immediately preceding taxable year. <Newly Inserted on Feb. 2, 2012>

(7) Where full-time employees who have worked in the previous business division are succeeded due to a merger, general acquisition of a business, or any similar event in the immediately preceding or relevant taxable year, the number of persons succeeded shall be included in the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they have worked for the succeeding enterprise from the immediately preceding taxable year. <Newly Inserted on Feb. 2, 2012>

(8) Where the number of full-time employees has reduced due to a split-off, general transfer of a business, or any similar event in the immediately preceding or relevant taxable year, the reduced number of employees shall be disregarded for the purposes of calculating the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they did not work for an enterprise, etc. which is split-off or generally transferred, from the immediately preceding taxable year. <Newly Inserted on Feb. 2, 2012>

(9) The total working hours of all full-time employees for the relevant taxable year referred to in Article 30-3 (2) 2 of the Act shall be deemed the total working hours for the relevant taxable year provided for in paragraph (1) 2. <Newly Inserted on Feb. 7, 2017>

(10) The total annual wages referred to in Article 30-3 (3) of the Act means the aggregate of ordinary wages and the amount of fixed payments, such as regular bonuses. In such cases, the total annual wages of a full-time employee whose labor relationship is established or terminated during the immediately preceding or relevant taxable year, shall be calculated by the following applicable formula: <Newly Inserted on Feb. 2, 2012; Feb. 7, 2017>

1. The total annual wages of a full-time employee whose labor relationship was established in the immediately preceding taxable year in the relevant taxable year, shall be calculated by the following formula:

Aggregate of ordinary wages and the amount of fixed payments in the relevant taxable year × (Total number of working days in the immediately preceding taxable year ÷ Total number of working days in the relevant taxable year)

2. The total annual wages of a full-time employee whose labor relationship is terminated in the relevant taxable year in the immediately preceding taxable year, shall be calculated by the following formula:

Aggregate of ordinary wages and the amount of fixed payments in the immediately preceding taxable year × (Total number of working days in the relevant taxable year ÷ Total number of working days in the immediately preceding taxable year)

3. The total annual wages of a full-time employee whose labor relationship is succeeded due to a merger, split-off, etc. of an enterprise during the immediately preceding or relevant taxable year, in the immediately preceding or relevant taxable year, shall be the aggregate of wages paid by the previous employer, notwithstanding subparagraphs 1 and 2.

(11)"Area prescribed by Presidential Decree" in Article 30-3 (5) 1 of the Act means an area designated and publicly notified by the Minister of Employment and Labor pursuant to Article 29 of the Enforcement Decree of the Framework Act on Employment Policy. <Amended on Feb. 17, 2021>

[This Article Newly Inserted on Apr. 21, 2009]

[Title Amended on Jun. 19, 2009]

Article 27-4(Scope of Full-Time Employees in Granting Tax Credits for Social Insurance Premiums for Small or Medium Enterprises) #

(1) The full-time employees referred to in Article 30-4 (1) of the Act shall be the Korean workers who enter into an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Amended on Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Jun. 2, 2020>

3. An executive officer falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

4. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietorship), and his/her spouse;

6. Persons regarding whom it is not confirmed whether income tax on earned income has ever been withheld by the book for tax withholding for earned income under Article 196 of the Enforcement Decree of the Income Tax Act;

7. Employees regarding whom it is not confirmed whether contributions or premiums payable by their employers for the social insurance under Article 30-4 (4) of the Act have ever been paid.

(2)"Youths and career-interrupted women hired as full-time employees" in Article 30-4 (1) 1 of the Act (hereafter in this Article, referred to as"youths, etc."), means the following persons; and"full-time employees, excluding youths, etc." in Article 30-4 (1) 2 of the Act means full-time employees who are not full-time youth employees, etc.: <Amended on Feb. 7, 2017>

1. Full-time youth employees: Full-time employees between the ages of 15 and 29 (if a person has performed any military service specified under Article 27 (1) 1, and his age calculated by subtracting the period of such military service (which shall not exceed six years) from his age as on the date an employment contract is entered into, does not exceed 29 years, the person shall be deemed a youth);

2. Career-interrupted women hired as full-time employees: Full-time employees who are career-interrupted women provided for in Article 29-3 (1) of the Act.

(3)"Number of employees prescribed by Presidential Decree" in Article 30-4 (1) 1 of the Act means the increased number of full-time youth employees, etc. between the relevant taxable year and the immediately preceding taxable year (if the number is a negative, it shall be deemed zero): Provided, That its ceiling shall be the increased number of full-time employees in the relevant taxable year compared to the immediately preceding taxable year. <Amended on Feb. 7, 2017>

(4)"Number of increased full-time employees prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means the increased number of full-time employees between the relevant taxable year and the immediately preceding taxable year (if the number is a negative, it shall be deemed zero) minus the number referred to in paragraph (3).

(5)"Small or medium enterprise engaging in any of the new-growth service businesses prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means a small or medium enterprise engaging mainly in any of the following business activities. In such cases, if it engages in two or more different businesses, the business generating more revenue shall be deemed its principal business: <Newly Inserted on Feb. 7, 2017; Feb. 11, 2020; Feb. 17, 2022>

1. Computer programming, system integration and management services; software development and supply; information service activities; or telecommunications;

3. Engineering business; specialized designing services; security system service activities; or business making advertisements, among advertising businesses;

5. Tourist accommodation business, international conference business, or amusement facility business under the Tourism Promotion Act; or tourist facilities business referred to in Article 6 (3) 20 of the Act;

6. The logistics industry referred to in Article 5 (7);

7. Other new-growth service businesses prescribed by Ordinance of the Ministry of Economy and Finance.

(6) For the purposes of granting a tax credit under Article 30-4 of the Act, the number of full-time employees and the number of full-time youth employees, etc. shall be calculated by the formulas prescribed in subparagraph 1: Provided, That one employee referred to in the proviso of paragraph (1) 2 shall be deemed 0.5 person for the purpose of calculation, but if all of the requirements for support under subparagraph 2 are met, one employee shall be deemed 0.75 person for the purpose of calculation, and a fraction of less than 1/100 shall be deemed nil: <Amended on Feb. 21, 2014; Feb. 5, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022>

1. Formulas for calculating the number of full-time employees and full-time youth employees, etc.:

(a) Number of full-time employees:

Aggregate of the number of full-time employees as at the end of each month during the relevant period ÷ Number of months during the relevant period

(b) Number of full-time youth employees, etc.:

Aggregate of the number of full-time youth employees, etc. as at the end of each month during the relevant period ÷ Number of months during the relevant period

2. Requirements for support:

(a) The number of full-time employees in the relevant taxable year (excluding the workers referred to in the proviso to paragraph (1) 2), shall not be smaller than that in the immediately preceding taxable year (excluding the workers referred to in the proviso to paragraph (1) 2);

(b) They shall have entered into an indefinite employment contract;

(d) The hourly wage shall be at least 120/100 of the minimum wage prescribed under Article 5 of the Minimum Wage Act.

(7) When calculating the increased number of full-time youth employees, etc. or full-time employees referred to in paragraphs (3) and (4), the number classified as follows shall be deemed the number of full-time youth employees, etc. or the number of full-time employees in the immediately preceding or relevant taxable year, if an enterprise starts its business, etc. in the relevant taxable year: <Amended on Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018; Feb. 12, 2019>

1. Number of full-time employees in the immediately preceding taxable year where the national starts a business (excluding cases falling under Article 6 (10) 1 through 3 of the Act): 0;

2. Number of full-time employees in the immediately preceding taxable year in cases falling under any of Article 6 (10) 1 (excluding succession to the previous business through a merger, a split-off, an investment in kind or acquisition of business) through 3 of the Act: Number of full-time youth employees, etc. or number of full-time employees in the immediately preceding taxable year of the previous business, business before conversion into a corporation, or business before closure of business;

3. Number of full-time employees in the immediately preceding or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by deducting the number of full-time youth employees, etc. or the number of full-time employees transferred by succession from the number of full-time youth employees, etc. or the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the aggregate of the number of full-time youth employees, etc. or the number of full-time employees by succession and the number of full-time youth employees, etc. or the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time youth employees, etc. or the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:

(a) Where such enterprise takes over full-time youth employees, etc. or full-time employees engaging in the previous business division due to a merger, a split-off, an investment in kind, a transfer of business, or any similar event in the relevant taxable year;

(b) Where such enterprise takes over full-time youth employees, etc. or full-time employees from a related party provided for in Article 11 (1).

(8)"Amount prescribed by Presidential Decree" in Article 30-4 (1) 1 of the Act means an amount calculated by the following formula (excluding the aggregate of subsidies paid or to be paid by the State and public institutions under Article 4 of the Act on the Management of Public Institutions and reduced or exempted amounts for the equivalent to social insurance premium to be borne by the employer for social insurance falling under any subparagraph of Article 30-4 (4) of the Act for full-time youth employees, etc. for the relevant taxable year): <Amended on Feb. 7, 2017; Feb. 11, 2020>

(Total salary and wages referred to in Article 20 (1) of the Income Tax Act, which are paid to full-time youth employees, etc. in the relevant taxable year ÷ Number of full-time youth employees, etc. in the relevant taxable year) × Social insurance premium rate

(9)"Amount prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means the amount calculated by the following formula (excluding the aggregate of subsidies paid or to be paid by the State and public institutions under Article 4 of the Act on the Management of Public Institutions and reduced or exempted amounts for the equivalent to social insurance premium to be borne by the employer for social insurance falling under any subparagraph of Article 30-4 (4) of the Act for full-time youth employees, etc. for the relevant taxable year): <Amended on Feb. 7, 2017; Feb. 11, 2020>

(Total salary and wages referred to in Article 20 (1) of the Income Tax Act, which are paid to full-time employees, excluding youths, etc., in the relevant taxable year ÷ (Number of full-time employees in the relevant taxable year - Number of full-time youth employees, etc. in the relevant taxable year) × Social insurance premium rate

(10) For purposes of paragraphs (8) and (9), the social insurance premium rate shall be the aggregate of the following applicable as of the end of the relevant taxable year: <Amended on Aug 31, 2012; Feb. 7, 2017>

1. 1/2 of the insurance premium rate prescribed under Article 44 (1) of the Enforcement Decree of the National Health Insurance Act;

2. Number calculated by multiplying the number calculated under subparagraph 1 by the long-term care insurance premium rate prescribed under Article 4 of the Long-Term Care Insurance Act;

3. The insurance premium rate prescribed under Article 88 of the National Pension Act;

4. The aggregate of the numbers calculated under each subparagraph of Article 13 (4) of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance;

5. The industrial accident compensation insurance rate prescribed under Article 14 (3) of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance.

(11) The amount of income tax or corporate tax payable pursuant to the latter part of Article 30-4 (2) of the Act shall be calculated according to the following subparagraphs (limited to the amount of tax deducted pursuant to Article 30-4 (1) of the Act in the taxable year immediately preceding the relevant taxable year) and shall be paid as income tax or corporate tax when filing the tax return for the relevant taxable year: <Newly Inserted on Feb. 15, 2022>

1. Where the number of full-time employees decreased: An amount calculated as follows:

(a) Where the reduced number of full-time youth employees is not less than the reduced number of full-time employees: An amount calculated according to the following formula:

A - B + C

A: Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act mutatis mutandis to the number of persons calculated by subtracting the reduced number of full-time employees, as compared to the number in the year for which a deduction was granted (hereafter in this Article referred to as"first deduction year"), from the reduced number of full-time youth employees, etc. (limited to the increased number of the full-time youth employees in the first deduction year), as compared to the number in the first deduction year (hereafter in this formula referred to as"subtracted number of persons")

B: Amount calculated by applying the formula prescribed in Article 30-4 (1) 2 of the Act to the subtracted number of persons

C: Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act to the reduced number of full-time employees, as compared to the number in the first deduction year

(b) In other cases: An amount calculated according to the following formula:

A + B

A: Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act mutatis mutandis to the reduced number of full-time youth employees (limited to the increased number of full-time youth employees in the first deduction year), as compared to the number in the first deduction year

B. Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act mutatis mutandis to the reduced number of full-time employees, except full-time youth employees, etc. (limited to the decreased number of full-time employees in the first deduction year), as compared to the number in the first deduction year

2. Where the number of full-time employees has not decreased, but the number of full-time youth employees, etc. has decreased: An amount calculated according to the following formula:

A + B

A: Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act mutatis mutandis to the reduced number of full-time youth employees (limited to the increased number of full-time youth employees in the first deduction year; hereafter in this formula referred to as"reduced number of youth employees"), as compared to the number in the first deduction year

B. Amount calculated by applying the formula prescribed in Article 30-4 (1) 1 of the Act mutatis mutandis to the reduced number of youth employees

(12) For the purposes of paragraph (11), persons classified as full-time youth employees, etc. in the first deduction year shall be deemed full-time youth employees in subsequent taxable years thereafter for the purpose of calculating the number of full-time youth employees, etc. <Newly Inserted on Feb. 15, 2022>

(13)"Enterprise prescribed by Presidential Decree among small and medium enterprises" in Article 30-4 (3) of the Act means small and medium-sized enterprises that meet all of the following requirements: <Newly Inserted on Feb. 13, 2018; Feb. 15, 2022>

1. That the number of full-time employees of the enterprise shall be less than ten persons;

2. That the tax base of income tax or corporate tax for the relevant taxable year shall not exceed five million won. In such cases, the tax base of income tax shall be limited to business income, and the calculation method shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(14)"Employees prescribed by Presidential Decree" in Article 30-4 (3) of the Act means employees whose hourly wage is between 100/100 and 120/100 of the minimum wage amount under Article 5 of the Minimum Wage Act among nationals who have entered into an employment contract under the Labor Standards Act. <Newly Inserted on Feb. 13, 2018; Feb. 15, 2022>

(15)"Subsidies from the State, etc. prescribed by Presidential Decree" in Article 30-4 (3) of the Act means the aggregate amount of the subsidies paid or to be paid by the State and public institutions under Article 4 of the Act on the Management of Public Institutions for the amount equivalent to the premiums of a social insurance which falls under any subparagraph of Article 30-4 (4) of the Act and is to be borne by the employer, and the amount of reductions or exemptions. <Newly Inserted on Feb. 13, 2018; Feb. 15, 2022>

(16)"Amount prescribed by Presidential Decree" in Article 30-4 (3) of the Act means the amount equivalent to the social insurance premiums to be borne by the employer less the amount referred to in paragraph (15). <Newly Inserted on Feb. 13, 2018; Feb. 15, 2022>

[This Article Wholly Amended on Feb. 2, 2012]

[Title Amended on Feb. 13, 2018]

Article 27-5(Special Taxation for Gift Tax on Start-Up Funds) #

(1)"Property prescribed by Presidential Decree, such as land and buildings" in the former part of Article 30-5 (1) of the Act means any property specified in Article 94 (1) of the Income Tax Act. <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 21, 2014>

(2)"Business start-up fund prescribed by Presidential Decree" in the former part of Article 30-5 (1) of the Act means either of the following funds used directly for starting a business specified in Article 30-5 (2) of the Act: <Newly Inserted on Feb. 5, 2016; Aug. 28, 2018; Feb. 11, 2020; Feb. 28, 2023>

1. Funds for acquiring business assets prescribed in Article 5 (19);

2. Payments made for security deposits and rents for the place of business (including security money for lease on a deposit basis; hereinafter the same shall apply).

(3)"Commence his/her business" or"business startup" in the former part and the latter part of Article 30-5 (2) of the Act, with the exception of its subparagraphs, means registration of a business with the head of the tax office having jurisdiction over the place of tax payment under Article 168 (1) of the Income Tax Act, Article 111 (1) of the Corporate Tax Act, or Article 8 (1) or (5) of the Value-Added Tax Act; and"situations prescribed by Presidential Decree" in the latter part of Article 30-5 (2) of the Act, with the exception of its subparagraphs, means where a person acquires a business asset under Article 5 (19) or pays a security deposit or a rent for an extended place of business. <Amended on Jun. 28, 2013; Feb. 5, 2016; Feb. 28, 2023>

(4)"Business assets prescribed by Presidential Decree" in Article 30-5 (2) 1-2 of the Act means the business assets prescribed in Article 5 (19). <Newly Inserted on Feb. 28, 2023>

(5)"Ratio prescribed by Presidential Decree" in Article 30-5 (2) 1-2 of the Act means 30/100. <Newly Inserted on Feb. 28, 2023>

(6)"Date prescribed by Presidential Decree" in the former part of Article 30-5 (5) of the Act means: <Amended on Feb. 18, 2010; Feb. 28, 2023>

1. The end of the month following the month in which the date of start-up falls;

2. The deadline for filing the tax return each taxable year by the four subsequent taxable years (where the start-up funds are fully used, the taxable year in which the date such start-up funds are used falls) from the taxable year in which the date of start-up falls.

(7)"Cases prescribed by Presidential Decree" in Article 30-5 (2) 4 of the Act means where start-up funds are used for operating the business in which a person has engaged before receiving donated start-up funds or for replacing plant and equipment for such business. <Amended on Feb. 18, 2010; Feb. 5, 2016; Feb. 28, 2023>

(8) The following information shall be stated in a statement on the spending of start-up funds submitted under the former part of Article 30-5 (5) of the Act: <Amended on Feb. 5, 2016; Feb. 28, 2023>

1. Details of the donated start-up funds;

2. Details of the use of the donated start-up funds and materials evidencing such details;

3. Materials evidencing details of employment, if the donated start-up funds exceed five billion won.

(9) The equivalent to the interest, which is added to gift tax levied under the latter part of Article 30-5 (6) of the Act shall be calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the rate of subparagraph 3: <Amended on Feb. 5, 2016; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

1. The amount of gift tax determined pursuant to the former part of Article 30-5 (6) of the Act, with the exception of its subparagraphs;

2. The period from the day following a deadline for filing the tax return of gift tax on the first-donated start-up funds until the date the grounds for additional collection arise;

3. The rate specified in Article 11-2 (9) 2.

(10)"Cases prescribed by Presidential Decree" in Article 30-5 (6) 6 of the Act means any of the following: <Amended on Feb. 18, 2010; Feb. 2, 2012; Feb. 28, 2023>

1. Where a donee dies: Provided, That the same shall not apply to the following cases:

(a) Where a donee dies after receiving donated start-up funds, but before commencing his/her business pursuant to Article 30-5 (2) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (2) through (6) of the same Act after succeeding to the donee's status;

(b) Where a donee dies after receiving donated start-up funds and commencing his/her business pursuant to Article 30-5 (2) of the Act, but before using the start-up funds for the start-up objectives provided for in Article 30-5 (4) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (4) through (6) of the same Act after succeeding to the donee's status;

(c) Where a donee dies after receiving donated start-up funds and completing the commencement of his/her business pursuant to Article 30-5 (4) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (6) of the same Act after succeeding to the donee's status;

2. Where a donee discontinues or suspends his/her business (including actual suspension of the business): Provided, That the same shall not apply where the donee discontinues or suspends his/her business on either of the following grounds:

(a) Where the donee discontinues his/her business on the grounds that his/her debt exceeds his/her asset;

(b) Where the donee suspends or discontinues his/her business (limited to either one of suspension or discontinuation of the business) for the period not exceeding two years (where he/she discontinues his/her business, referring to two years by the time he/she resumes his/her business after discontinuing his/her business) only once on the grounds of his/her business need or his/her business conversion after first commencing his/her business.

(11)"Amount prescribed by Presidential Decree" in Article 30-5 (6) 6 of the Act means start-up funds (including the portion of the value increased on the grounds of the start-up). <Amended on Feb. 18, 2010; Feb. 2, 2012; Feb. 28, 2023>

(12) For the purposes of Article 30-5 (6) 7 of the Act,"employees" means full-time employees prescribed in Article 27-3 (4). In such cases, the number of workers shall be calculated by dividing the aggregate of the number of employees as at the end of each month in the relevant taxable year by the number of months in the relevant taxable year. <Newly Inserted on Feb. 5, 2016; Feb. 28, 2023>

(13) A person who files a tax return on gift tax and interest thereon pursuant to Article 30-5 (7) of the Act shall submit a statement on the reason for violation of special taxation on gift tax for start-up funds and a calculation sheet for voluntary payment, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Newly Inserted on Feb. 28, 2023>

(14) Pursuant to Article 30-5 (12) of the Act, a person who wishes to be eligible for the special taxation under paragraph (1) of that Article shall submit an application for special taxation for start-up funds and a statement on the use of start-up funds, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment at the time of filing a tax return on gift tax. <Amended on Feb. 28, 2023>

[This Article Newly Inserted on Feb. 9, 2006]

Article 27-6(Special Taxation for Gift Tax on Succession to Family Business) #

(1) "Where a resident succeeds to a family business, as prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 30-6 (1) of the Act means where a person to whom stocks or equity shares of a family business (hereafter in this Article, referred to as "stocks, etc.") are conveyed as a gift (hereafter in this Article and Articles 28 and 29, referred to as "donee") or his/her spouse, engages in the family business until the deadline for filing a tax return on gift tax under Article 68 of the Inheritance Tax and Gift Tax Act, and takes office as representative director within five years from the date of conveyance as a gift. <Amended on Feb. 3, 2015; Feb. 28, 2023; Feb. 29, 2024>

(2)"Amount calculated by the method prescribed by Presidential Decree" in the latter part of Article 30-6 of the Act means an amount calculated as follows: <Newly Inserted on Feb. 11, 2020>

1. Where two or more residents receive stocks, etc. as a gift on the same day: An amount calculated by allocating the amount of gift tax imposed under Article 30-6 of the Act to each resident in proportion to the value of the stocks, etc. received by each resident as a gift, deeming that one of the residents receive all of the stocks, etc. as a gift;

2. Where another resident received stocks, etc. in the relevant family business before the date of conveyance of the relevant stocks, etc. as a gift and became liable for gift tax imposed under Article 30-6 of the Act: The amount of gift tax imposed under Article 30-6 of the act, deeming that the other resident is the donee of the relevant stocks, etc.

(3)"Where a person fails to succeed to the family business" in Article 30-6 (3) of the Act means where the donee fails to succeed to the family business as provided for in paragraph (1). <Amended on Feb. 11. 2020>

(4)"Just grounds prescribed by Presidential Decree" in the former part of Article 30-6 (3) of the Act, with the exception of its subparagraphs, means any of the following circumstances: <Amended on Feb. 29, 2008; Oct. 7, 2008; Feb. 11. 2020>

1. Where a donee has died and the heir of the donee engages in the family business after succeeding to the initial status of the donee by the filing deadline for filing a tax return under Article 67 of the Inheritance and Gift Tax Act;

2. Where a donee donates the stocks, etc. conveyed as a gift, to the State or a local government;

3. Where other extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance arise.

(5) The equivalent to the interest, which is added to gift tax levied under the latter part of Article 30-6 (3) of the Act, with the exception of its subparagraphs, shall be calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the rate of subparagraph 3: <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

1. The amount of gift tax determined pursuant to the former part of Article 30-6 (3) of the Act, with the exception of its subparagraphs;

2. The period from the day following a deadline for filing the tax return of gift tax on the first-donated stocks, etc., until the date the grounds for additional collection arise;

3. The rate specified in Article 11-2 (9) 2.

(6) Circumstances provided for in Article 30-6 (3) 1 of the Act shall include the following: <Amended on Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023; Feb. 29, 2024>

1. Where the done (including the spouse of the done referred to in paragraph (1)) fails to continue to hold office as representative director for five years from the date of conveyance of stocks, etc. as a gift;

2. Where it falls under Article 15 (11) 2 or 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act;

3. Deleted; <Feb. 29, 2024>

(7) Circumstances provided for in Article 30-6 (3) 2 of the Act shall include the following: <Amended on Feb. 2, 2012; Feb. 3, 2015; Feb. 5, 2016; Feb. 13, 2018; Feb. 11, 2020>

1. Where the done disposes of the stocks, etc. conveyed as a gift: Provided, That the following cases shall be excluded here from:

(a) Where the done becomes the largest stockholder, etc. defined under Article 15 (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (hereafter in this Article, referred to as"largest stockholder, etc.") as a consequence of restructuring, such as a merger or split-off;

(b) Where the done reduces his/her shares in order to meet the requirements for listing specified in the Listing Regulations pursuant to Article 390 (1) of the Financial Investment Services and Capital Markets Act;

2. Where the dome's holding ratio decreases due to forfeiture of his/her rights, etc. in the course of increasing the paid-in capital of the corporation that issued the stocks, etc. conveyed as a gift: Provided, That any of the following cases shall be excluded here from:

(a) Where the relevant corporation increases its paid-in capital by issuing new stocks in order to increase its investment in plant and equipment or to expand its business, and the done is forfeited his/her rights in order to allocate new stocks to any person, other than the related persons (referring to the persons defined under Article 2-2 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; hereafter in this Article, the same shall apply) to the done, but the done falls under the largest stockholder, etc.;

(b) Where the dome's holding ratio decreases due to a debt-for-equity swap of the relevant corporation, but the done becomes the largest stockholder, etc.

3. Where the done ceases to be the largest stockholder, etc. because his/her holding ratio decreases due to the disposal of stocks or forfeiture, etc. in the course of increasing the paid-in capital by any related person to the done.

(8) A taxpayer may be granted special taxation for gift tax under Article 30-6 (1) of the Act on the aggregate of the taxable value of the stocks, etc. eligible for special taxation of gift tax and the gains from donation, subject to a ceiling of ten billion won, with regard to gains from donation under Article 41-3 or 41-5 of the Inheritance Tax and Gift Tax Act (hereafter in this paragraph, referred to as"gains from donation"), which accrue from the donation of stocks after the taxpayer receives stocks, etc. eligible for special taxation of gift tax under Article 30-6 (1) of the Act. In such cases, gains from donation granted special taxation shall be added to the taxable value of inheritance tax under Articles 30-5 (7) and (8) and 30-6 (4) of the Act, notwithstanding Article 13 (3) of the Inheritance Tax and Gift Tax Act. <Amended on Feb. 5, 2016; Feb. 11, 2020>

(9) Where an inheritance commences after stocks, etc. eligible for special taxation of gift tax under Article 30-6 (1) of the Act were conveyed as a gift; and each of the following requirements are satisfied as at the commencement date of inheritance, relevant provisions shall apply by deeming such case inheritance of a family business under Article 18-2 (1) of the Inheritance Tax and Gift Tax Act: <Amended on Feb. 5, 2016; Feb. 11, 2020; Feb. 28, 2023>

1. It shall be the family business prescribed in the former part of the provisions, with the exception of the subparagraphs, of Article 18-2 (1) of the Inheritance Tax and Gift Tax Act (the average amount of turnover, among the relevant requirements, shall be determined on the basis of the average amount of turnover for three business years immediately preceding the business year in which stocks, etc. are conveyed as a gift pursuant to Article 30-6 (1) of the Act; but if the requirement of Article 15 (3) 1 (a) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act is not met, it shall be deemed that the decedent holds the stocks, etc. conveyed to the heir as a gift until the commencement date of inheritance in applying the requirement of that item): Provided, That Article 15 (3) 1 (b) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall not apply;

2. Deleted. <Jun. 3, 2011>

3. The done engages in the family business or holds office as representative director where he/she has not disposed of the stocks, etc. conveyed as a gift or his/her holding ratio has not decreased.

(10) "Equivalent to the property of family business prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 30-6 (1) of the Act means an amount calculated by applying mutatis mutandisArticle 15 (5) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. In such cases, "commencement date of inheritance" shall be construed as "date of conveyance as a gift". <Newly Inserted on Feb. 21, 2014; Feb. 11, 2020; Feb. 28, 2023; Feb. 29, 2024>

(11) "Fine prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 30-6 (4) of the Act means any of the fines prescribed in the subparagraphs of Article 15 (19) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. <Newly Inserted on Feb. 29, 2024>

(12) "Amount corresponding to interest calculated as prescribed by Presidential Decree" in the latter part of Article 30-6 (4) 2 of the Act means an amount calculated by multiplying the amount specified in subparagraph 1 by the period specified in subparagraph 2 and the ratio specified in subparagraph 3: <Newly Inserted on Feb. 29, 2024>

1. The amount of gift tax determined pursuant to the former part of Article 30-6 (4) 2 of the Act;

2. The period from the day after the deadline for filing a tax return on gift tax on stocks, etc. originally received as a gift to the day on which any of the events referred to in Article 30-6 (4) 2 of the Act occurs;

3. The rate pursuant to Article 27-4 of the Enforcement Decree of the National Tax Act.

(13) When filing a tax return on gift tax and interest thereon pursuant to Article 30-6 (8) of the Act, a statement on the reason for additional collection of gift tax on succession to the family business eligible for special taxation and a statement of voluntary payment shall be submitted in the forms prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment. <Newly Inserted on Feb. 13, 2018; Feb. 11. 2020; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 22, 2008]

Article 27-7(Deferral of Payment of Gift Tax for Succession to Family Business) #

(1) A resident who intends to apply for payment deferral pursuant to Article 30-7 (1) or (6) of the Act shall submit the following documents to the head of the tax office having jurisdiction over the place of tax payment at the time of filing a tax return on inheritance tax or gift tax under Article 67 or 68 of the Inheritance Tax and Gift Tax Act (including a revised return under Article 45 of the Framework Act on National Taxes or a tax return after due date under Article 45-3 of that Act): Provided, That a person who has received a notice of determination of the tax base and tax amount pursuant to Article 77 of the Inheritance Tax and Gift Tax Act may submit such documents by the due date for payment designated in the notice.

1. An application for payment deferral in the form prescribed by Ordinance of the Ministry of Economy and Finance;

2. Documents proving that the special taxation under Article 30-6 the Act or the permission for payment deferral under Article 30-7 of the Act has been granted (applicable only to applications filed pursuant to Article 30-7 (6) 1 of the Act);

3. Documents proving that a deduction for inheritance of a family business under Article 18-2 (1) of the Inheritance Tax and Gift Tax Act or the permission for payment deferral under Article 72-2 (1) of that Act (applicable only for applications filed under Article 30-7 (6) 2 of the Act).

(2) Upon receipt of an application under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall notify the applicant in writing of the grant or denial of the permission within a period prescribed as follows:

1. In cases of a tax return on inheritance tax filed pursuant to Article 67 of the Inheritance Tax and Gift Tax Act: Nine months from the day after the deadline for filing the tax return under paragraph (1) of that Article;

2. In cases of a tax return on gift tax filed pursuant to Article 68 of the Inheritance Tax and Gift Tax Act: Six months from the day after the deadline for filing the tax return under paragraph (1) of that Article;

3. In cases of a revised return filed pursuant to Article 45 of the Framework Act on National Taxes or a tax return filed after due date pursuant to Article 45-3 of that Act: Six months from the end of the month in which the revised return or return after due date is filed (or nine months in cases of an application filed pursuant to Article 30-7 (6) 2 of the Act);

4. In cases of the provision of paragraph (1), with the exception of its subparagraphs: 14 days after the due date for payment according to the payment notice.

(3) If a notice under paragraph (2) 4 is given after the due date for payment according to the payment notice, no additional tax for delayed payment shall be imposed under Article 47-4 (1) 1 (limited to the portion accruing from the day after the due date for payment according to the payment notice) or 3 of the Framework Act on National Taxes for the period prior to the date of the notice.

(4)"Amount prescribed in Presidential Decree" In the provisions, with the exception of the subparagraphs, of Article 30-7 (1) of the Act means an amount calculated according to the following formula. In such cases, the equivalent to the value of family business assets in the formula means an amount calculated according to Article 15 (5) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, and"date of inheritance" in that subparagraph shall be construed as"date of conveyance as a gift":

Amount payable as gift tax × Equivalent to value of family business assets/Total value of assets conveyed as a gift

(5) In order to be granted permission to defer payment of gift tax pursuant to Article 30-7 (1) of the Act, a resident or his/her spouse who received stocks or equity shares in a family business (hereafter in this Article referred to as"stocks, etc.") pursuant to subparagraph 1 of that paragraph shall be engaged in the family business by not later than the deadline for filing a tax return on gift tax pursuant to Article 68 of the Inheritance Tax and Gift Tax Act and shall take office as representative director within three years from the date of conveyance as a gift.

(6)"Small and medium enterprises prescribed by Presidential Decree" in Article 30-7 (1) 1 of the Act means small and medium enterprises under Article 15 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act.

(7)"Good cause prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 30-7 (3) of the Act means a case falling under any subparagraph of Article 27-6 (4) (except subparagraph 1 of that paragraph).

(8) For the purposes of Article 30-7 (3) 1 of the Act, a resident shall be deemed to have ceased to be engaged in a family business in any of the following cases:

1. Where the resident (including the resident's spouse under paragraph (5)) who received stocks, etc. of a family business as a gift does not hold office as representative director (within five years from the date of conveyance as a gift);

2. Where the family business is suspended (or has no business performance) for not less than one year or is closed.

(9)"Where the equity shares of the resident…decrease" in the provisions, without the exception of the subparagraphs" of Article 30-7 (3) 2 of the Act includes cases falling under any subparagraph of Article 27-6 (7).

(10)"Tax amount calculated as prescribed by Presidential Decree in consideration of the ratio of the decrease in the equity shares" in Article 30-7 (3) 2 (b) and the latter part of Article 30-7 (7) of the Act means an amount calculated according to the following formula:

Tax amount = A × (B + C)

A: Tax amount for which payment is deferred under Article 30-7 (1) of the Act

B: Decreased ratio of equity shares

C: Ratio of equity shares as at the date of conveyance as a gift

(11)"Regular employees prescribed by Presidential Decree" in Article 30-7 (3) 3 (a) of the Act means employees who hold a contract concluded under the Labor Standards Act: Provided, That persons falling under any subparagraph of Article 15 (13) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act are excluded herefrom.

(12)"Gross salary amount prescribed by Presidential Decree" in Article 30-7 (3) 3 (b) of the Act means the total amount of income under Article 20 (1) 1 and 2 of the Income Tax Act, paid to an employee pursuant to the main clause of paragraph 11 (excluding persons falling under Article 26 -4 (2) 3, but including those persons if the persons falling under that paragraph are only persons who exist).

(13) Articles 15 (17) and (18) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply to the calculation of the number of regular employees and the gross salary amount under Article 30-7 (3) 3 (a) and (b) of the Act.

(14)"Interest calculated thereon as prescribed by Presidential Decree" in the provisions, with the exceptions of the subparagraphs, of Article 30-7 (3) of the Act means an amount calculated by multiplying the amount in subparagraph 1 by the period in subparagraph 2 and the rate in subparagraph 3 (or, in cases where permission was granted for payment deferral under Article 30-7 (6) of the Act, 50/100 of the rate in subparagraph 3):

1. The amount of gift tax determined pursuant to the provisions, with the exception of the subparagraphs, of Article 30-7 (3) of the Act;

2. The period from the day after the deadline for filing a tax return on gift tax on stocks, etc. in a family business originally received as a gift to the day on which any of the events referred to in Article 30-7 (3) of the Act occurs;

3. The interest rate calculated by diving the interest rate in the main clause of Article 43-3 (2) of the Enforcement Decree of the Framework Act on National Taxes at the time of the revocation or change of permission for payment deferral under Article 30-7 (3) of the Act by 365: Provided, That if the interest rate in the main clause of Article 43-3 (2) of the Enforcement Decree of the Framework Act on National Taxes is changed once or more during the period of subparagraph 2, the interest rate calculated by dividing the rate before the change by 365 shall be applied to the period before the change.

(15)"Interest calculated thereon as prescribed by Presidential Decree" in the provisions, with the exceptions of the subparagraphs, of Article 30-7 (5) of the Act means an amount calculated by multiplying the amount in subparagraph 1 by the period in subparagraph 2 and the rate in subparagraph 3 (or, in cases where permission was granted for payment deferral under Article 30-7 (6) of the Act, 50/100 of the rate in subparagraph 3):

1. The amount of gift tax under Article 30-7 (5) of the Act;

3. The interest rate calculated by diving the interest rate in the main clause of Article 43-3 (2) of the Enforcement Decree of the Framework Act on National Taxes at the time of the revocation or change of permission for payment deferral under Article 30-7 (5) of the Act by 365: Provided, That if the interest rate in the main clause of Article 43-3 (2) of the Enforcement Decree of the Framework Act on National Taxes is changed once or more during the period of subparagraph 2, the interest rate calculated by dividing the rate before the change by 365 shall be applied to the period before the change.

(16) A person who files a tax return on gift tax and interest thereon pursuant to Article 30-7 (4) of the Act shall submit a statement on the reason for additional collection for ex-post management of payment deferral and a statement of voluntary payment, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment.

(17) The head of the tax office having jurisdiction over the place of tax payment shall check whether a resident who has been granted permission for payment deferral falls under any subparagraph of Article 30-7 of the Act for the purpose of management.

[This Article Newly Inserted on Feb. 28, 2023]

Article 28(Capital Gains Tax Carried Forward Following Consolidation between Small or Medium Enterprises) #

(1)"Consolidation between small or medium enterprises engaging in the types of business prescribed by Presidential Decree" in Article 31 (1) of the Act means that a small or medium entrepreneur (referring to small or medium entrepreneurs subject to the Framework Act on Small and Medium Enterprises; hereafter in this Article, the same shall apply) engaging in a business, other than consumer service businesses defined under Article 29 (3) (limited to where the turnover of each consumer service business for the business year immediately preceding the business year in which the date of transfer of real estate falls, is the largest, if a small or medium entrepreneur concurrently engages in any of the consumer service businesses and other business), fully succeeds to the main assets at each business establishment relating to the business of the relevant enterprise, maintains the business identity, and meets the following requirements. In such cases, succession to a business of an individual investor by a corporation for which one year has not passed since its incorporation (limited to majority stockholders prescribed under Article 39 (2) of the Framework Act on National Taxes), shall not be deemed consolidation: <Amended on Dec. 31, 2001; Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 18, 2010; Feb. 15, 2013>

1. The small or medium entrepreneur of the business establishment to be extinguished upon consolidation, shall be a shareholder or an investor of the corporation which has survived, or newly incorporated in the course of such consolidation (hereafter in this Article, referred to as"consolidated corporation");

2. The value of stocks or shares acquired by the small or medium entrepreneur of the business establishment to be extinguished upon consolidation, shall be more than or equal to the net asset value of the business establishment to be extinguished upon such consolidation (referring to the total value of assets appraised at the market price as on the date of consolidation minus total liabilities, including the reserves; hereinafter the same shall apply).

(2)"Fixed business assets prescribed by Presidential Decree" in Article 31 (1) of the Act means tangible and intangible assets (excluding the assets determined to be real estate unrelated to the business of corporations as stipulated by Ordinance of the Ministry of Economy and Finance, which have been acquired as of January 1, 1981) used directly for the relevant business. <Amended on Dec. 31, 2001; Feb. 29, 2008; Feb. 18, 2010>

(3) Any person who intends to have the capital gains tax carried-forward under Article 31 (1) of the Act shall submit an application for tax carried-forward in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the consolidated corporation, at the time of filing his/her tax return for the taxable year in which the date of consolidation falls (including the provisional return). <Amended on Jan. 10, 2000; Dec. 31, 2001; Feb. 29, 2008>

(4) A person eligible for tax reduction or exemption for the remaining period of tax reduction or exemption under Article 31 (4) of the Act is entitled to such tax reduction or exemption for each taxable year that ends within the remaining period of tax reduction or exemption at the time of consolidation, with respect to the income generated from the business the person succeeded to from a small or medium start-up enterprise or a small or medium start-up venture enterprise to be extinguished upon consolidation, or an occupant enterprise in an agro-industrial complex or an area for special support for local small or medium enterprises designated under Article 23 of the Act on the Fostering and Innovation Promotion of Small and Medium Enterprises (hereinafter referred to as "area for special support for local small or medium enterprises"). <Amended on Jan. 10, 2000; Feb. 3, 2015; Sep. 29, 2016; Jan. 25, 2022; Feb. 29, 2024>

(5) A consolidated corporation that seeks the tax benefit provided for in Article 31 (4) of the Act shall file an application for tax reduction or exemption by applying mutatis mutandisArticle 5 (6) or 61 (7). <Amended on Feb. 15, 2013; Aug. 28, 2018; Feb. 12, 2019; Feb. 11, 2020>

(6) A person eligible for tax reduction or exemption for the remaining period of tax reduction or exemption under Article 31 (5) of the Act is entitled to such tax reduction or exemption for each taxable year that ends within the remaining period of tax reduction or exemption at the time of consolidation, with respect to the income generated from the business the person succeeded to from a small or medium entrepreneur to be extinguished upon consolidation. <Amended on Dec. 31, 2001; Dec. 30, 2002>

(7) Article 60 (5) or 65 shall apply mutatis mutandis to an application for tax reduction or exemption filed by a consolidated corporation that seeks the tax benefit provided for in Article 31 (5) of the Act. <Amended on Dec. 31, 2001; Feb. 18, 2010; Feb. 15, 2013>

(8) A person who has succeeded to an unused tax credit pursuant to Article 31 (6) of the Act may obtain a tax credit by carrying forward the equivalent to the unused tax credit on the assets succeeded to from a small or medium entrepreneur to be extinguished upon consolidation to each taxable year that ends within the remaining period of carry-forward deduction for that small or medium entrepreneur. <Amended on Dec. 30, 2002>

(9) Where a consolidated corporation disposes of at least 1/2 of the fixed business assets referred to in paragraph (2) it has succeeded to from a small or medium entrepreneur whose business establishment extinguishes upon consolidation, or fails to use the fixed business assets for its business, the consolidated corporation shall be deemed to discontinue its business under Article 31 (7) 1: Provided, That this shall not apply to any of the following cases: <Newly Inserted on Feb. 15, 2013>

1. Where the consolidated corporation disposes of the assets succeeded, due to its bankruptcy;

2. Where the consolidated corporation disposes of its assets by means of a merger under Article 44 (2) of the Corporate Tax Act, split-off under Article 46 (2) of that Act, spin-off under Article 47 (1) of that Act, or an investment in kind under Article 47-2 (1) of that Act;

3. Deleted. <Feb. 13, 2018>

4. Where the consolidated corporation disposes of the assets succeeded, in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court.

(10) A disposal under Article 31 (7) 2 of the Act includes a transfer of stocks or equity shares for or without consideration and capital reduction for or without consideration (excluding where stocks or equity shares are retired equally in proportion to the ratio of stocks or equity shares held by each stockholder or investor): Provided, That this shall not apply in the following cases: <Newly Inserted on Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 13, 2018>

1. Where the stocks or equity shares are disposed of upon the death or bankruptcy of a national eligible under Article 31 (1) of the Act (hereafter in this Article, referred to as"relevant national");

2. Where the relevant national disposes of the stocks or equity shares by means of a merger or split-off under Article 44 (2) or 46 (2) of the Corporate Tax Act;

3. Where the relevant domestic corporation disposes of the stocks or equity shares under the benefit of special taxation by means of comprehensive exchange and transfer of stocks under Article 38 of the Act or investment in kind with stocks under Article 38-2 of the Act;

4. Where the relevant national disposes of the stocks or equity shares in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court;

5. Where the relevant national disposes of the stocks or equity shares to perform his/her legal obligation;

6. Where the relevant national conveys stocks or equity shares of the relevant family business as a gift to any third person in order to transfer the family business, and the donee is granted special taxation for gift tax under Article 30-6 of the Act.

(11) For the purposes of paragraph (10) 6, Article 31 (7) of the Act shall apply to the donee, deeming that the donee is the relevant national, but the five-year period shall include the period during which the donor has held the stocks or equity shares of the consolidating corporation it acquired upon consolidation. <Newly Inserted on Feb. 3, 2015>

[Title Amended on Feb. 21, 2014]

Article 29(Capital Gains Tax Carried Forward Following Conversion into Corporation) #

(1) Deleted. <Dec. 30, 2002>

(2)"By the means of business transfer or acquisition prescribed by Presidential Decree" in the main clause of Article 32 (1) of the Act means the comprehensive transfer of all business-related rights and duties to the relevant corporation within three months from the date of its incorporation by a person who has operated the relevant business after incorporating such corporation by becoming one of the incorporators and investing at least the amount calculated under paragraph (5). <Amended on Feb. 9, 2006; Jun. 19, 2009; Dec. 30, 2010; Feb. 17, 2021>

(3)"Consumer service business prescribed by Presidential Decree" in the main clause of Article 32 (1) of the Act means any of the following businesses (hereinafter referred to as"consumer service business"): <Newly Inserted on Feb. 18, 2010; Feb. 17, 2021>

1. Hotel business and inn business (excluding tourist accommodation business under the Tourism Promotion Act);

2. Bar business (applicable only to general entertainment bar business, dancing entertainment bar business, and karaoke bar business under Article 21 of the Enforcement Decree of the Food Sanitation Act, but excluding foreigner-only entertainment restaurant business and tourist entertainment restaurant business under the Tourism Promotion Act);

3. Other businesses for the purpose of amusement, entertainment, etc., which are prescribed by Ordinance of the Ministry of Economy and Finance.

(4) A person who intends to have capital gains tax carried-forward under Article 32 (1) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, an application for carried-forward taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with a newly-incorporated corporation, when filing his/her tax return (including provisional returns) for the taxable year in which the date of an investment in kind or the date of business transfer and acquisition falls. <Amended on Jan. 10, 2000; Dec. 31, 2001; Feb. 29, 2008; Feb. 18, 2010>

(5)"Amount prescribed by Presidential Decree" in Article 32 (2) of the Act means the amount calculated by applying mutatis mutandisArticle 28 (1) 2, which is the net asset value of a business place converted into a corporation by making an investment in kind with fixed business assets, or transferring and acquiring a business. <Amended on Dec. 30, 2002; Feb. 18, 2010>

(6) Where a corporation incorporated under Article 32 (1) of the Act (hereafter in this Article, referred to as"converted corporation"), disposes of at least 1/2 of the fixed business assets acquired through investment in kind or business transfer or acquisition pursuant to Article 32 (1) of the Act, or fails to use the fixed business assets for its business, the corporation shall be deemed to discontinue its business under Article 32 (5) 1 of the Act: Provided, That this shall not apply to any of the following cases: <Amended on Feb. 15, 2013>

1. Where the converted corporation disposes of the assets succeeded due to its bankruptcy;

2. Where the converted corporation disposes of its assets by means of a merger under Article 44 (2) of the Corporate Tax Act, split-off under Article 46 (2) of that Act, spin-off under Article 47 (1) of that Act, or an investment in kind under Article 47-2 (1) of that Act;

3. Deleted. <Feb. 13, 2018>

4. Where the converted corporation disposes of the assets succeeded, in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court.

(7) A disposal under Article 32 (5) 2 of the Act includes a transfer of stocks or equity shares for or without consideration and capital reduction for or without consideration (excluding where stocks or equity shares are retired equally in proportion to the ratio of stocks or equity shares held by each stockholder or investor): Provided, That this shall not apply in the following cases: <Newly Inserted on Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 13, 2018>

1. Where the stocks or equity shares are disposed of, upon the death or bankruptcy of a national eligible under Article 32 (1) of the Act (hereafter in this Article, referred to as"relevant resident");

2. Where the relevant resident disposes of the stocks or equity shares by means of a merger or split-off under Article 44 (2) or 46 (2) of the Corporate Tax Act;

3. Where the relevant resident disposes of the stocks or equity shares under the benefit of special taxation by means of comprehensive exchange and transfer of stocks under Article 38 of the Act or investment in kind with stocks under Article 38-2 of the Act;

4. Where the relevant resident disposes of the stocks or equity shares in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court;

5. Where the relevant resident disposes of the stocks or equity shares to perform his/her legal obligation;

6. Where the relevant resident conveys stocks or equity shares of the relevant family business as a gift to any third person in order to transfer the family business, and the donee is granted special taxation for gift tax under Article 30-6 of the Act.

(8) For the purposes of paragraph (7) 6, Article 32 (5) of the Act shall apply to the donee by deeming that the donee is the relevant national, but the five-year period shall include the period during which the donor has held the stocks or equity shares of the consolidating corporation it acquired upon consolidation. <Newly Inserted on Feb. 3, 2015>

Article 30(Special Taxation for Enterprises Undergoing Trade Adjustment Assistance whose Business is Converted) #

(1) Deleted. <Feb. 4, 2009>

(2)"Fixed business assets" in the former part of Article 33 (1) of the Act means tangible fixed assets and intangible fixed assets used directly for the relevant business.

(3) Business conversion eligible for Article 33 (1) of the Act means that a person transfers fixed assets for the pre-conversion business at each place of business and starts the converted business by acquiring replacement fixed business assets to be used directly for the converted business within one year from the date of such transfer.

(4)"Amount calculated, as prescribed by Presidential Decree" in the former part of Article 33 (1) of the Act means the amount calculated by multiplying the amount of subparagraph 1 by the ratio of subparagraph 2: <Amended on Feb. 4, 2009; Feb. 12, 2019>

1. The transfer value of the fixed assets for the pre-conversion business minus the aggregate of the book value of the fixed assets and carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act as of the end of the immediately preceding business year;

2. The ratio of the acquisition value of the fixed assets for the converted business to the transfer value of the fixed assets for the pre-conversion business.

(5) The amount of tax reduction or exemption under Article 33 (2) 1 of the Act shall be calculated by the following formula: <Amended on Feb. 2, 2012>

Amount of the capital gains tax calculated under subparagraph 1 of Article 93 of the Income Tax Act, payable upon the transfer of the building for the pre-conversion business and the land appurtenant thereto × Ratio of the acquisition value of the machinery and equipment of the converted business to the transfer value of the pre-conversion business × 50/100

(6) The amount eligible for tax deferral under Article 33 (2) 2 of the Act shall be calculated by the following formula: <Amended on Feb. 2, 2012>

Capital gains provided for in Article 95 (1) of the Income Tax Act × (Acquisition value of the building for the converted business and the land appurtenant thereto ÷ Transfer value of the pre-conversion business)

(7) For the purposes of paragraphs (4) through (6), where none of the fixed assets for the converted business, the machinery, equipment, and building for the converted business, and land appurtenant thereto, is acquired by the end of the business year in which the fixed assets for the pre-conversion business are transferred, the acquisition value shall be the estimated value in a statement of (planned) business conversion.

(8)"Amount calculated, as prescribed by Presidential Decree" in the former part of Article 33 (3) of the Act, with the exception of its subparagraphs, means the following amounts: <Amended on Feb. 18, 2010; Feb. 2, 2017; Feb. 13, 2018>

1. Where capital gains are not included in the gross income pursuant to paragraph (4), the total amount not included in the gross income;

2. Where the capital gains tax is reduced or exempted pursuant to paragraph (5), the total amount of tax reduced or exempted;

3. Where the tax is deferred under paragraph (6), the total equivalent to the tax-deferred amount (referring to the amount of tax calculated by multiplying the tax rate specified in Article 104 of the Income Tax Act by the tax-deferred amount; hereafter in this paragraph and paragraphs (9) and (14), referred to as"amount of tax deferred");

4. Where the estimated value is not included in the gross income under paragraph (7), the tax is reduced, exempted, or deferred, the amount granted in excess of the amount calculated on the basis of the actual value pursuant to paragraphs (4) through (6).

(9)"Equivalent to the interest calculated, as prescribed by Presidential Decree" in the latter part of Article 33 (3) of the Act shall be the amount calculated as follows: <Amended on Feb. 4, 2009; Feb. 18, 2010; Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022>

1. Where the amount referred to in paragraph (8) 1 and 4 is included in the gross income: The amount calculated by multiplying the difference in corporate tax incurred by excluding the amount referred to in paragraph (8) 1 or 4 from the gross income for the business year in which capital gains are not included in gross income, by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which capital gains are not included in the gross income, until the end of the business year in which the amount referred to in paragraph (8) 1 or 4 is included in the gross income;

(b) The rate specified in Article 11-2 (9) 2;

2. Where the tax referred to in paragraph (8) 2 through 4 is paid: The amount calculated by multiplying the amount of tax reduced, exempted, or deferred that has to be paid pursuant to paragraph (8) 2 through 4, by the period of item (a) and the rate of item (b):

(a) The period from the day following the deadline for payment of capital gains tax for the provisional return on fixed assets for the pre-conversion business until the date the amount of tax is paid under subparagraphs of Article 33 (3) of the Act;

(b) The rate specified in Article 11-2 (9) 2;

(10) For the purpose of Article 33 of the Act, the business shall be classified into a subclass according to the Korea Standard Industrial Classification. <Newly Inserted on Feb. 28, 2007>

(11) Any domestic corporation that wishes to be eligible for Article 33 (1) of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of (planned) business conversion, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the business year in which the fixed assets for the pre-conversion business are transferred. <Amended on Feb. 28, 2007; Feb. 29, 2008>

(12) Any resident who wishes to be granted a reduction, exemption, or deferral of capital gains tax pursuant to Article 33 (2) of the Act shall submit an application for tax reduction, exemption, or deferral, and a statement of (planned) business conversion, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return (including the provisional return) for the taxable year in which the fixed assets for the pre-conversion business are transferred. <Amended on Feb. 28, 2007; Feb. 29, 2008>

(13) When a person starts the converted business after the application of paragraph (7), the person shall submit a report on the completion of the business conversion in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which he/she starts the converted business. <Amended on Feb. 28, 2007; Feb. 29, 2008>

(14)"Amount of tax deferred, calculated as prescribed by Presidential Decree" in Article 33 (4) of the Act, with the exception of its subparagraphs, means the total amount of tax deferred under paragraph (8) 3. <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on Feb. 9, 2006]

[Title Amended on Feb. 4, 2009]

Article 34(Special Taxation for Assets Sold by Domestic Corporations to Pay Financial Debts) #

(1)"Date prescribed by Presidential Decree" in Article 34 (1) of the Act means the date a domestic corporation receives an installment (the down payment is deemed to be included in the first installment). <Amended on May 10, 2016>

(2) For the purposes of Article 34 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the date an asset is transferred (hereafter in this Article, referred to as"date an asset is transferred"): Provided, That dates prescribed in paragraph (1) shall apply to the transfer of an asset under long-term installment terms.

(3)"Unavoidable causes prescribed by Presidential Decree" in Article 34 (1) of the Act means where it is impracticable to repay a debt due to a situation in which the financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act (hereafter in this Article, referred to as"financial creditor") is unable to receive the repayment of the debt. <Amended on May 10, 2016; Feb. 13, 2018>

(4)"Deadline prescribed by Presidential Decree" in Article 34 (1) of the Act means the deadline specified in the following: <Amended on May 10, 2016>

1. Where the causes provided for in paragraph (3) arise and the date such causes terminate comes later than the date specified in subparagraph 2, the date following the date such causes terminate;

2. In any case other than subparagraph 1, the date three months lapse from the date assets are transferred.

(5) For the purposes of Article 34 (1) and (2) of the Act, the scope of debts shall be limited to those specified in the financial restructuring plan provided for in paragraph (6), which shall contain the details of the debts and a repayment plan through the transfer of assets, and shall include the following (hereafter in this Article, referred to as"debts to financial creditors"): <Amended on May 10, 2016; Feb. 13, 2018>

1. Business-related loans from any financial creditor;

2. Interest on the loans referred to in subparagraph 1;

3. Corporate bonds issued by the relevant domestic corporation to raise funds, which are purchased or guaranteed by the financial creditor;

4. Commercial paper issued by the relevant domestic corporation to raise funds, which is purchased by the financial creditor.

(6)"Financial restructuring plan prescribed by Presidential Decree" in Article 34 (1) of the Act means any of the following documents, which specify the total amount and details of debts to financial creditors, a repayment plan, details of assets to be transferred, and a transfer plan (hereafter in this Article, referred to as"financial restructuring plan"): <Amended on May 10, 2016; Feb. 7, 2017; Feb. 13, 2018; Feb. 17, 2022>

1. An agreement made between the principal creditor bank defined in subparagraph 5 of Article 2 of the Corporate Restructuring Promotion Act, or a council of financial creditors provided for in Article 22 of that Act (hereafter in this Article, referred to as"council of financial creditors or such") and an enterprise to implement the workout program pursuant to Article 14 of that Act;

2. A special agreement made between a committee (hereafter in this Article, referred to as"creditor banks’ autonomous committee") organized among banks having bonds of an enterprise subject to financial restructuring, to assess credit risks and to discuss a restructuring plan, etc. of the enterprise subject to financial restructuring and the enterprise subject to financial restructuring in accordance with the basis to organize such, and an agreement stipulating the joint management procedure of the banks having bonds of the enterprise subject to financial restructuring to implement the workout program;

3. Timely corrective measures, which the Financial Services Commission recommends, requests, or orders to the relevant financial institution under Article 10 of the Act on the Structural Improvement of the Financial Industry, or the Financial Services Commission orders the relevant financial institution to submit the implementation plan such timely corrective measures;

4. A rehabilitation plan formulated under Article 193 of the Debtor Rehabilitation and Bankruptcy Act, for which a decision on authorization is declared by the court under Article 245 of that Act;

5. An agreement made by the Korea Asset Management Corporation under the Act on the Establishment of Korea Asset Management Corporation (hereafter in this Article referred to as"Korea Asset Management Corporation") with a small or medium enterprise that falls under either of the following to improve its financial structure:

(a) A possibly insolvent enterprise defined in the Act on the Establishment of Korea Asset Management Corporation;

(b) A restructuring company defined in the Act on the Establishment of Korea Asset Management Corporation.

(7)"Persons prescribed by Presidential Decree" in Article 34 (1) of the Act means the following entities (hereafter in this Article and Articles 36, 37, and 43, referred to as"person authorized to approve the financial restructuring plan"): <Amended on May 10, 2016; Feb. 7, 2017>

1. In cases falling under paragraph (6) 1: A council of financial creditors or such;

2. In cases falling under paragraph (6) 2: A creditor banks’ autonomous committee;

3. In cases falling under paragraph (6) 3: The Financial Services Commission;

4. In case falling under paragraph (6) 4: The competent court;

5. In case falling under paragraph (6) 5: The Korea Asset Management Corporation.

(8)"Amount equivalent to the paid debts prescribed by Presidential Decree (limited to the amount that exceeds the deficit prescribed by Presidential Decree)" in Article 34 (1) of the Act means an amount calculated by the following formula (hereafter in this Article referred to as"equivalent to capital gains"): <Amended on May 10, 2016; Feb. 11, 2020>

[Capital gains referred to in Article 34 (1) of the Act ? Carried-forward losses referred to in subparagraph 1 of Article 13 of the Corporate Tax Act (hereafter in this Article referred to as"carried-forward losses") as at the end of the business year immediately preceding the business year in which assets are transferred. If the domestic corporation covers carried-forward losses first with the value of assets it has acquired without consideration or with the reduced amount of debts due to debt relief or acquittance in such cases, the covered amount shall be subtracted from the carried-forward losses] × [the amount of debts paid to financial institutions (hereafter in this Article referred to as"amount of debts paid") out of the transfer value of assets transferred pursuant to Article 34 (1) of the Act (hereafter in this Article referred to as"transfer value") ÷ the transfer value]

(9) For the purposes of paragraph (8), if debts to financial creditors have not been paid until the end of the business year in which the date assets are transferred, the amount of debts paid shall be determined with the amount of debts payable on the statement of debts paid (payable) in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on May 10, 2016; Feb. 13, 2018>

(10) Where an amount not included in gross income is included in gross income in accordance with the former part of Article 34 (2) of the Act, with the exception of its subparagraphs, the amount calculated by the following formula shall be included in gross income: <Amended on May 10, 2016>

1. In cases falling under Article 34 (2) 1 of the Act: The amount calculated by the following formula:

Equivalent to capital gains × [Amount of debts payable on the statement of debts paid (or payable) - Amount of debts paid out of the transfer value] ÷ Amount of debts payable on the statement of debts repaid (or payable)

2. In cases falling under Article 34 (2) 2 of the Act: The amount calculated by the following formula:

Equivalent to capital gains × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)

3. In cases falling under Article 34 (2) 3 of the Act: The full amount not included in gross income out of the equivalent to capital gains.

(11)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 34 (2) of the Act, with the exception of its subparagraphs, and the proviso to Article 34 (2) 3 of the Act means the difference in corporate tax incurred by excluding the amount calculated under any subparagraph of paragraph (10) from gross income for the business year in which assets are transferred, multiplied by the period of subparagraph 1 and the rate of subparagraph 2: <Amended on May 10, 2016; Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the end of the business year in which the assets are transferred, until the end of the business year in which the amount calculated under any subparagraph of paragraph (10) is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(12) For the purposes of paragraphs (10) (excluding paragraph (10) 3; hereafter in this paragraph, the same shall apply) and (11), if an amount not included partially or fully in gross income in accordance with Article 34 (1) of the Act is included later in gross income (hereafter in this Article, referred to as"amount already included in gross income") before including the amount calculated under paragraph (10) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (10); and the equivalent to interest referred to in paragraph (11) shall be calculated, based on the period until the business year in which the amount already included in gross income is included in gross income. <Amended on May 10, 2016>

(13) For the purposes of Article 34 (2) 2 of the Act, if the date assets are transferred and the date debts are repaid to financial creditors (hereafter in this Article, referred to as"date debts are repaid"), fall in different business years, the three-year period shall be counted from the date debts are repaid. <Amended on May 10, 2016; Feb. 13, 2018>

(14) For the purposes of Article 34 (2) 2 of the Act, the three-year period shall be counted, deeming that the period from the date assets are transferred (referring to the date debts are repaid, in cases falling under paragraph (13)), until the end of the relevant business, is one year. <Amended on May 10, 2016>

(15) For the purposes of Article 34 (2) 2 of the Act, the debt ratio shall be calculated by dividing the liabilities prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"liabilities") as at the end of each business year, by the stockholder's equity on the statement of financial position (its amount shall be calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, and it refers to the paid-in capital calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, if the stockholder's equity is less than the paid-in capital; hereafter in this Article, referred to as"stockholder's equity"). Foreign-currency denominated assets and liabilities in such cases shall be valued, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on May 10, 2016; Jan. 5, 2021>

(16) For the purposes of Article 34 (2) 2 of the Act, the standard debt ratio shall be the ratio of subparagraph 1 minus the ratio of subparagraph 2. In such cases, the latter part of paragraph (15) shall apply to foreign-currency denominated assets and liabilities: <Amended on May 10, 2016>

1. The ratio calculated by dividing liabilities as at the end of the business year (hereafter in this Article, referred to as"record date for calculation of the standard debt ratio") immediately preceding the business year in which a financial restructuring plan is first approved, by the stockholders' equity as at the record date for calculation of the standard debt ratio. If liabilities and stockholder's equity are valued and confirmed by the person authorized to approve the financial restructuring plan to formulate a financial restructuring plan as of a specific day during the period from the record date for calculation of the standard debt ratio to the date before the date the financial restructuring plan is first approved, such liabilities and stockholder's equity may be used for calculation in such cases;

2. The ratio calculated by dividing the amount of debts paid, by the stockholder's equity referred to in subparagraph 1.

(17)"Unavoidable cause prescribed by Presidential Decree, such as bankruptcy" in the proviso to Article 34 (2) 3 of the Act means the following cases:

1. Where bankruptcy is declared;

2. Where a business is discontinued due to a natural disaster or any other similar event.

(18) The person authorized to approve the financial restructuring plan shall submit the financial restructuring plan and a report on performance of the financial restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment of a domestic corporation whose financial restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved financial restructuring plan") by the following relevant deadline: Provided, That, where the domestic corporation with an approved financial restructuring plan submits its financial restructuring plan or a report on performance of its financial restructuring plan, which have been confirmed by the person authorized to approve the financial restructuring plan, to the head of the tax office having jurisdiction over the place of tax payment, such plan and report shall be deemed submitted by the person authorized to approve the financial restructuring plan: <Amended on May 10, 2016>

1. The financial restructuring plan: By the end of the business year in which the domestic corporation’s financial restructuring plan is approved;

2. The report on performance of the financial restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which assets are transferred;

(b) The business year in which debts are repaid (limited to where the date assets are transferred and the date debts are repaid, fall in different business years);

(19) A domestic corporation that wishes to be eligible under Article 34 (1) of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of debts paid (payable), in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which assets are transferred. It shall submit a statement of debts paid (or payable) additionally, along with its tax return for the business year in which debts are repaid, if the date assets are transferred and the date debts are repaid, fall in different business years. <Amended on May 10, 2016>

[This Article Newly Inserted on Jun. 19, 2009]

[Title Amended on May 10, 2016]

Article 35-2(Special Taxation for Corporations following All-Inclusive Share Swap or Transfer) #

(1) Where a corporation (limited to domestic corporations and foreign corporations referred to in Article 91 (1) of the Corporate Tax Act; hereafter in this Article, the same shall apply) that is a stockholder of a domestic corporation (hereafter in this Article, referred to as"wholly-owned subsidiary"), conducts an all-inclusive share swap or transfer (hereafter in this Article, referred to as"all-inclusive share swap, etc.") with or to another domestic corporation (hereafter in this Article, referred to as"complete parent company") as prescribed in Article 38 (1) of the Act, and is granted tax deferral, the corporation may include the equivalent to the amount of subparagraph 1 minus the amount of subparagraph 2 in deductible expenses, when calculating the income amount for the business year in which the date of the all-inclusive share swap, etc. falls. In such cases, the amount included in deductible expenses shall be recognized as the advanced depreciation provision of stocks of the complete parent company or of the complete parent company of that complete parent company, acquired through the all-inclusive share swap, etc.: <Amended on Dec. 30, 2010; Feb. 7, 2017>

1. The amount calculated by subtracting the acquisition price of stocks of the wholly-owned subsidiary transferred through the all-inclusive share swap, etc. from the aggregate of the price of stocks of the complete parent company (referring to stocks of the complete parent company of the complete parent company, if the value of stocks of the complete parent company of the complete parent company is at least 80/100 of the aggregate of the price for the swap or transfer received under Article 38 (1) 2 of the Act; hereafter in this Article, referred to as"stocks of the complete parent company, etc."), acquired through the all-inclusive share swap, etc., money, and value of other property (hereafter in this Article, referred to as"price for the swap or transfer");

2. The smaller of an amount calculated under subparagraph 1, and the aggregate of money, other than stocks of the complete parent company, etc., received as the price for the swap or transfer, and value of other property.

(2) The advanced depreciation provision recognized under paragraph (1) shall be adjusted by the following formula and be included in the gross income in the business year in which the relevant corporation disposes of the stocks of the complete parent company, etc.; However, if such stocks are retired as treasury stocks, the advanced depreciation provision adjusted as aforementioned shall not be included in the gross income, but be deemed to become extinct. In such cases, if stocks of the complete parent company, etc. have been acquired through any means other than an all-inclusive share swap, etc., stocks acquired through the all-inclusive share swap, etc. shall be deemed transferred first: <Amended on Feb. 7, 2017>

Advanced depreciation provision × (Number of stocks disposed of ÷ Number of stocks acquired through the all-inclusive share swap, etc.)

(3) Where a resident, non-resident, or foreign corporation not falling under Article 91 (1) of the Corporate Tax Act (hereafter in this Article, referred to as"resident, etc."), being a stockholder of a wholly-owned subsidiary, conducts an all-inclusive share swap, etc. with a complete parent company as prescribed in Article 38 (1) of the Act, and is granted tax deferral, capital gains tax or financial investment tax shall be imposed, deeming that the smaller of the amounts calculated under subparagraphs 1 and 2, is capital gains or financial investment income: <Amended on Dec. 30, 2010; Feb. 7, 2017; Feb. 15, 2022>

1. An amount calculated by subtracting the acquisition value of stocks of the wholly-owned subsidiary that have been transferred by the all-inclusive share swap, etc., from the price for the swap or transfer;

2. The aggregate of money, other than stocks of the complete parent company, etc., received as the price for the swap or transfer, and value of other property.

(4) When a resident, etc. transfers all or some of the stocks of a complete parent company, etc., acquired under paragraph (3), capital gains tax or financial investment income tax shall be imposed, deeming the amount calculated by the following formula to be the acquisition value. In such cases, where stocks of the complete parent company, etc. have been acquired through any means other than an all-inclusive share swap, etc., stocks acquired through the all-inclusive share swap, etc. shall be deemed transferred first: <Amended on Feb. 7, 2017; Feb. 15, 2022> (Acquisition value of stocks of the wholly-owned subsidiary + Capital gains calculated under paragraph (3) - Amount calculated under paragraph (3) 2) × (Number of stocks disposed of ÷ Number of stocks acquired through the all-inclusive share swap, etc.)

(Acquisition value of stocks of the wholly-owned subsidiary + Capital gains calculated under paragraph (3) - Amount calculated under paragraph (3) 2) × (Number of stocks disposed of ÷ Number of stocks acquired through the all-inclusive share swap, etc.)

(5) Where a complete parent company has acquired stocks of a wholly-owned subsidiary within two years prior to the date of all-inclusive swap or transfer of stocks of a complete parent company for the purposes of determining whether the value of stocks amounts to at least 80/100 of the total price for the swap or transfer as prescribed in Article 38 (1) 2 of the Act, the following amounts shall be deemed given in cash and be added to the total price for the swap or transfer:

1. Where the complete parent company is not a controlling stockholder under Article 43 (7) of the Enforcement Decree of the Corporate Tax Act of the wholly-owned subsidiary as at the date of all-inclusive share swap or transfer: Where the stocks of such wholly-owned subsidiary acquired by the complete parent company within two years prior to the date of all-inclusive share swap or transfer, exceed 20/100 of the total number of outstanding stocks of the wholly-owned company: The acquisition value of such stocks in excess;

2. Where the complete parent company is the controlling stockholder under Article 43 (7) of the Enforcement Decree of the Corporate Tax Act of the wholly-owned subsidiary as at the date of all-inclusive share swap or transfer: The acquisition price of stocks acquired within two years prior to the date of all-inclusive share swap or transfer.

(6)"Stockholders of the wholly-owned subsidiary prescribed by Presidential Decree" in Article 38 (1) 2 and (2) 2 of the Act means the controlling stockholders under Article 43 (3) of the Enforcement Decree of the Corporate Tax Act (including their related parties under paragraph (8) of that Article) of the wholly-owned subsidiary, except: <Amended on Feb. 21, 2014; Feb. 28, 2023>

1. Fourth-degree relatives by blood among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;

2. Persons whose equity ratio in the wholly-owned subsidiary is less than 1/100, and the value of the equity share at the appraised market price is less than one billion won as of the date of all-inclusive share swap or transfer.

(7) When the stocks of a complete parent company, etc. received as the price for the swap or transfer, are distributed to the stockholders of a wholly-owned subsidiary, stocks of the complete parent company, etc. in at least the amount calculated by the following formula, shall be distributed to the stockholders referred to in paragraph (6): <Amended on Feb. 7, 2017>

Aggregate of stocks of the complete parent company, etc., paid by the complete parent company as the price for the swap or transfer × Share-holding ratio of the relevant stockholder in the wholly-owned subsidiary

(8) Where a wholly-owned subsidiary disposes of at least 1/2 of the value of fixed assets held as at the date of all-inclusive share swap or transfer, or does not use it for its business when determining whether the wholly-owned subsidiary continues or closes the business under Article 38 (1) 3 and (2) 1 of the Act, it shall be deemed to have closed its business.

(9) Deleted. <Feb. 13, 2018>

(10) Deleted; <Feb. 13, 2018>

(11)"Period prescribed by Presidential Decree" in Article 38 (2) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which the date of an all-inclusive share swap or transfer falls. <Amended on Feb. 2, 2012>

(12) Where either of the circumstances provided for in any subparagraph of Article 38 (2) of the Act arises with respect to a wholly-owned subsidiary, a stockholder thereof shall pay the capital gains tax, financial investment income tax, or corporate tax deferred, according to the following distinction: <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. Where the stockholder of the wholly-owned subsidiary is a resident: The amount of tax transferred under Article 38 (1) of the Act (excluding the portion already paid out of the amount of tax transferred and the amount of tax paid pursuant to paragraph (3) of this Article) shall be paid within two months from the end of a half-year term in which the date the relevant circumstance arises falls. In such cases, if stocks of the complete parent company, etc. are transferred, the acquisition value of such stocks shall be the market price of the stocks of the complete parent company, etc. as at the date of the comprehensive exchange and transfer of the stocks;

2. Where the stockholder of the wholly-owned subsidiary is a corporation: When calculating the amount of income for the business year in which the date the relevant circumstance arises falls, the balance left over after including the amount included in the deductible expenses as the advanced depreciation provision under paragraph (1) in the gross income under paragraph (2), shall be included in the gross income.

(13)"Where extenuating circumstances prescribed by Presidential Decree arise" in Article 38 (3) of the Act means either of the following circumstances: <Amended on Feb. 2, 2012>

1. Where extenuating circumstances are deemed to have arisen for the purposes of Article 38 (1) 2 and (2) 2 of the Act: Where a complete parent company and stockholders referred to in paragraph (6) fall under any of the items of Article 80-2 (1) 1 of the Enforcement Decree of the Corporate Tax Act;

2. Where extenuating circumstances are deemed to have arisen for the purposes of Article 38 (1) 3 and (2) 1 of the Act: Where a wholly-owned subsidiary falls under any of the items of Article 80-2 (1) 2 of the Enforcement Decree of the Corporate Tax Act.

(14) A stockholder of a wholly-owned subsidiary who intends to be eligible under Article 38 (1) of the Act shall file an application for special taxation for all-inclusive share swap, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, jointly with the complete parent company, when filing his/her tax return for the taxable year in which the date of all-inclusive share swap or transfer falls. <Amended on Feb. 5, 2016>

(15) Deleted; <Feb. 13, 2018>

[This Article Newly Inserted on Jun. 8, 2010]

[Previous Article 35-2 moved to Article 35-3 <Jun. 8, 2010>]

Article 35-3(Special Taxation for Corporate Stockholders concerning Incorporation of Holding Companies) #

(1) Where a corporation, being a stockholder of a domestic corporation, invests in kind with stocks held by it in a holding company or converted holding company, or exchanges such stocks with the stocks of the holding company or converted holding company pursuant to Article 38-2 (1) or (2) of the Act, and is granted tax deferral, the corporation shall include the amount (where the amount exceeds the amount calculated by subtracting the book value from the market price of the relevant stocks held, the excess shall be excluded; hereafter in this Article, referred to as"stock transfer gains") calculated by subtracting the book value of the relevant stocks held as at the date immediately preceding the date such investment in kind or exchange was made (hereafter in this Article and in Article 35-4, referred to as"investment in kind, etc.") from the price of stocks (referring to the appraised market price under Article 52 (2) of the Corporate Tax Act) of the holding company or converted holding company acquired by investment in kind, etc. as at the date investment in kind, etc. was made in the deductible expenses in calculating the amount of income for such business year. In such cases, said amount shall be recognized as the advanced depreciation provision for such stocks.

(2) The advanced depreciation provision recognized under paragraph (1) shall be included in gross income in the business year in which the stocks of the relevant holding company or converted holding company are disposed of (where stocks are acquired by any means other than investment in kind, etc., the stocks acquired by investment in kind, etc. are deemed disposed of first), but where some of such stocks are disposed of, the amount calculated by the following formula shall be included in gross income:

Advanced depreciation provision × (Number of disposed stocks out of stocks of a holding company or a converted holding company, which are acquired by investment in kind or treasury stock swap ÷ Number of stocks of a holding company or a converted holding company, which are acquired by investment in kind or treasury stock swap)

(3) Notwithstanding paragraph (2), where stocks of the relevant holding company or converted holding company are transferred by qualified division that meets the requirements prescribed in Article 82-2 (3) 2 of the Enforcement Decree of the Corporate Tax Act (excluding split-offs and mergers by division; hereafter in this paragraph, referred to as"qualified division"), the advanced depreciation provision reflected in the relevant stocks shall not be included in gross income, while the corporation newly established as a consequence of the qualified division shall succeed to the advanced depreciation provision reflected in the stocks as the advanced depreciation provision for the stocks of the holding company or converted holding company, which it acquires by the qualified division, and shall include such advanced depreciation provision calculated by the formula prescribed in paragraph (2) in its gross income.

(4)"Stockholders prescribed by Presidential Decree" in Article 38-2 (1) 1 and (3) 4 of the Act means stockholders falling under Article 80-2 (5) of the Enforcement Decree of the Corporate Tax Act, among stockholders of a corporation that has issued stocks subject to investment in kind, etc.

(5) Articles 80-2 (7) and 80-4 (8) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether a subsidiary continues or closes its business under Article 38-2 (1) 2 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 3 of the Act.

(6) Where a holding company or converted holding company acquires the stocks of its subsidiary defined in Article 38-2 (1) 2 of the Act (hereafter in this Article and Article 35-4 referred to as"subsidiary") at the book value pursuant to the former part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, it shall recognize the value of the subsidiary's stocks acquired through investment in kind, etc. as the market price as at the date such investment in kind, etc. is made, but reflect an amount calculated by subtracting the total book value of the subsidiary's stocks from the market price in the asset adjustment account. In such cases, the recognized asset adjustment account shall include the amount calculated by the following formula in the gross income or deductible expenses in the business year in which the relevant stocks are disposed of; and where such stocks are retired as treasury stocks, it shall be excluded from the gross income or deductible expenses, but be deemed to become extinct:

Asset adjustment account × (Number of stocks disposed of ÷ Number of stocks acquired through investment in kind, etc.)

(7)"Period prescribed by Presidential Decree" in the former part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which investment in kind, etc. is made.

(8) Where any of the causes provided for in any subparagraph of Article 38-2 (3) of the Act arises after a corporation has included the equivalent to the stock transfer gains in the deductible expenses as prescribed in paragraph (1), any balance in the asset adjustment account under paragraph (6) of this Article (limited to where the balance is greater than zero; if the balance is less than zero, it shall be deemed nil) shall be included in the deductible expenses pursuant to the former part of that paragraph, with the exception of its subparagraphs. In such cases, the asset adjustment account recognized under paragraph (5) shall be deemed extinguished.

(9) Public notice of a treasury stock swap under Article 38-2 (2) 3 of the Act shall be made by publishing the following matters at least once on a nationally-circulated newspaper among the general dailies or the special dailies in the economy field permitted under the Act on the Promotion of Newspapers:

1. The date of the treasury stock swap and the scope of stocks to be swapped;

2. The deadline for, and place of, presenting the stock certificates;

3. The quantity, ratio, and method of the swap;

4. The content that all shareholders are allowed to participate in the swap of treasury stocks, and other matters necessary for the stock swap.

(10) The equivalent to interest payable in addition to corporate tax under the latter part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, shall be calculated by multiplying the amount of subparagraph 1 by the value of subparagraph 2:

1. The difference in the amount of corporate tax incurred due to a failure to include the balance in the asset adjustment account to be included in the gross income under paragraph (8) in the gross income of the business year in which the date of investment in kind, etc. falls for the event prescribed in Article 38-2 (3) 2 of the Act;

2. 22/100000 per day for the period from the commencement date of the business year following the business year in which the date of investment in kind, etc. falls, until the end of the business year in which the balance in the asset adjustment account is added to gross income.

(11)"Cases prescribed by Presidential Decree" in the proviso to Article 38-2 (3) 1 of the Act means where a holding company or converted holding company satisfies, as of the end of each business year, the criteria for holding companies under the statutes or regulations in effect as at the time it was incorporated or converted into a holding company (referring to the criteria in effect closest to the date of revising criteria, where the holding company's criteria have been revised at least two occasions during the period from after incorporation or conversion to the date of revising criteria), among the period (hereafter in this paragraph, referred to as"grace period") of the business year in which the date of revising the criteria for holding company (hereafter in this paragraph, referred to as"date of revising criteria") due to the amendments of statutes or regulations (referring to the business year of the relevant holding company that ceases to be a holding company due to a revision of holding company's criteria; hereafter in this paragraph, the same shall apply), and of the business year that ends within four years from the commencement date of the following business year, which remains in the relevant grace period.

(12) Paragraphs (1) and (2) shall apply mutatis mutandis to the deferral of corporate tax under Article 38-2 (4) of the Act. In such cases, the amount to be recognized as the advanced depreciation provision shall be the aggregate of the amount of tax deferred under paragraph (1), and the transfer gains accrued by swapping the stocks of the intermediary holding company granted tax deferral with the stocks of the financial holding company that controls the relevant intermediary holding company; and the relevant advanced depreciation provision shall be included in the gross income in the business year in which the stocks of the financial holding company acquired through swap with the stocks of the intermediary holding company are disposed of.

(13)"Where unavoidable causes prescribed by Presidential Decree arise" in Article 38-2 (5) of the Act means any of the following cases:

1. Where an unavoidable cause is deemed to arise for the purposes of Article 38-2 (1) 1 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 4 of the Act: Where a holding company, converted holding company, and stockholders referred to in paragraph (4), fall under any item of Article 80-2 (1) 1 of the Enforcement Decree of the Corporate Tax Act;

2. Where an unavoidable cause is deemed to arise for the purposes of Article 38-2 (1) 2 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 3 of the Act: Where a holding company and a subsidiary of a converted holding company, falls under any items of Article 80-2 (1) 2 of the Enforcement Decree of the Corporate Tax Act.

(14) Where a corporation, being a stockholder of a subsidiary has included stock transfer gains through investment in kind, etc. in deductible expenses as prescribed in paragraph (1), a holding company or converted holding company shall deem the stocks of the subsidiary acquired through investment in kind, etc. to have been acquired at the book value of the corporation, being a stockholder of such subsidiary:

(15) A corporation that intends to be eligible under Article 38-2 (1), (2), and (4) of the Act shall submit an application for special taxation for investment in kind, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, together with the holding company or converted holding company, when filing its tax return for the business year in which such investment in kind, etc. is made.

(16) A holding company or converted holding company that has acquired stocks of a subsidiary at the book value as prescribed in paragraph (14) shall submit a statement of calculation of the book value of stocks of the subsidiary prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when filing its tax return for the business year in which investment in kind, etc. is made.

[This Article Wholly Amended on Feb. 28, 2023]

Article 35-4(Special Taxation for Resident Stockholders concerning Incorporation of Holding Companies) #

(1) Where a resident, being a stockholder of a domestic corporation, invests in kind with the stocks in possession in a holding company or converted holding company, or exchanges such stocks with the stocks thereof as prescribed in Article 38-2 (1) or (2) of the Act, and is granted tax deferral, no capital gains tax shall be imposed on income accruing from the investment in kind, etc. of such stocks in possession (hereafter in this Article, referred to as"amount of tax deferred on stocks"), but with respect to the transfer of stocks of the said holding company or the converted holding company (where there exist any stocks acquired by a method other than the method of investment in kind, etc., the stocks acquired by investment in kind, etc. shall be deemed first transferred), the capital gains tax shall be imposed, considering the amount obtained by subtracting the amount of tax deferred on stocks from the acquisition value of stocks of a holding company or a converted holding company, as acquisition value.

(2) Paragraph (1) shall apply mutatis mutandis to the taxation deferment of capital gains tax under Article 38-2 (4) of the Act. In such cases, the amount for which taxation shall be deferred, shall be the aggregate of the amount of tax deferred under paragraph (1), and the transfer gains accruing from exchanging the stocks of an intermediary holding company granted deferred taxation, with the stocks of a financial holding company that controls the intermediary holding company concerned; and capital gains tax shall be imposed when the stocks of the financial holding company acquired by exchange with the stocks of such intermediary company, are transferred.

(3) Where capital gains tax on the amount of tax deferred on stocks accruing from investment in kind, etc. made by residents, being the stockholders of a subsidiary, has not been imposed as prescribed in paragraph (1), the holding company or converted holding company shall make the stocks of a subsidiary acquired by investment in kind, etc. as having acquired at the acquisition value of residents, being the stockholders of a subsidiary:

(4) When residents who wishes to be eligible under Article 38-2 (1), (2), and (4) of the Act file a tax return for the taxable year in which the relevant investment in kind, etc. is made, they shall submit an application for special taxation for investment in kind, etc. prescribed by Ordinance of the Ministry of Economy and Finance together with the holding company or converted holding company.

(5) When the holding company or converted holding company that has acquired stocks of a subsidiary at book value as prescribed in paragraph (3), files a tax return for the business year in which such investment in kind, etc. is made, it shall submit a statement of book value of stocks of the subsidiary prescribed by Ordinance of the Ministry of Economy and Finance, to the head of tax office having jurisdiction over the place of tax payment.

[This Article Newly Inserted on Feb. 28, 2023]

Article 36(Special Taxation for Assumption and Payment of Debts) #

(1) The assumption or payment of debts under Article 39 (1) of the Act (hereafter in this Article, referred to as "assumption or payment of debts"), with the exception of its subparagraphs, shall be limited to debts assumed or paid in lump sum solely by a stockholder or jointly by stockholders, etc. referred to paragraph (1) of the same Article, with the exception of its subparagraphs, (hereafter in this Article, referred to as "stockholders, etc.") under a single agreement.

(2) For the purposes of Article 39 (1) through (5) of the Act, the scope of debts shall be limited to those specified in the financial restructuring plan referred to in paragraph (4), which shall contain details of the debts and the plan for assumption or payment of debts by stockholders, etc. and shall include the amounts referred to in the subparagraphs of Article 34 (5) (hereafter in this Article, referred to as "debts to financial creditors"). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>

(3) "Amount prescribed by Presidential Decree" in Article 39 (1) of the Act, with the exception of its subparagraphs, means the amount of debts assumed or paid by the relevant stockholders, etc. (hereafter in this Article, referred to as "amount of debts assumed and paid"), out of debts that the corporation subject to transfer, etc. provided for in Article 39 (2) of the Act (hereafter in this Article, referred to as "corporation subject to transfer, etc."), owes to financial creditors. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>

(4) "Financial restructuring plan prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any of the documents provided for in Article 34 (6) 1 through 4, which state the total amount and details of debts to financial creditors, a plan for assumption and payment of debts by stockholders, etc., and a plan for transfer or liquidation of the corporation (hereafter in this Article, referred to as "financial restructuring plan"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>

(5) "Person prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any person specified in Article 34 (7) 1 through 4. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>

(6) "Controlling stockholder or investor of the domestic corporation and related persons to such controlling stockholder or investor" in Article 39 (1) 1 of the Act means a controlling stockholder, etc. and a related party provided for in Article 43 (7) and (8) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as "controlling stockholder, etc.").

(7) "Related party prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any person who has the relationship specified in any subparagraph of Article 2 (5) of the Enforcement Decree of the Corporate Tax Act with the relevant domestic corporation or controlling stockholder, etc. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>

(8) "Amount that exceeds the deficit prescribed by Presidential Decree" in the main sentence of Article 39 (2) of the Act means the amount (hereafter in this Article, referred to as "amount of debts reduced") calculated by subtracting losses provided for in Article 16 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as "carried-forward losses") from the amount of debts assumed and paid. If the corporation subject to transfer, etc. covers carried-forward losses first with the value of assets it has acquired without consideration under subparagraph 6 of Article 18 of the Corporate Tax Act or with the amount of debts reduced (excluding the amount of debts assumed and paid) due to debt relief or acquittance in such cases, the covered amount shall be subtracted from the carried-forward losses. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>

(9) An amount that the corporation subject to transfer, etc. must include in its gross income under the former part of Article 39 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows:

1. In cases falling under Article 39 (3) 1 of the Act: The amount calculated by the following formula:

Amount of debts reduced × Debt equity ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one);

2. In cases falling under Article 39 (3) 2 of the Act: The full amount not included in gross income out of the amount of debts reduced;

3. In cases falling under Article 39 (3) 3 of the Act: The full amount of debts reduced.

(10) The amount of corporate tax reduction granted to stockholders, etc. that must be paid in addition to corporate tax under the latter part of Article 39 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows:

1. In cases falling under Article 39 (3) 1 of the Act: The amount calculated by the following formula:

Difference in corporate tax, incurred by including the amount of debts assumed and paid in deductible expenses for the business year in which such amount of debts assumed and paid is included in deductible expenses × Debt ratio less standard debt ratio to standard debt equity ratio (if the ratio exceeds one, it shall be deemed one);

2. In cases falling under the main sentence of Article 39 (3) 2 and Article 39 (3) 3 of the Act: Difference in corporate tax, incurred by including the amount of debts assumed and paid in deductible expenses for the business year in which such amount of debts assumed and paid is included in deductible expenses

(11)"Additional amount equivalent to interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 39 (3) of the Act, with the exception of its subparagraphs, and the proviso to Article 39 (3) 2 of the Act means the aggregate of the following amounts: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The amount calculated by multiplying the difference in corporate tax, incurred by excluding the amount that must be included in gross income under paragraph (9) for the business year in which debts are assumed and paid from gross income, by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the amount that must be included in the gross income under paragraph (9) is included in the gross income;

(b) The rate specified in Article 11-2 (9) 2;

2. The amount of tax that must be paid under paragraph (10) multiplied by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the amount that must be paid under paragraph (10) is paid;

(b) The rate specified in Article 11-2 (9) 2;

(12) For the purposes of Article 39 (3) 1 of the Act, the three-year period shall be calculated, deeming that the period from the date of assumption and payment of debts, until the end of the relevant business year, is one year.

(13) Article 34 (15) and (16) shall apply mutatis mutandis to the calculation of the debt ratio and the standard debt ratio referred to in Article 39 (3) 1 of the Act. In such cases, "amount of debts paid" shall be construed as "total amount of debts assumed and paid."

(14)"Unavoidable cause prescribed by Presidential Decree, such as bankruptcy" in the proviso to Article 39 (3) 2 of the Act means any of the events specified under Article 34 (17).

(15) In cases of a transfer and acquisition of a corporation under Article 39 (4) of the Act, if the relevant stock transfer agreement contains provisions concerning due diligence on assets, the shortfall in assets of the corporation subject to transfer, etc. shall be limited to the shortfall as at the date of stock transfer, as corrected and reflected in accounts after having it confirmed by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the corporation subject to transfer, etc. <Amended on Jan. 5, 2021>

(16) "Related persons prescribed by Presidential Decree" in the proviso to Article 39 (5) of the Act means persons who have the relationship specified in any subparagraph of Article 19 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act with the stockholder, etc. who has assumed and paid debts.

(17) The person authorized to approve the financial restructuring plan shall submit details of the financial restructuring plan to the head of the tax office having jurisdiction over the place of tax payment for the corporation subject to transfer, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the end of the business year in which such plan for the corporation subject to transfer, etc. is approved (hereafter in this Article, referred to as "business year"); and shall submit a report on performance of the financial restructuring plan to the head of the tax office having jurisdiction over the place of tax payment for the corporation subject to transfer, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the deadline for filing the tax return for any of the following business years. In such cases, where the corporation subject to transfer, etc. submits its financial restructuring plan or a report on performance of it financial restructuring plan, which has been confirmed by the person authorized to approve the financial restructuring plan, to the head of the tax office having jurisdiction over the place of tax payment, such plan or report shall be deemed submitted by the person authorized to approve the financial restructuring plan:

1. The business year in which debts are assumed and paid;

2. The business year in which stocks, etc. are transferred or the liquidation of the corporation is completed under Article 39 (1) 1 or 2 of the Act;

3. Three years following the business year in which stocks, etc. are transferred under Article 39 (1) 1 of the Act.

(18) A stockholder, etc. who wishes to be eligible under Article 39 (1) of the Act shall submit a plan for transfer/acquisition/liquidation of a corporation, a statement of debts assumed and paid, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the stockholder, etc. assumes and pays debts.

(19) A corporation that wishes to be eligible under Article 39 (2) of the Act shall submit a plan for transfer/acquisition/liquidation of a corporation, a statement of debts assumed and paid, and a statement of adjustment for inclusion in gross income in installments, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which its debts are assumed and paid.

[This Article Wholly Amended on Feb. 5, 2016]

Article 37(Special Taxation on Corporate Tax Following Transfer of Assets by Stockholder) #

(1) The donation of an asset under Article 40 (1) of the Act shall be limited to an asset donated solely or jointly by stockholders or investors referred to in Article 40 (1) of the Act, with the exception of its subparagraphs, (hereafter in this Article, referred to as "stockholder, etc.") at once under a single agreement.

(2) "Amount exceeding the deficit prescribed by Presidential Decree" in Article 40 (1) of the Act, with the exception of its subparagraphs, means the amount calculated by applying mutatis mutandisArticle 36 (8) (hereafter in this Article, referred to as "gains from donated assets"). In such cases, "amount of debts assumed or paid" shall be construed as "assets value donated under Article 40 (1) of the Act."

(3) "Financial restructuring plan prescribed by Presidential Decree" in Article 40 (1) 1 of the Act means any of the documents provided for in Article 34 (6) 1 through 4, which contain a plan for the transfer or donation of assets by stockholders, etc., total amount and details debts to financial creditors referred to in paragraph (10), and a plan for repayment of debts (hereafter in this Article, referred to as "financial restructuring plan"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>

(4) "Person prescribed by Presidential Decree" in Article 40 (1) 1 of the Act means any of the persons referred to in Article 34 (7) 1 through 4. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>

(5) "Deadline prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the deadline provided for in Article 34 (4).

(6) "Date prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the date a corporation receives an installment (the down payment shall be deemed included in the first installment).

(7) For the purposes of Article 40 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the time when an asset is transferred: Provided, That the date provided for in paragraph (6) shall apply to the transfer of assets under long-term installment terms.

(8) "Financial creditor prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means any financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>

(9) "Inevitable causes prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the causes provided for in Article 34 (3).

(10) The debts paid under Article 40 (1) 2 of the Act shall be limited to those specified in the financial restructuring plan that contains the details of the debts and a repayment plan through donation of assets by stockholders, etc. and mean the amount specified under Article 34 (5) (hereafter in this Article, referred to as "debts to financial creditors"). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>

(11) "Amount prescribed by Presidential Decree" in Article 40 (2) of the Act means the book value of assets donated by stockholders, etc. (hereafter in this Article, referred to as "amount of donated assets"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017>

(12) "Equivalent to the donated amount prescribed by Presidential Decree" in Article 40 (3) of the Act, with the exception of its subparagraphs, means the amount calculated by the following formula (hereafter in this Article, referred to as "equivalent to capital gains"): <Amended by Presidential Decree No. 27848, Feb. 7, 2017>

Capital gains on transfer of an asset under Article 40 (3) of the Act × {Amount donated to a corporation whose financial restructuring plan is approved (hereafter in this Article, referred to as "corporation with an approved financial restructuring plan"), out of the transfer value of the asset ÷ (Transfer value of the asset - Amount of special rural development tax paid by the relevant corporation under the Act on Special Rural Development Tax for the capital gains on transfer of the asset under Article 40 (3) of the Act)}

(13) An amount that shall be included in gross income under the former part of Article 40 (4) of the Act, with the exception of its subparagraphs, shall be calculated as follows:

1. In cases falling under Article 40 (4) 1 of the Act: The amount calculated by the following formula:

Gains from the donated asset × [Value of the asset donated under Article 40 (1) of the Act (referring to the transfer value in cases of any asset other than money; hereafter in this Article, referred to as "value of the transferred asset") - Amount used to repay debts, out of the value of the transferred asset] ÷ Value of the transferred asset

2. In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:

Gains from the donated asset × Debt ratio less standard debt equity ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)

3. In cases falling under Article 40 (4) 3 of the Act: The full amount not included in gross income, out of gains from the donated asset

(14) The amount of tax that shall be collected in addition to corporate tax to be paid by a corporation with an approved financial restructuring plan under Article 40 (4) of the Act, out of the tax reduction or exemption granted to a stockholder, etc. under Article 40 (2) of the Act shall be as follows:

1. In cases falling under Article 40 (4) 1 of the Act: Difference in corporate tax incurred by including the amount calculated by the following formula in deductible expenses for the business year in which the stockholder, etc. has included the amount of donated assets in deductible expenses:

Amount of the donated asset × (Value of the transferred asset - Amount used to repay debts, out of the value of the transferred asset) ÷ Value of the transferred asset

2. In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:

Difference in corporate tax, incurred by including the amount of the donated asset in deductible expenses for the business year in which the amount of the donated asset is included in deductible expenses × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)

3. In cases falling under the main sentence of Article 40 (4) 3 of the Act: Difference in corporate tax incurred by including the amount of the donated asset in deductible expenses for the business year in which the amount of the donated asset is included in deductible expenses.

(15) The amount of tax that shall be collected in addition to the corporate tax to be paid by a corporation with an approved financial restructuring plan under Article 40 (4) of the Act, out of the tax reduction or exemption granted to a stockholder, etc. under Article 40 (3) of the Act shall be as follows: <Amended on Feb. 15, 2022>

1. Where the stockholder, etc. is a resident: The amount calculated by the following formulas:

(a) In cases falling under Article 40 (4) 1 of the Act: Difference in capital gains tax or financial investment income tax incurred by including the amount calculated by the following formula for the taxable year, for which capital gains tax or financial investment income tax on the equivalent to capital gains was not paid, in the calculation of the equivalent to capital gains:

Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ Value of the transferred asset

(b) In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:

Unpaid capital gains tax or financial investment income tax on the equivalent to capital gains × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)

(c) In cases falling under the main sentence of Article 40 (4) 3 of the Act: The full amount of unpaid capital gains tax or financial investment income tax on the equivalent to capital gains;

2. Where the stockholder, etc. is a domestic corporation: The amount calculated by the following formulas:

(a) In cases falling under Article 40 (4) 1 of the Act: Difference in corporate tax incurred by excluding the amount calculated by the following formula from gross income for the business year in which the equivalent to capital gains was not included in gross income:

Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ Value of the transferred asset

(b) In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:

Difference in corporate tax incurred by excluding the equivalent to capital gains from gross income for the business year in which the equivalent to capital gains was not included in gross income × Debt ratio less standard debt ratio to standard debt equity ratio (if the ratio exceeds one, it shall be deemed one)

(c) In cases falling under the main clause of Article 40 (4) 3 of the Act: Difference in corporate income tax incurred by excluding the equivalent to capital gains from gross income for the business year in which the equivalent to capital gains was not included in gross income

(16) For the purpose of Article 40 (4) 2 of the Act, the three-year period shall be counted, deeming that the period from the date debts are repaid (hereafter in this Article, referred to as"date debts are repaid"), until the end of the relevant business, is one year, if debts are repaid during the business year.

(17) Article 34 (15) and (16) shall apply mutatis mutandis to calculating the debt ratio and the standard debt ratio referred to in Article 40 (4) 2 of the Act. In such cases,"amount of debts paid" shall be construed as"amount used to repay debts out of the value of the transferred asset."

(18)"Unavoidable cause prescribed by Presidential Decree" in the proviso to Article 40 (4) 3 of the Act means any of the events specified under Article 34 (17).

(19)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the main sentence of Article 40 (5) of the Act means the aggregate of the following: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The amount calculated by multiplying the difference in corporate tax incurred by excluding the amount calculated under paragraph (13) from gross income for the business year in which a corporation receives an asset donated under Article 40 (1) of the Act (hereafter in this Article, referred to as"date the asset is donated") by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which the asset is donated, until the end of the business year in which the amount calculated under paragraph (13) is included in gross income;

(b) The rate specified in Article 11-2 (9) 2;

2. The amount of tax calculated under paragraph (14) or (15), multiplied by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which the amount of tax calculated under paragraph (14) or (15) is not paid, until the end of the business year in which the amount of tax calculated under paragraph (14) or (15) is paid;

(b) The rate specified in Article 11-2 (9) 2;

(20) For the purposes of paragraphs (13) (excluding paragraph (13) 3; hereafter in this paragraph, the same shall apply) and (19) 1, if an amount not included partially or fully in gross income in accordance with Article 40 (1) of the Act is included later in gross income (hereafter in this Article, referred to as"amount already included in gross income") before including the amount calculated under paragraph (13) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (13). The additional amount equivalent to interest referred to in paragraph (19) 1 shall be calculated based on the period until the business year in which the amount already included in gross income is included in gross income.

(21) Article 36 (16) shall apply mutatis mutandis to the scope of"related persons" in the proviso to Article 40 (6) of the Act.

(22) Article 34 (18) shall apply mutatis mutandis to how to submit a financial restructuring plan and a report on performance of the financial restructuring plan under Article 40 (7) of the Act. In such cases,"date an asset is transferred" shall be construed as"date an asset is donated."

(23) A corporation who wishes to be eligible under Article 40 (1) of the Act shall submit a statement of donated assets, debts repaid (or payable), and adjustment for inclusion in gross income in installments, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which an asset is donated. Where the date an asset is donated and the date debts are repaid, fall in different business years, it shall submit a statement of debts paid (or payable) additionally along with its tax return for the business year in which debts are repaid.

(24) A stockholder, etc. who wishes to be eligible under Article 40 (2) of the Act shall submit an asset donation agreement, a statement of debts paid (or payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the relevant asset is donated.

(25) A stockholder, etc. who wishes to be eligible under Article 40 (3) of the Act shall submit an asset sale/purchase agreement, a donation agreement, a statement of debts paid (or payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the relevant asset is transferred under the same paragraph.

[This Article Wholly Amended on Jun. 19, 2009]

[Title Amended on Feb. 7, 2017]

Article 42(Special Taxation for Reduction of Capital) #

(1)"Financial restructuring plan prescribed by Presidential Decree" in Article 45 (1) of the Act means cases falling under any subparagraph of Article 34 (6), which stipulates a donation plan of stock or investment shares (hereafter in this Article, referred to as"stocks, etc.") of stockholders or investors (hereafter in this Article, referred to as"stockholders, etc.") and a retirement plan of donated stocks, etc.

(2)"Person prescribed by Presidential Decree" in Article 45 (1) of the Act means persons falling under any subparagraph of Article 34 (7).

(3)"Amount exceeding the deficit prescribed by Presidential Decree" in Article 45 (1) of the Act means the amount calculated by applying mutatis mutandisArticle 36 (8). In such cases,"amount subject to takeover and payment of liabilities" shall be construed as"value of stocks, etc. donated under Article 45 (1) of the Act."

(4) Article 36 (16) shall apply mutatis mutandis to the scope of"related persons" referred to in the proviso to Article 45 (3) of the Act.

(5) Any corporation which seeks the benefit under Article 45 (1) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, a statement of assets received, its financial restructuring plan, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return of a business year in which stocks, etc. are donated under the same paragraph.

(6) Any stockholder, etc. who seeks the benefit under Article 45 (2) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, a donation deed, his/her financial restructuring plan, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return of a business year in which stocks, etc. are donated under Article 45 (1) of the Act.

[This Article Newly Inserted on Jun. 19, 2009]

Article 43(Special Taxation for Exchange of Stocks between Enterprises) #

(1) Article 36 (6) shall apply mutatis mutandis to the scope of"controlling stockholder or investor of a domestic corporation or a related person to such stockholder or investor" in Article 46 (1) of the Act, with the exception of its subparagraphs, (hereafter in this Article, referred to as"controlling stockholder, etc.").

(2)"Financial restructuring plan prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any of the documents provided for in Article 34 (6) 1 through 4, which stipulates a plan for transfer/acquisition of stocks or equity shares (hereafter in this Article, referred to as"stocks, etc.") held by a controlling stockholder, etc. <Amended on Feb. 7, 2017>

(3)"Person prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any of the entities provided for in Article 34 (7) 1 through 4. <Amended on Feb. 7, 2017>

(4)"Related party prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any person who has any of the relationships prescribed under Article 2 (5) of the Enforcement Decree of the Corporate Tax Act with a corporation subject to exchange defined in the same paragraph (hereafter in this Article, referred to as"exchanged corporation"). <Amended on Feb. 12, 2019>

(5) In the transfer and acquisition of stocks, etc. under Article 46 (1) of the Act, stocks, etc. of a transferred corporation for exchange defined in the same paragraph, with the exception of its subparagraphs, (hereafter in this Article, referred to as"transferred corporation for exchange"), shall be distributed in proportion to the holding ratio of stocks, etc. of the relevant corporation among the controlling stockholder, etc. that transfers stocks, etc. of the transferred corporation for exchange.

(6) Pursuant to Article 46 (1) of the Act, a controlling stockholder, etc. may be allowed to defer capital gains tax, financial investment income tax, or corporate tax as follows: <Amended on Feb. 15, 2022>

1. If the controlling stockholder, etc. is a corporation, it may be allowed to defer capital gains tax or corporate tax as follows:

(a) Capital gains accruing from transfer of stocks, etc. under Article 46 (1) of the Act shall be the market price at the time of transfer of the stocks, etc. (referring to the market price provided for in Article 52 (2) of the Corporate Tax Act) minus the book value as of the date preceding the date of transfer day (the capital gains shall not exceed the value of acquired stocks, etc. of the transferred corporation for exchange; hereafter in this Article, referred to as"tax-deferred amount"); and such capital gains shall be recognized as the advance depreciation allowance for the acquired stocks, etc. of the transferred corporation for exchange;

(b) The advance depreciation provision recognized under item (a) shall be included in gross income for the business year in which the acquired stocks, etc. of the transferred corporation for exchange are transferred, inherited, or donated (if stocks, etc. have been acquired in any manner other than the acquisition as provided for in Article 46 (1) of the Act, the stocks, etc. acquired under the same paragraph shall be deemed first transferred, inherited, or donated; hereafter in this Article, referred to as"disposal"). Where stocks, etc. are disposed of partially, the amount calculated by the following formula shall be included in gross income:

The advanced depreciation provision recognized under item (a) × (Number of disposed stocks, etc. out of the acquired stocks, etc. of the transferred corporation for exchange ÷ Number of the acquired stocks, etc. of the transferred corporation for exchange)

2. If the controlling stockholder, etc. is a resident, it may pay financial investment income tax, treating the acquisition value of stocks, etc. of the transferred corporation for exchange minus the tax-deferred amount as the acquisition value, when it disposes of stocks, etc. of the transferred corporation for exchange, which it has acquired without paying financial investment income tax at the time of transferring stocks, etc. under Article 46 (1) of the Act.

(7) The shortfall in assets referred to in Article 46 (2) of the Act shall be limited to the shortfall as at the date of transfer/acquisition of stocks, etc., as corrected and reflected in accounts after having confirmed by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the relevant corporation, where the agreement on the stock exchange between the exchanged corporation and the transferred corporation for exchange contains provisions concerning due diligence on assets. <Amended on Jan. 5, 2021>

(8)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 46 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. If the controlling stockholder, etc. is a resident: The amount of financial investment income tax not paid at the time of transferring stocks, etc. under Article 46 (1) of the Act, multiplied by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the taxable year in which financial investment income tax on the tax-deferred amount is not paid at the time of transferring stocks, etc. under Article 46 (1) of the Act, until the end of the taxable year in which financial investment income tax on the tax-deferred amount is paid due to any of the grounds specified under Article 46 (3) of the Act;

(b) The rate specified in Article 11-2 (9) 2;

2. If the controlling stockholder, etc. is a domestic corporation: The amount calculated by multiplying the difference in corporate tax incurred by excluding the tax-deferred amount from gross income for the business year in which the tax-deferred amount was not included in gross income, by the period of item (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which the tax-deferred amount was not included in gross income, until the end of the business year in which the tax-deferred amount is included in gross income due to any of the grounds specified under Article 46 (3) of the Act;

(b) The rate specified in Article 11-2 (9) 2;

(9) The types of business referred to in Article 46 (3) 1 of the Act shall be classified into the Group according to the Korea Standard Industrial Classification.

(10) The amount eligible for tax deferral under Article 46 (4) of the Act shall be the tax-deferred amount at the time of an investment in kind or a spin-off, which shall not exceed the equivalent to the value of acquired stocks, etc. of the transferred corporation for exchange under Article 46 (1) of the Act; and such amount shall be recognized as the advanced depreciation provision for the stocks, etc. of the transferred corporation for exchange and shall be included in gross income by applying mutatis mutandis paragraph (6) 1 (b).

(11) The person authorized to approve the financial restructuring plan shall submit the details of the financial restructuring plan of an exchanged corporation in the form prescribed by Ordinance Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment for the exchanged corporation by the end of the business year (hereafter in this subparagraph, referred to as"business year") in which the exchanged corporation’s financial restructuring plan is approved, and submit a report on performance of the financial restructuring plan in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment for the exchanged corporation by the deadline for filing the tax return for the following business years. In such cases, where the exchanged corporation submits its financial restructuring plan or a report on performance of its financial restructuring plan, which has been confirmed by the person authorized to approve the financial restructuring plan, to the head of a tax office having jurisdiction over the place of tax payment, such plan or report shall be deemed submitted by the person authorized to approve the financial restructuring plan:

1. The business year in which stocks, etc. are transferred or acquired under Article 46 (1) of the Act;

2. Three business years following the business year in which stocks, etc. are transferred or acquired under Article 46 (1) of the Act.

(12) A stockholder, etc. who wishes to be eligible under Article 46 (1), (2), and (4) of the Act shall file an agreement on the exchange of enterprises and a statement of transfer/acquisition of stocks, etc. and an application for tax deferral in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which stocks, etc. are transferred or acquired under the same paragraph.

[This Article Newly Inserted on Jun. 19, 2009]

Article 43-2(Special Taxation for Stock Exchange by Venture Business) #

(1)"Strategic partnership program" in Article 46-2 (1) 1 of the Act means a plan under which a venture business intends to establish a cooperative relationship with a third cooperation (hereafter in this Article, referred to as"affiliated corporation") through stock exchange or stock investment in kind (hereafter in this Article, referred to as"stock exchange, etc.") between the stockholders of the affiliated corporation and the venture business by a contract between such venture business and affiliated corporation in order to improve its productivity improvement and to strengthen its competitiveness, etc.

(2) The contract referred to in paragraph (1) shall satisfy the following requirements that:

1. The venture business and its affiliated corporation shall be the parties to a contract;

2. The details of the business for partnership shall be feasible and specific;

3. The method for distributing profits and losses generated from the partnership business shall be determined;

4. The contract shall include provisions concerning cooperation in technology, information, facilities, human resources, capital, etc.

(3)"Stockholder who holds at least 10/100 of the total number of stocks issued by a corporation" in Article 46-2 (1) of the Act, with the exception of its subparagraphs, means a stockholder who holds at least 10/100 of the total number of voting stocks issued by the relevant corporation.

(4)"Related person prescribed by Presidential Decree" in Article 46-2 (1) 2 of the Act means the related party prescribed under Article 1-2 (1) and (2) of the Enforcement Decree of the Framework Act on National Taxes; and"special relationship prescribed by Presidential Decree" means the relationship prescribed under Article 1-2 (1) and (2) of the Enforcement Decree of the Framework Act on National Taxes. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 2, 2012>

(5)"Largest stockholder prescribed by Presidential Decree" in Article 46-2 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with any person stipulated in paragraph (4). <Amended on Feb. 18, 2010>

(6) No financial investment income tax shall be imposed on the incomes accruing from the stock exchanges, etc. conducted by a stockholder of the affiliated corporation with a venture business under Article 46-2 (1) of the Act (hereafter in this Article, referred to as"tax-deferred amount on stocks"), but when any stocks of the venture business acquired by the stock exchanges, etc. have been transferred (where any stocks have been acquired by any means, other than the stock exchanges, etc., such stocks acquired by the stock exchanges, etc. shall be deemed first transferred), financial investment income tax shall be imposed by deeming that the amount calculated by deducting the tax-deferred amount calculated under paragraph (7), is the acquisition value. <Amended on Feb. 15, 2022>

(7) The tax-deferred amount to be deducted from the acquisition value under paragraph (6), shall be calculated by multiplying the tax-deferred amount on stocks by the ratio of the transferred stocks among the stocks acquired by the stockholders of an affiliated corporation through stock exchanges, etc. with the venture business with the stocks held by them.

(8) When any cause for violating Article 46-2 (1) 3 of the Act occurs after a stockholder of an affiliated corporation has been allowed to defer financial investment income tax under Article 46-2 (1) of the Act (a stockholder of an affiliated corporation or a venture business transfers the stocks acquired by stock exchanges, etc. within one year from such acquisition), the stockholder shall pay an amount calculated by multiplying the tax-deferred amount for stocks by the ratio of the stocks remaining as at the date of occurrence of the relevant cause out of the stocks acquired through stock exchange, etc. and by the tax rate under Article 87 (19) of the Income Tax Act valid as at the time of such stock exchange, etc., when filing his/her tax return for the taxable year in which the relevant cause occurs. <Amended on Feb. 19, 2005; Feb. 15, 2022>

(9) Any person who intends to apply for deferral of financial investment income tax under Article 46-2 (3) of the Act shall submit his/her tax return, and an application for deferred taxation on the transfer gains from the transfer of stocks, such as the exchange of stocks of a venture business, in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by his/her strategic partnership program, a contract for stock exchange, and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for taxation support, to the head of a tax office having jurisdiction over the place of tax payment within two months from the end of the quarter of the month in which stocks are exchanged or investment in kind is made. <Amended on Feb. 29, 2008; Feb. 15, 2022>

[This Article Newly Inserted on Dec. 30, 2003]

Article 43-4(Special Taxation of Corporate Tax on Margins Accruing from Transfer of Self-Logistics Facilities) #

(1)"Self-logistics facilities prescribed by Presidential Decree" in the former part of Article 46-4 (1) of the Act means facilities for logistics defined in subparagraph 5 of Article 2 of the Goods Distribution Promotion Act, which are owned and used by a corporation for its own purpose. <Amended on Feb. 18, 2010>

(2)"Amount calculated pursuant to Presidential Decree" in the former part of Article 46-4 (1) of the Act means the amount calculated by the following arithmetic formula: <Amended on Feb. 2, 2012>

(Transfer price of relevant self-logistics facilities - Book value of relevant self-logistics facilities ? Aggregate of carried-forward losses prescribed in subparagraph 1 of Article 13 of the Corporate Tax Act as at the end of the immediately preceding business year)

(3) "Amount calculated pursuant to Presidential Decree" in the former part of Article 46-4 (2) of the Act, with the exception of its subparagraphs, means the full amount not included in gross income in accordance with Article 46-4 (1) of the Act. <Amended on Feb. 18, 2010>

(4)"Period fixed by Presidential Decree" in Article 46-4 (2) 1 and 2 of the Act means the period of three subsequent business years after the business year immediately following the business year in which the date of transfer falls. <Amended on Feb. 18, 2010>

(5)"Interest rate prescribed by Presidential Decree" in Article 46-4 (2) 2 (b) of the Act means the interest rate prescribed by Ordinance of the Ministry of Economy and Finance, based upon the time deposit interest rates to which financial institutions apply. <Amended on Feb. 29, 2008; Feb. 18, 2010>

(6) Where Article 46-4 (1) and (2) of the Act is applied, the logistics expense shall be the aggregate of the expenses set forth in subparagraphs 1 and 2: <Amended on Feb. 29, 2008>

1. Logistics expense incurred from logistics activities conducted from the stage of transportation of goods from a supplier and safekeeping and management of the goods in a warehouse to the stage immediately before production process or putting them to a factory;

2. Logistics expense incurred from logistics activities from the stage of commencing the movement of goods after the sales are finalized to the stage of delivering them to a consumer, being returned from a consumer, or being reused or scrapped, as prescribed further by Ordinance of the Ministry of Economy and Finance.

(7) A domestic corporation that wishes to be eligible under Article 46-4 (1) of the Act shall submit a statement on gains from transfer and a statement on adjustment for inclusion of gross income in installments prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the business year during which the self-logistics facilities are transferred. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 28, 2007]

Article 43-7(Special Taxation for Swap of Unlisted Stocks for Strategic Partnership) #

(1)"Small or medium enterprises which invest at least five percent of their sales prescribed by Presidential Decree in research and development of human resources" in the provisions, with the exception of the subparagraphs, of Article 46-7 (1) of the Act means small or medium enterprises which invest at least five percent of their sales in research and development of human resources referred to in Article 10 (1) of the Act in the business year immediately preceding the business year in which the date of a stock swap or an investment in kind falls. <Amended on Feb. 11. 2020>

(2)"Technologically innovative small and medium enterprises prescribed by Presidential Decree" means the following enterprises: <Newly Inserted on Feb. 15, 2022>

1. Small and medium enterprises established not more than three years ago and falling under Article 2 (1) 2 (c) of the Act on Special Measures for the Promotion of Venture Businesses;

2. Small and medium enterprises established not more than three years ago, which have spent more than 30 million won for research and human resource development expenses under Article 10 (1) of the Act in the taxable year immediately preceding the taxable year in which the date of a stock exchange or a contribution in kind falls: Provided, That if the period of the immediately preceding taxable year is less than six months, the small and medium enterprises shall be those that have spent more than 15 million won for research and human resource development expenses pursuant to Article 10 (1) of the Act;

3. Small and medium enterprises established not more than three years ago, whose technical rating is in the top 50th percentile of the technical rating system as evaluated by a corporate credit bureau engaged in technical credit evaluation pursuant to the Credit Information Use and Protection Act.

(3)"Stockholder who holds at least 10/100 of the total number of stocks issued" in Article 46-7 (1) of the Act, with the exception of its subparagraphs, means a stockholder who holds at least 10/100 of the total number of voting stocks issued by the relevant corporation. <Amended on Feb. 15, 2022>

(4)"Strategic partnership program" in Article 46-7 (1) 1 of the Act means a plan under which a venture business (including small or medium enterprises prescribed in paragraph (1); hereafter in this Article, referred to as"venture business, etc.") intends to establish a cooperative relationship with a corporation which is a stock company (hereafter in this Article, referred to as"affiliated corporation") through a contract to improve its productivity and strengthen its competitiveness. <Amended on Dec. 1, 2016; Feb. 11, 2020; Feb. 15, 2022>

(5) The contract referred to in paragraph (4) shall meet the following requirements that: <Amended on Feb. 15, 2022>

1. A venture business, etc. and an affiliated corporation shall be parties to such contract;

2. The details of the business for partnership shall be feasible and specific;

3. The method for distributing profits and losses generated from the partnership business shall be determined;

4. The contract shall include provisions concerning cooperation in technology, information, facilities, human resources, capital, etc.

(6)"Related person prescribed by Presidential Decree" in Article 46-7 (1) 2 of the Act means a person in any the relationships prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes (hereafter in this Article, referred to as"related person"); and"special relationship prescribed by Presidential Decree" means any relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes. <Amended on Feb. 15, 2022>

(7)"Largest stockholder prescribed by Presidential Decree" in Article 46-7 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with his/her related persons, out of the total number of voting stocks of a corporation. <Amended on Feb. 15, 2022>

(8) No financial investment income tax shall be imposed on gains (hereafter in this Article, referred to as"tax-deferred amount on stocks") accrued to a stockholder of a venture business, etc. through a stock swap with an affiliated corporation or a stockholder of the affiliated corporation or through an investment in kind under Article 46-7 (1) of the Act (hereafter in this Article, referred to as"stock swap, etc."); however, when the stockholder transfers any stocks of the affiliated corporation acquired through the stock swap, etc. (where he/she has acquired any stocks by any means other than the stock swap, etc., the stocks acquired through such stock swap, etc. shall be deemed first transferred), financial investment income tax shall be imposed, deeming that the amount calculated by the following formula is the acquisition value thereof: <Amended on Feb. 15, 2022>

Acquisition value of transferred stocks among stocks acquired through the stock swap, etc. - (Tax-deferred amount on stocks × Number of transferred stocks ÷ Number of stocks acquired through the stock swap, etc.)

(9) When any cause for violating Article 46-7 (1) 3 of the Act occurs after a stockholder of a venture business, etc. has been allowed to defer financial investment income tax under Article 46-7 (1) of the Act, the stockholder shall pay an amount calculated by multiplying the tax-deferred amount on stocks by the ratio of remaining stocks as at the date of occurrence of the relevant cause to the stocks acquired through a stock swap, etc. and by the tax rate prescribed under Article 87 (19) of the Income Tax Act valid as at the time of the stock swap, etc., when filing his/her tax return for the taxable year in which the relevant cause occurs. <Amended on Feb. 15, 2022>

(10) Any person who intends to apply for deferral of financial investment income tax under Article 46-7 (3) of the Act shall file his/her tax return and an application for tax deferral on capital gains from the stock swap and in-kind investment of a venture business, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her strategic partnership program, a stock swap agreement, and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for tax support, within two months from the end of the quarter in which the date of the stock swap, etc. falls. <Amended on Feb. 11, 2020; Feb. 15, 2022>

[This Article Newly Inserted on Feb. 21, 2014]

Article 43-8(Special Taxation for Re-Investment in Venture Businesses after Sale of Stocks) #

(1)"Stockholder prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, means a founder or an incorporator of a venture business or an enterprise in which case seven years have not passed since it ceased to be a venture business (hereafter in this Article, referred to as"enterprise for sale"), which is a stockholder of an enterprise for sale (hereafter in this Article, referred to as"stockholder of an enterprise for sale"). <Amended on Feb. 7, 2017>

(2)"Percentage prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, means 30/100 of the stocks held by a stockholder of an enterprise for sale. <Amended on Feb. 7, 2017>

(3)"Related party prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, and Article 46-8 (1) 2 of the Act means a person in a relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes (hereafter in this Article, referred to as"related party"); and"special relationship prescribed by Presidential Decree" in Article 46-8 (1) 2 of the Act means a relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes.

(4)"Largest stockholder prescribed by Presidential Decree" in Article 46-8 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with his/her related parties, out of the total number of voting stocks of a corporation. <Amended on Feb. 7, 2017>

(5) "Period prescribed by Presidential Decree" in Article 46-8 (1) 1 of the Act, with the exception of its items, means 2 years from the deadline for filing a provisional return on financial investment income accruing from the sale of stocks of an enterprise for sale, as specified under Article 87-21 of the Income Tax Act. <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

(6)"Venture business investment trust prescribed by Presidential Decree" in Article 46-8 (1) 1 (b) of the Act means a venture business investment trust under Article 14 (1). <Amended on Feb. 13, 2018>

(7) Re-investment referred to in Article 46-8 (1) 1 (c) of the Act means an investment made by an individual investment association established under subparagraph 8 of Article 2 of the Venture Investment Promotion Act (hereafter in this Article referred to as"individual investment association") with an amount of money contributed by residents, in a venture business, etc. by the end of the taxable year following the taxable year in which the date of such contribution falls; and"small or medium enterprise prescribed by Presidential Decree for which three years have not passed since its incorporation" in Article 46-8 (1) 1 (c) of the Act means a small or medium enterprise for which three years have not passed since its incorporation, the technology of which is highly appreciated as prescribed in Article 2-2 (1) 2 (c) (iii) of the Act on Special Measures for the Promotion of Venture Businesses. <Amended on Aug. 11, 2020>

(8) No financial investment income tax shall be imposed on gains accruing from the transfer of stocks of an enterprise for sale under Article 46-8 (1) of the Act (hereafter in this Article, referred to as"tax-deferred amount on stocks"); however, when any stocks or equity shares (hereafter in this Article, referred to as"stocks etc.") acquired by a re-investment, are transferred (where any stocks have been acquired by any means other than the re-investment, the stocks, etc. acquired by such re-investment shall be deemed first transferred), financial investment income tax shall be imposed, deeming that the amount calculated by the following formula is the acquisition value thereof: <Amended on Feb. 15, 2022>

Acquisition value of transferred stocks, etc. among stocks, etc. acquired by the re-investment - (Tax-deferred amount on stocks × Number of transferred stocks ÷ Number of stocks, etc. acquired by the re-investment)

(9) When any cause for violating Article 46-8 (1) 1 of the Act occurs after a stockholder of an enterprise for sale has been allowed to defer financial investment income tax under Article 46-8 (1) of the Act, the stockholder shall be deemed to have filed his/her provisional return, but have not paid the financial investment income tax. <Amended on Feb. 15, 2022>

(10) A stockholder of an enterprise for sale shall pay financial investment income tax on gains from the sale of stocks of the enterprise for sale and a penalty tax under Article 47-4 (1) of the Framework Act on National Taxes, along with his/her tax return, immediately after a cause for violating Article 46-8 (1) 1 of the Act occurs. <Amended on Feb. 15, 2022>

(11) When any cause for violating Article 46-8 (1) 3 of the Act occurs after a stockholder of an enterprise for sale has been allowed to defer financial investment income tax under Article 46-8 (1) of the Act, the stockholder shall pay an amount calculated by multiplying the tax-deferred amount on stocks by the ratio of remaining stocks as at the date of occurrence of the relevant cause to the stocks acquired by the re-investment and by the tax rate prescribed under Article 87-19 of the Income Tax Act valid as at the time of transfer of the stocks to sell the enterprise, when filing his/her tax return for the taxable year in which the relevant cause occurs. <Amended on Feb. 15, 2022>

(12) Any person who intends to apply for deferral of financial investment income tax under Article 46-8 (2) of the Act shall file his/her provisional return on financial investment income tax under Article 87-21 of the Income Tax Act and an application for tax deferral on gains from the transfer of stocks through a re-investment, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with a stock sale/purchase agreement and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for tax support: Provided, That the person shall submit a certificate of re-investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment after making an re-investment. <Amended on Feb. 7, 2017; Feb. 15, 2022>

(13)"Grounds prescribed by Presidential Decree" in Article 46-8 (3) of the Act means any of the following:

1. Death of a stockholder of an enterprise for sale;

2. Emigration of all members of a household to a foreign country under the Emigration Act;

3. Occurrence of a serious loss to property occurs due to a natural disaster.

(14) If any of the grounds specified under paragraph (13) arises, the relevant stockholder shall file his/her provisional return on financial investment income tax and pay financial investment income tax on the tax-deferred amount within the period specified in Article 87-21 of the Income Tax Act, deeming that the date the relevant ground arises, is the date of transfer. In such cases, the applicable financial investment income tax rate shall be the tax rate prescribed in Article 87-19 of the Income Tax Act valid as at the time stocks of the enterprise for sale are transferred. <Amended on Feb. 7, 2017; Feb. 15, 2022>

[This Article Newly Inserted on Feb. 21, 2014]

[Title Amended on Feb. 7, 2017]

Article 44-4(Special Taxation for Transfer of Redundant Assets following Merger) #

(1)"Domestic corporations engaging in the type of business prescribed by Presidential Decree, including pharmaceutical business" in the former part of Article 47-4 (1) of the Act means domestic corporations engaging mainly in any of the following business activities. In such cases, the main business shall be determined according to the Korea Standard Industrial Classification based on the business year immediately preceding the business year in which the merger is registered; and where a domestic corporation engages in at least two different businesses, the one with the largest turnover shall be deemed the main business: <Newly Inserted on Feb. 15, 2013; Feb. 21, 2014; Feb. 7, 2017; Feb. 13, 2018>

1. Manufacture of pharmaceuticals, medicinal chemicals and botanical products;

2. Manufacture of medical appliances and instruments;

3. Construction;

4. Sea and coastal water transportation;

5. Building of ships and floating structures;

6. Manufacture of basic iron and steel;

7. Manufacture of basic organic chemicals;

8. Manufacture of synthetic rubber and plastics in primary forms.

(2)"Redundant asset" in the former part of Article 47-4 (1) of the Act means a tangible fixed asset for business, the use of which is identical or similar to an asset used directly for the business of corporations, parties to a merger (including a merger by division). <Amended on Feb. 15, 2013>

(3) Deleted. <Feb. 7, 2017>

(4)"Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 47-4 (1) of the Act means the aggregate of the amounts prescribed in subparagraphs 1 and 2: <Amended on Feb. 18, 2010; Feb. 15, 2013; Feb. 7, 2017>

1. The amount calculated by applying mutatis mutandisArticle 30 (4) 1. In such cases,"fixed assets for the pre-conversion business" shall be construed as"redundant assets";

2. In cases of a redundant asset succeeded from a merged corporation, the equivalent to the gains on the valuation of the redundant asset upon the merger or gains on the valuation of the redundant asset upon the division;

3. Deleted. <Feb. 7, 2017>

(5) Deleted. <Feb. 7, 2017>

(6)"Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 47-4 (2) of the Act means the full amount of capital gains excluded from gross income, where such capital gains are excluded from gross income in accordance with the former part of Article 47-4 (1) of the Act: <Amended on Feb. 18, 2010; Feb. 15, 2013; Feb. 7, 2017>

1. Deleted. <Feb. 7, 2017>

2. Deleted. <Feb. 7, 2017>

(7) A corporation that wishes to be eligible under Article 47-4 (1) of the Act shall file a statement of capital gains and adjustment for inclusion in gross income in installments in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which a redundant asset is transferred. <Amended on Feb. 29, 2008; Feb. 15, 2013; Feb. 7, 2017>

[This Article Newly Inserted on Feb. 9, 2006]

[Title Amended on Feb. 21, 2014]

Article 56(Special Taxation for Corporate Tax on Relocating Factories to Outside of Large Cities) #

(1) Relocation of a factory in a large city to a local area subject to Article 60 (2) of the Act shall fall under any of the following cases: Provided, That, where the site of factories in a large city or of provincial factories exceeds the standard size for factory sites prescribed by Ordinance of the Ministry of Economy and Finance, Article 60 (2) of the Act shall not apply to such excess: <Amended on Oct. 30, 1999; Dec. 31, 2001; Feb. 29, 2008; Feb. 18, 2010>

1. Where a factory in a large city is transferred within two years from the date a business is commenced at a factory relocated to a local area;

2. Where a business is commenced at an existing factory acquired in a local area within one year from the date a factory in a large city is transferred;

3. Where a business is commenced after completing the construction of a factory in a local area within three years from the date a factory in a large city is transferred.

(2)"Area prescribed by Presidential Decree" in the main clause of Article 60 (2) 2 of the Act means jurisdictional areas of the Busan Metropolitan City (excluding Gijang-gun), Daegu Metropolitan City (excluding Dalseong-gun and Gunwi-gun), Gwangju Metropolitan City, Daejeon Metropolitan City, and Ulsan Metropolitan City. <Amended on Feb. 28, 2023; Jun. 7, 2023>

(3)"Amount computed by the formula prescribed by Presidential Decree" in Article 60 (2) of the Act means the amount calculated by multiplying the amount under subparagraph 1 less the amount under subparagraph 2 by the ratio under subparagraph 3: <Newly Inserted on Oct. 30, 1999; Dec. 29, 2000; Feb. 19, 2005; Feb. 4, 2009; Feb. 12, 2019>

1. The amount obtained by subtracting the book value of a factory in a large city from the transfer value of the factory;

2. The amount of loss carried forward under Article 13 (1) 1 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which the date of transfer falls;

3. The ratio of the aggregate of the expenses for relocation of factory facilities and of the amount required for the acquisition, replacing, enlargement, or extension of the buildings, appurtenant land, and machinery of a relocated factory to the transfer value of the factory in a large city (the ratio shall not exceed 100/100).

(4) For the purposes of paragraph (3), the estimated price indicated in the written plan for relocation shall apply to any case falling under paragraph (1) 2 or 3 by not later than the date a business is commenced at the factory under paragraph (1) 2 or 3, respectively. <Amended on Oct. 30, 1999; Dec. 31, 2001>

(5)"Upon occurrence of an event prescribed by Presidential Decree, such as a domestic corporation accorded special tax treatment under paragraph (2) fails to commence its business by acquiring a factory in any rural area or closes its business or is dissolved" in the former part of Article 60 (4) of the Act means any of the following cases: <Amended on Dec. 31, 2001; Feb. 18, 2010; Feb. 11, 2020>

1. Where it fails to commence the business as prescribed in paragraph (1);

2. Where the business is closed or dissolved.

3. Where the amount not included in gross income according to the estimated price under paragraph (4) exceeds the amount calculated according to paragraph (3).

(6)"Amount calculated by the formula prescribed by Presidential Decree" in Article 60 (4) of the Act means any of the following amounts: <Newly Inserted on Dec. 30, 1999; Feb. 18, 2010>

1. Where a domestic corporation that has not included the transfer margin in its gross income under Article 60 (2) of the Act, fails to commence a business suited to paragraph (1) 2 or 3, the amount not included in gross income;

2. Where the amount not included in gross income based on the estimated value under paragraph (4), exceeds the amount calculated pursuant to paragraph (3), such excess;

3. Where the business is discontinued or dissolved before the amount not included in gross income under Article 60 (2) of the Act is included in full in gross income, the amount not included in gross income at the time of business discontinuance or dissolution.

(7) Any domestic corporation which intends to be eligible under Article 60 (6) of the Act shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification of gains from the transfer of land, etc. prescribed by Ordinance of the Ministry of Economy and Finance accompanied by the following documents, along with its tax return for the taxable year in which the factory in a large city is transferred: <Amended on Oct. 30, 1999; Jan. 10, 2000; Dec. 31, 2001; Mar. 17, 2004; Feb. 19, 2005; Jun. 28, 2007; Feb. 29, 2008>

1. In cases falling under paragraph (1) 1, a report on completion of re- location prescribed by Ordinance of the Ministry of Economy and Finance;

2. In cases falling under paragraph (1) 2 or 3, a written plan for the relocation prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where a business is commenced under para- graph (1) 2 or 3, a report on completion of relocation prescribed by Ordinance of the Ministry of Economy and Finance shall be furnished, along with its tax return for the taxable year in which such business is commenced.

[Title Amended on Feb. 22, 2008]

Article 57(Special Taxation for Corporate Tax on Capital Gains following Relocation of Corporation's Head Office to Outside of Over-Concentration Control Region of Seoul Metropolitan Area) #

(1) Deleted. <Dec. 30, 2002>

(2) A domestic corporation is eligible under Article 61 (3) of the Act in any of the following cases: <Amended on Oct. 30, 1999; Dec. 31, 2001; Dec. 30, 2002>

1. Where the domestic corporation transfers the site and buildings of the head office or principal place of business in the over-concentration control region of the Seoul Metropolitan area (hereinafter referred to as"head office in the over-concentration control region of the Seoul Metropolitan area") within two years from the date it has relocated the head office in the over-concentration control region of the Seoul Metropolitan area to an area outside of the over-concentration control region of the Seoul Metropolitan area;

2. Where the domestic corporation relocates the head office or principal place of business to an area outside of the over-concentration control region of the Seoul Metropolitan area within three years from the date it has transferred the site and buildings of the head office in the over-concentration control region of the Seoul Metropolitan area.

(3) Deleted; <Dec. 31, 2001>

(4)"Amount computed by the formula prescribed by Presidential Decree" in Article 61 (3) of the Act means the amount calculated by multiplying the amount of subparagraph 1 minus the amount of subparagraph 2 by the ratio of subparagraph 3: <Newly Inserted on Oct. 30, 1999; Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Presidential Decree No. 29527, Feb. 12, 2019>

1. The transfer value of the head office in the over-concentration control region of the Seoul Metropolitan area minus the book value of such asset;

2. The amount of carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which the head office in the over-concentration control region of the Seoul Metropolitan area is transferred;

3. The ratio of the aggregate of the following amounts to the transfer value of the head office in the over-concentration control region of the Seoul Metropolitan area (the ratio shall not exceed 100/100):

(a) The acquisition value or lease deposit (including the key money for lease on a deposit basis; hereinafter the same shall apply) of the site and buildings of the head office or principal place of business of a corporation located outside of the over-concentration control region of the Seoul Metropolitan area: Provided, That, if a portion of the buildings is not used directly by the corporation, it shall be calculated by multiplying the acquisition value or lease deposit by the ratio of the floor area used directly by such corporation to the total floor area of such buildings;

(b) The acquisition value of a fixed business asset (excluding the site and buildings referred to in item (a)) belonging to the head office or principal place of business of a corporation located outside of the over-concentration control region of the Seoul Metropolitan area within one year from the date the head office in the over-concentration control region of the Seoul Metropolitan area is transferred;

(c) Expenses incurred in relocating the head office in the over-concentration control region of the Seoul Metropolitan area.

(5) Where a portion of a corporation' head office in the over-concentration control region of the Seoul Metropolitan area is used directly by the corporation for its business, and other portions are used by any third person, Article 61 of the Act shall apply to the portion that the corporation has used directly for its business for at least two years retroactively from the date of transfer (or the date the head office in the over-concentration control region of the Seoul Metropolitan area is relocated, in cases falling under paragraph (2) 1), as calculated by the ratio of the area used directly by it to the total floor area. <Amended on Feb. 7, 2017>

(6) For the purposes of paragraph (4), the estimated prices stated in a relocation plan or plan for use of disposal proceeds referred to in the former part of paragraph (11) 2 shall be used in cases falling under paragraphs (2) 2 and (4) 3 (b) by no later than the completion of relocation or use. <Newly Inserted on Oct. 30, 1999; Dec. 31, 2001>

(7)"Where the domestic corporation relocates its head office or principal place of business to an area outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 61 (5) 1 of the Act means relocation prescribed under paragraph (2). <Amended onDec. 31, 2001; Dec. 30, 2002; Feb. 18, 2010>

(8)"Exceeding the criteria prescribed by Presidential Decree" in Article 61 (5) 2 of the Act means where the annual average number of full-time employees engaging in the affairs of the head office in the office located in the over-concentration control region of the Seoul Metropolitan area (referring to the number of personnel calculated by aggregating the number of full-time employees as at the end of each month in the relevant taxable year and then dividing the total number of full-time employees by the number of months; hereafter in this Article and Article 60-2, the same shall apply) after the end of the taxable year falling on the third anniversary from the date of relocation of the head office to an area outside of the over-concentration control region of the Seoul Metropolitan area, is at least 50/100 of the annual average number of full-time employees engaging in the affairs of the head office. <Amended on Dec. 30, 2003; Feb. 18, 2010;

(9)"Where the domestic corporation disburses the proceeds for any purpose other than purposes prescribed by Presidential Decree" in Article 61 (5) 3 of the Act means disbursing the proceeds for any purposes other than the following purposes. In such cases, if any portion of the site and buildings of the head office located outside of the over-concentration control region of the Seoul Metropolitan area, which are not used directly by the relevant corporation for the purpose of subparagraph 1, such portion shall be deemed used for other purposes: <Amended on Dec. 31, 2001; Dec. 30, 2002; Feb. 18, 2010>

1. Where the site and buildings of the head office located outside of the over-concentration control region of the Seoul Metropolitan area, are acquired or leased within the period specified under paragraph (2);

2. Where the fixed business assets belonging to the head office located outside of the over-concentration control region of the Seoul Metropolitan area (excluding the site and buildings referred to in subparagraph 1), are acquired within one year from the date the head office in the over-concentration control region of the Seoul Metropolitan area is transferred.

(10)"Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 61 (5) of the Act, with the exception of its subparagraphs, means the following applicable amount: <Newly Inserted on Oct. 30, 1999; Dec. 31, 2001; Feb. 18, 2010>

1. In cases falling under Article 61 (5) 1 or 2 of the Act, the amount not yet included in gross income as at the date the relevant event occurs;

2. In cases falling under Article 61 (5) 3 of the Act or where the amount is not yet included in gross income based on the estimated value under paragraph (6), the amount not yet included in gross income minus the amount calculated under paragraph (4);

3. Where a domestic corporation closes its business or is dissolved before it fully including the amount not yet included in gross income under Article 61 (3) of the Act in gross income, the amount not yet included in gross income as at the time of business closure or dissolution.

(11) A domestic corporation that intends to be eligible under Article 61 (6) of the Act shall file a statement of capital gains on transfer of land, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance and the following documents, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the taxable year in which the date of transfer of its head office in the over-concentration control region of the Seoul Metropolitan area falls: <Amended on Oct. 30, 1999; Dec. 31, 2001; Dec. 30, 2002; Feb. 29, 2008>

1. In cases falling under paragraph (2) 1, a relocation completion report and a plan for use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the domestic corporation acquires a fixed business asset referred to in paragraph (4) 3 (b) or (9) 2, it shall submit a statement on use of the disposal proceeds in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the taxable year in which the date of acquisition falls;

2. In cases falling under paragraph (2) 2, a relocation plan and a plan for use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the domestic corporation relocates its head office or principal place of business outside of the over-concentration control region of the Seoul Metropolitan area under paragraph (2) 2, it shall submit a relocation completion report and a statement on use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the taxable year in which the date of relocation falls.

(12) “Classification prescribed by Presidential Decree” in Article 61 (4) of the Act means the Class under the Korean Standard Industrial Classification. <Newly Inserted on Feb. 3, 2015>

[Title Amended on Feb. 4, 2009; Feb. 18, 2010]

Article 58(Reduction or Exemption of Corporate Tax for Public Institutions Relocating to Innovation Cities) #

(1) "Real estate prescribed by Presidential Decree" in the former part of Article 62 (1) of the Act means the buildings, when and how to sell which are stipulated in a plan for disposal of previous real estate formulated under Article 43 of the Special Act on the Construction and Construction and Development of Innovation Cities and sites therefor. <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 28686, Feb. 27, 2018>

(2) "Amount computed by the formula prescribed by Presidential Decree" in the former part of Article 62 (1) of the Act means the amount calculated by applying mutatis mutandisArticle 57 (4) through (6). In such cases, "in the over-concentration control region of the Seoul Metropolitan area" shall be construed as "in the Seoul Metropolitan area"; and "area outside of the over-concentration control region of the Seoul Metropolitan area" as "innovation city and Sejong City," respectively. <Amended by Presidential Decree No. 25211, Feb. 21, 2014>

(3) The scope to which Article 61 (5) of the Act shall apply mutatis mutandis pursuant to Article 62 (2) of the Act shall be limited to Article 57 (7) through (10). <Amended on Feb. 15, 2013>

(4) Article 57 (11) shall apply mutatis mutandis to submission of a statement of capital gains on transfer of land, etc. and other required documents under Article 62 (3) of the Act. In such cases, "in the over-concentration control region of the Seoul Metropolitan area" shall be construed as "in the Seoul Metropolitan area"; and "area outside the over-concentration control region of the Seoul Metropolitan area" as "innovation city and Sejong City," respectively. <Amended by Presidential Decree No. 25211, Feb. 21, 2014>

(5) "Income prescribed by Presidential Decree" in Article 62 (4) 1 of the Act means the amount (if such amount is negative, it shall be deemed zero) calculated by subtracting losses on disposal of fixed assets, losses on disposal of marketable securities, and interest paid (excluding losses on disposal of marketable securities and interest paid that constitute operating expenses under the Korea Financial Accounting Standards, in cases of a public institution that engages in financial or insurance business (excluding financial holding companies under the Financial Holding Companies Act)), from the sum of gains on disposal of fixed assets, gains on disposal of marketable securities, interest received, dividend received, and gains on assets contributed (excluding gains on disposal of marketable securities, interest received, and dividend received that constitute operating revenues under the Korea Financial Accounting Standards (excluding financial holding companies under the Financial Holding Companies Act)). <Amended by Presidential Decree No. 26959, Feb. 5, 2016>

(6) Deleted. <Feb. 13, 2018>

(7) "Executive officers prescribed by Presidential Decree" in Article 62 (6) of the Act means the persons falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act: Provided, That such executive officers do not include non full-time executive officers. <Amended by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>

(8) "Cases prescribed by Presidential Decree" in Article 62 (7) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>

1. Where an agency fails to commence its business by December 31, 2018 after relocating its head office to an innovation city;

2. Where an agency fails to transfer its head office in the Seoul Metropolitan area within two years after commencing its business in its head office relocated to an innovation city.

(9) "At least the scale prescribed by Presidential Decree" in Article 62 (7) 3 of the Act means where the annual average number of full-time employees engaging in the affairs of the head office in the office in the Seoul Metropolitan area, is at least 50/100 of the annual average number of full-time employees engaging in the affairs of the head office.

(10) The amount of tax payable under Article 62 (7) of the Act shall be calculated as follows: <Amended on Feb. 15, 2013>

1. In cases falling under Article 62 (7) 1 of the Act: An amount of tax reduced or exempted within three years retrospectively from the date of business closure or the date of corporate dissolution;

2. In cases falling under Article 62 (7) 2 of the Act: An amount of tax reduced or exempted within five years retrospectively from the date the relevant agency falls under paragraph (8);

3. In cases falling under Article 62 (7) 3 of the Act: An amount of tax reduced or exempted within five years retrospectively from the date the relevant agency establishes an office of at least the scale provided for in paragraph (9);

4. In cases falling under Article 62 (7) 4 of the Act: An amount of tax reduced or exempted within five years retrospectively from the date the relevant agency fails to meet the prescribed percentage.

(11) Any corporation that wishes to be granted a reduction or exemption of corporate tax under Article 62 (4) and (9) of the Act shall file an application for tax reduction or exemption and a statement of calculation of tax reduction or exemption, in the forms stipulated by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Amended on Feb. 15, 2013>

[This Article Newly Inserted by Act No. Feb. 2, 2012]

[Title Amended on Feb. 21, 2014]

Article 60(Tax Reduction or Exemption for Enterprises Relocating Factories to Outside of Seoul Metropolitan Area) #

(1) "Real estate business, construction business, consumer service business, non-store retailing business, or shipping brokerage business prescribed by Presidential Decree" in the proviso of the provisions, with the exception of the subparagraphs, of Article 63 (1) means the following businesses: Provided, That any business operated by a relocating public institution under subparagraph 2 of Article 2 of the Special Act on the Construction and Development of Innovation Cities and falling under any of the following subparagraphs shall be excluded herefrom:

1. Real estate rental business;

2. Real estate brokerage business;

3. Real estate trading business under Article 122 (1) of the Enforcement Decree of the Income Tax Act;

4. Construction business (including the development and supply of residential buildings according to the Korea Standard Industrial Classification (excluding the resale of purchased residential buildings));

5. Consumer services;

6. Non-store retail business defined in Article 2 (9) of the Distribution Industry Development Act;

7. Shipping brokerage business under subparagraph 5 of Article 2 of the Marine Transportation Act.

(2) The requirement for tax reduction under Article 63 (1) 1 of the Act means to have a record of continuous operations (the period of suspension of operations due to an order to improve or relocate emitting facilities or pollutant emission prevention facilities under the Clean Air Conservation Act, the Water Environment Conservation Act, or the Noise and Vibration Control Act shall be deemed the period of operations) for at least three years (or two years in cases of small and medium enterprises) retroactively from the date of suspension of operations in order to relocate factory facilities located within the over-concentration control region of the Seoul Metropolitan area to outside the Seoul Metropolitan area (in cases of small and medium-sized enterprises, outside the over-concentration control region of the Seoul Metropolitan area; hereafter in this Article, the same shall apply).

(3) "The national shall completely relocate the factory and facilities to outside of the Seoul Metropolitan area…as prescribed by Presidential Decree" in Article 63 (1) 1 (b) of the Act means that the national meets any of the following requirements; In such cases, Article 63 (4) of the Act shall be applied only to cases where a factory in the over-concentration control region of the Seoul Metropolitan area is transferred to someone else.

1. Within two years from the date of commencement of business by relocating the factory to outside the Seoul Metropolitan area, the factory in the over-concentration control region of the Seoul Metropolitan area shall be transferred to some else or all of the factory facilities remaining in the over-concentration control region of the Seoul Metropolitan area shall be demolished or closed so that it is impossible to operate the business with such factory facilities;

2. The national shall commence the business outside the Seoul Metropolitan area within two years from the date of transfer or closure of the factory in the over-concentration control region of the Seoul Metropolitan area (referring to the date of suspension of operations for relocation of the factory, if the national possesses his/her own factory facilities in a site or building leased for the factory; hereafter in this subparagraph, the same shall apply): Provided, That if the national relocates a factory to a new building built by him/her, he/she shall commence the business within three years from the date of transfer or closure of the factory in the over-concentration control region of the Seoul Metropolitan area.

(4) "Area prescribed by Presidential Decree, such as the Seoul Metropolitan area" in Article 63 (1) 2 (a) (i) of the Act means any of the following areas: Provided, That the area referred to in subparagraph 2 is applicable only to cases where an enterprise relocating to the area is a small or medium enterprise: <Amended on Feb. 28, 2023>

1. Jurisdictional area of Dangjin-si, Asan-si, Wonju-si, Eumseong-gun, Jincheon-gun, Cheonan-si, Chuncheon-si, Chungju-si, Hongcheon-gun (excluding Nae-myeon), and Hoengseong-gun;

2. Growth management regions and nature preservation regions under Article 6 (1) 2 and 3 of the Seoul Metropolitan Area Readjustment Planning Act.

(5) "Area prescribed by Presidential Decree, such as a Metropolitan City outside of the Seoul Metropolitan City" in Article 63 (1) 2 (a) (ii) of the Act means any of the following areas: <Newly Inserted on Feb. 28, 2023>

1. Jurisdictional area of a metropolitan city located outside the Seoul Metropolitan area;

2. Jurisdictional area of Gumi-si, Gimhae-si, Jeonju-si, Jeju-si, Jinju-si, Changwon-si, Cheongju-si, or Pohang-si.

(6) An amount of tax payable under Article 63 (2) of the Act shall be calculated as follows: <Amended on Feb. 28, 2023>

1. In cases of Article 63 (2) 1 of the Act: The tax amount reduced or exempted within three years retroactively from the date of closure or dissolution of the corporation;

2. In cases of Article 63 (2) 2 of the Act: The tax amount reduced or exempted within five years retroactively from the date on which the requirements of paragraph (3) are no longer met;

3. In cases of Article 63 (2) 3 of the Act: The tax amount reduced or exempted within five years retroactively from the date of installation of the factory (if a small or medium enterprise relocated its head office or principal place of business pursuant to Article 63 (1) 1 (c) (i) of the Act, including the date of installation of the head office or principal place of business). In such cases, if two or more factories are relocated but the factories produce different products, the reduction or exemption shall be limited to amount reduced or exempted for the relocation of the factory that produces the same product as the product produced by the factory in the Seoul Metropolitan area (in cases of small and medium enterprises, referring to the over-concentration control region of the Seoul Metropolitan area).

(7) "Where the enterprise fails to commence its business after relocating its factory to outside of the Seoul Metropolitan area (in cases of a small or medium enterprise, the over-concentration control region of the Seoul Metropolitan area), as prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means a case that does not meet any requirement of paragraph (3). <Amended on Feb. 28, 2023>

(8) "Interest calculated thereon as prescribed by Presidential Decree" in Article 63 (3) of the Act means an amount calculated by multiplying the amount of tax payable under Article 63 (2) of the Act by the period under subparagraph 1 and the rate under subparagraph 2. <Amended on Feb. 15, 2022; Feb. 28, 2023>

1. The period from the day after the end of the taxable year in which the reduction or exemption was granted to the end of the taxable year in which an event falling under Article 63(2) of the Act occurs;

2. The rate specified in Article 11-2 (9) 2.

(9) A person who wishes to be eligible under Article 63 (1) of the Act shall submit an application for tax reduction or exemption and a statement of the amount of tax reduction or exemption in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with a tax return, to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 28, 2023>

(10) The amount of property tax to be collected pursuant to Article 63 (6) of the Act shall be the difference between the amount of property tax paid pursuant to Article 63 (5) of the Act and the amount of property tax that shall be paid if Article 106 (1) 1 or 2 of the Local Tax Act is applicable in any of the following periods; and the amount of comprehensive real estate holding tax to be collected pursuant to Article 63 (6) of the Act shall be the amount of comprehensive real estate holding tax that shall be paid if Article 106 (1) 1 or 2 of the Local Tax Act is applicable in any of the following periods: <Amended on Feb. 28, 2023>

1. In cases of Article 63 (2) 1 of the Act: Within three years retroactively from the date of closure or dissolution of the corporation;

2. In cases of Article 63 (2) 2 of the Act: Within five years retroactively from the date of failure to meet any requirement of paragraph 3;

3. In cases of Article 63 (2) 3 of the Act: Within five years retroactively from the date of installation of the factory.

(11) An additional amount equivalent to interest under Article 63 (6) of the Act shall be calculated by multiplying the difference between the property tax amounts under paragraph 10 and the amount of comprehensive real estate holding tax by the period in subparagraph 1 and the rate in subparagraph 2: <Amended on Feb. 15, 2022; Feb. 28, 2023>

1. The period from the day after the due date for payment of the tax for the taxable year to which Article 63 (5) of the Act applies to the date of the notice of the tax amount to be collected under Article 63 (6) of the Act;

2. The rate specified in Article 11-2 (9) 2.

(12) "Classification prescribed by Presidential Decree" in Article 63 (7) of the Act means a class of the Korea Standard Industrial Classification. <Amended on Feb. 28, 2023>

(13) "Events prescribed by Presidential Decree, such as a merger with an enterprise that is not a small or medium enterprise under the Framework Act on Small and Medium Enterprises" in Article 63 (8) of the Act means the events referred to in Article 2 (2). <Amended on Feb. 28, 2023>

[This Article Wholly Amended on Jun. 17, 2021]

Article 60-2(Tax Reduction or Exemption for Corporations Relocating Head Offices to Outside of Seoul Metropolitan Area) #

(2) The requirement for tax reduction or exemption under Article 63-2 (1) 1 (a) of the Act means to have a record of business operations with its head office in the over-concentration control region of the Seoul Metropolitan area continuously for at least three years retroactively from the date of registration of the relocation of the head office or principal place of business (hereafter in this Article referred to as "the head office").

(3) "That the corporation shall relocate its head office to outside of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 63-2 (1) 1 (b) of the Act means that any of the following requirements shall be met. In such cases, the application of Article 63-2 (4) of the Act shall be limited to the relocation of the head office in the over-concentration control region of the Seoul Metropolitan area:

1. To transfer the head office in the over-concentration control region of the Seoul Metropolitan area to someone else or convert it to a use other than a head office (including use as an office below the standard prescribed in paragraph (12); hereafter in this Article, the same shall apply) within two years from the date of commencement of business after relocating its head office to outside of the Seoul Metropolitan area;

2. To commence business outside the Seoul Metropolitan area within two years of the date of transfer or conversion of the head office in the Seoul Metropolitan area to any use other than head office: Provided, That if the head office is relocated to a new building constructed by the relocating enterprise, its business shall commence within three years from the date of transferring the head office in the over-concentration control region of the Seoul Metropolitan area or converting it to a use other than head office.

(4) "Criteria prescribed by Presidential Decree" in Article 63-2 (1) 1 (c) of the Act are as follows: <Newly Inserted on Feb. 15, 2022>

1. Investment amount: The cumulative amount of investments in business assets as prescribed by Ordinance of the Ministry of Economy and Finance, calculated as prescribed by Ordinance of the Ministry of Economy and Finance, shall be at least one billion;

2. Personnel in service: The head office relocated to outside of the Seoul Metropolitan area (hereafter in this Article referred to as"relocated head office") shall have at least 20 persons in service in the relevant taxable year.

(5)"Income prescribed by Presidential Decree" in Article 63-2 (1) 2 (a) of the Ac, means the amount in item 1 minus the amount in item 2. In such cases, if the difference is negative, it shall be deemed nil. <Amended on Feb. 15, 2022>

1. The aggregate of gains on disposal of fixed assets, gains on disposal of securities, interest received, dividends received, and gains on receipt of assets as a gift: Provided, That in cases of corporations engaged in any financial or insurance business (excluding financial holding companies under the Financial Holding Companies Act), gains on disposal of securities, interest received, and dividends received that can be recognized as operating income according to the Korea Financial Accounting Standards shall be excluded herefrom;

2. The aggregate of losses on disposal of fixed assets, losses on disposal of securities, and interest paid. Provided, That in cases of corporations engaged in any financial or insurance business (excluding financial holding companies under the Financial Holding Companies Act), losses on disposal of securities and interest paid that can be recognized as operating expenses according to the Korea Financial Accounting Standards shall be excluded herefrom.

(6) The number of personnel of the relocating head office and the total number of personnel of the corporation for the relevant taxable year shall be the number of personnel calculated according to the following subparagraphs: <Amended on Feb. 15, 2022>

1. The number of personnel of the relocating head office: The number of personnel calculated by subtracting the number in item (b) from the number in item (a):

(a) The annual average number of full-time personnel engaged in business of the head office at the relocated head office (referring to the number of personnel calculated by aggregating the number of personnel as of the end of each month and dividing the aggregate by the number of months; hereafter in this article, the same shall apply); Provided, That, the cases in which the number of personnel engaged in business of the head office in an area outside of the Seoul Metropolitan area is transferred to the relocated head office after the taxable year in which the day two years before the date of relocation falls are excluded herefrom;

(b) The average annual number of full-time personnel engaged in business of the head office at the relocated head office in the taxable year in which the day three years before the date of relocation falls;

2. Total number of personnel of the corporation: The average annual number of full-time personnel of the corporation.

(7) For the purposes of paragraph (6), full-time personnel shall consist of persons working full time among employers under Article 2 (1) 2 of the Labor Standards Act and Korean employees who hold an employment contract concluded pursuant to that Act: Provided, That persons falling under any of the following subparagraphs shall be excluded herefrom. <Amended on Feb. 15, 2022>

3. Non full-time personnel among executive officers specified in Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;

4. A person in whose case neither the fact that his/her earned income tax has been withheld nor the fact that any of the following amounts has been paid is verified by a book for tax withholding for earned income under Article 196 of the Enforcement Decree of Income Tax Act:

(a) An employer contribution or employee endowment defined in Article 3 (1) 11 or 12 of the National Pension Act;

(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.

(8) "Consignment processing trade prescribed by Presidential Decree" in Article 63-2 (1) 2 (c) of the Act means exporting all or part of raw materials to be processed (including manufacturing, assembling, recycling, and renovation; hereafter in this Article, the same shall apply) in a foreign country to a trading partner, or procuring and processing them in a foreign country, and then importing or delivering the processed products to a foreign country. <Amended on Feb. 15, 2022>

(9) The turnover generated from the consignment processing trade under Article 63-2 (1) 2 (c) of the Act shall be accounted for separately from other turnover. <Amended on Feb. 15, 2022>

(10) Deleted. <Feb. 28, 2023>

(11) An amount of tax payable under 63-2 (2) of the Act shall be calculated as follows: <Amended on Feb. 15, 2022>

1. In cases of Article 63 (2) 1 of the Act: The tax amount reduced or exempted within three years retroactively from the date of closure or dissolution of the corporation;

2. In cases of Article 63 (2) 2 of the Act: The tax amount reduced or exempted within five years retroactively from the date on which the requirements of paragraph (3) are no longer met;

3. In cases of Article 63-2 (2) 3 of the Act: An amount of tax reduced or exempted within five years retroactively from the date of establishment of the head office or the date of establishing a place of business of not smaller than the standard prescribed in paragraph (12);

4. In cases of Article 63-2 (2) 4 of the Act: An amount by which the tax was reduced or exempted retroactively within five years from the date the corporation fails to meet the ratio prescribed in that subparagraph.

(12) "Where the corporation fails to commence its business after relocating its head office to outside of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means cases that do not meet any requirement of paragraph (3). <Amended on Feb. 15, 2022>

(13) "Not smaller than the standard prescribed by Presidential Decree" in Article 63-2 (2) 3 of the Act means that the ratio of the annual average number of full-time personnel engaged in business of the head office in the place of business in the Seoul Metropolitan area to the annual average number of full-time personnel engaged in business of the head office after the taxable year in which the third anniversary of the date of relocation of the head office to outside of the Seoul Metropolitan area falls is 50/100 or more. <Amended on Feb. 15, 2022>

(14)"Executive officers prescribed by Presidential Decree" In Article 63-2 (2) 4 of the Act means the persons referred to in Article 40 (1) of the Enforcement Decree of the Corporate Income Tax Act: Provided, That non full-time officers shall be excluded herefrom. <Amended on Feb. 15, 2022>

(15) No corporation shall be entitled to a reduction or exemption in corporate tax under Article 63-2 (1) of the Act from the taxable year in which it falls under any of the following cases: <Amended on Feb. 15, 2022>

1. Where it fails to meet the requirement of paragraph (4) 2;

2. Where it falls under Article 63-2 (2) 4 of the Act.

(16) Any corporation that wishes to be granted a reduction or exemption of corporate tax under Article 63-2 (1) of the Act shall file an application for tax reduction or exemption and a statement of calculation of tax reduction or exemption, in the forms stipulated by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Amended on Feb. 15, 2022>

(17) "Classification prescribed by Presidential Decree" in Article 63-2 (5) of the Act means a class of the Korea Standard Industrial Classification. <Amended on Feb. 15, 2022>

[This Article Wholly Amended on Jun. 17, 2021]

Article 61(Tax Reduction or Exemption for Enterprises that Occupy Agro-Industrial Complexes) #

(1) "Agro-industrial complex prescribed by Presidential Decree" in Article 64 (1) 1 of the Act means any agro-industrial complex in a Si (including special self-governing cities and administrative cities under Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in paragraph (2), the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in paragraph (2), the same shall apply) with a population of less than 200,000 persons as at the date of designation as an agro-industrial complex, which is located in an area outside of the over-concentration control region of the Seoul Metropolitan area. <Amended on Dec. 29, 2000; Dec. 30, 2002; Feb. 18, 2010; Feb. 28, 2023>

(2) “Area prescribed by Presidential Decree" in Article 64 (1) 2 of the Act means an area designated by Ordinance of the Ministry of Economy and Finance as an area for special support for local small and medium enterprises in a Si/Gun/Gu with a population of less than 200,000 persons as at the date of designation as an area for special support for local small or medium enterprises, which is located outside of the over-concentration control region of the Seoul Metropolitan area. <Amended on Dec. 29, 2000; Dec. 30, 2002; Feb. 29, 2008; Feb. 18, 2010; Feb. 3, 2015; Jan. 25, 2022; Feb. 28, 2023>

(3) "Cumulative investments prescribed by Presidential Decree" in Article 64 (3) 1 of the Act means the sum of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable year in which a reduction or exemption of corporate tax or income tax is granted pursuant to Article 64 (2) of the Act. <Newly Inserted on Feb. 12, 2019>

(4) "Amount computed by the formula prescribed by Presidential Decree" in Article 61 (3) of the Act means the amount calculated by multiplying the amount of subparagraph 1 minus the amount of subparagraph 2 by the ratio of subparagraph 3: <Newly Inserted on Oct. 30, 1999; Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Feb. 12, 2019>

(5) The amount of income tax or corporate tax payable under Article 64 (5) of the Act shall be calculated by the following formula (where the amount is a negative figure, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive taxable years after the end of the taxable year in which tax reductions or exemptions are granted, such amount payable in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return for the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023>

The aggregate of amounts of tax reduced or exempted under Article 64 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees at the place of business eligible for tax reduction or exemption for the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a service business under Article 64 (3) 2 of the Act)]

(6) For the purposes of Article 64 (3) and (5) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and full-time youth employees and the method for calculating the number of full-time employees and full-time youth employees. <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023>

(7) “Tax amount calculated as prescribed by Presidential Decree” in Article 64 (1) of the Act means any of the following tax amounts: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 64 (7) 1 of the Act: The tax amount reduced or exempted within three years retroactively from the date of closure or dissolution of the corporation;

2. In cases of Article 64 (7) 2 of the Act: The tax amount reduced or exempted within five years retrospectively from the date of relocation.

(8) Any person who wishes to be granted a tax reduction or exemption under Article 64 (1) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 29, 2008; Feb. 12, 2019; Feb. 15, 2022>

Article 63(Corporate Tax Exemption for Agricultural Partnerships) #

(1)"Amount prescribed by Presidential Decree" in Article 66 (1) of the Act means any of the following amounts of income accruing from the business referred to in any subparagraph of Article 20-5 (1) of the Enforcement Decree of theAct on Fostering and Supporting Agricultural and Fisheries Business Entities: <Amended on Feb. 21, 2014; Feb. 3, 2015; May 9, 2022>

1. Amount of income accruing from business growing crops, other than business growing cereal crops and other crops for food (hereafter in this Article and Article 65, referred to as"food-crop growing business"), which does not exceed the amount calculated by the following formula each business year:

Amount of income accruing from business growing crops, other than food-crop growing business × {600 million won × Number of members × (Number of months in a business year ÷ 12) ÷ Amount of revenues from business growing crops, other than food-crop growing business}

2. Amount of income, other than the income accruing from business growing crops, which does not exceed the amount calculated by the following formula each business year :

{12 million won × Number of members × (Number of months in a business year ÷ 12)}

(2)"Amount prescribed by Presidential Decree" in the former part of Article 66 (2) of the Act means the full amount of dividend income if such dividend income accrues from the income exempt from corporate tax under paragraph (1) 1, or the amount not exceeding 12 million won each taxable year out of the dividend income if it accrues from the total income of an agricultural partnership minus the income from food-crop growing business and the income exempt from corporate tax under paragraph (1) 1. <Amended on Feb. 21. 2014>

(3) The dividend income referred to in the latter part of Article 66 (2) of the Act shall be calculated by the following formula at each dividend payment. In such cases, the amount of income shall be the income for a business year immediately preceding the business year during which distribution of the dividend is determined; and if such amount of income is less than zero, it shall be deemed nil: <Amended on Feb. 21. 2014>

1. Dividend income accruing from food-crop growing business:

Dividend income paid by an agricultural company × amount of income accruing from food-crop growing business ÷ total amount of revenues

2. Dividend income accruing from income exempt from corporate tax under paragraph (1) 1:

{Dividend income paid by an agricultural partnership × (Amount of income exempt from corporate tax under paragraph (1) 1 ÷ Total amount of income)}

3. Dividend income accruing from the total income minus the income from food-crop growing business and the income exempt from corporate tax under paragraph (1) 1:

[Dividend income paid by an agricultural partnership × {1 - (Amount of income accruing from food-crop growing business + Amount of income exempt from corporate tax under paragraph (1)) 1 ÷ Total amount of income}]

(4)"Farmer prescribed by Presidential Decree" in the main sentences of Articles 66 (4) and 68 (2) of the Act means a farmer defined in subparagraph 2 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, who has directly cultivated farmland for at least four years while residing in a Si (including the Special Self-Governing City and the administrative Si 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; hereafter in this Article, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) in which he/she has the farmland, grassland, or real estate invested in kind (hereafter in this Article, referred to as"farmland, etc.") or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc.;"farmer prescribed by Presidential Decree" in Articles 66 (7) and 68 (3) of the Act means a farmer defined in subparagraph 2 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, who has directly cultivated farmland for at least four years while residing in a Si/Gun/Gu in which he/she has the farmland, etc. invested in kind or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc. <Amended on Feb. 19, 2005; Feb. 22, 2008; Nov. 26, 2009; Feb. 18, 2010; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Dec. 22, 2015; Jan. 22, 2016; Feb. 7, 2017>

(5) Farmland eligible for full exemption from capital gains tax on the income accruing from making an investment in kind with farmland or grassland under Article 66 (4) or 68 (2) of the Act shall be rice paddies or dry fields actually used for cultivation, irrespective of land categories on the Cadastral Record, and the land used for a farmer's hut, compost barrack, pumping station, lake and pond, farm road, waterway, etc. directly necessary for such cultivation: Provided, That any farmland listed under Article 66 (4) shall be excluded herefrom. <Amended on Feb. 19, 2005; Feb. 5, 2016; Feb. 7, 2017>

(6) Capital gains tax referred to in Article 66 (5) of the Act shall be paid only where the period during which a farmer has directly cultivated farmland before making an investment in kind with such farmland and the period from the date of the investment in kind with such farmland to the date of transfer of his/her equity shares does not exceed eight years in total; and the amount of tax payable shall be calculated by multiplying the amount of tax reduction or exemption on the relevant farmland by the ratio of the equity shares transferred within three years to the total equity shares. Where an heir continues to cultivate inherited farmland (referring to cultivation while the heir resides in a Si/Gun/Gu in which he/she has the farmland, etc. invested in kind under paragraph (4), or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc.) for at least one year, the heir is deemed to have cultivated the relevant farmland for the sum of the following periods, for the purposes of calculating the period of cultivation of the inherited farmland: <Amended on Dec. 29, 2000; Feb. 3, 2015; Feb. 5, 2016>

1. The period during which the decedent has cultivated the farmland after acquisition (limited to the period for which the former decedent has cultivated the farmland);

2. Where the decedent inherited farmland from his/her spouse and has cultivated such farmland, the period during which the decedent’ spouse had cultivated it after acquisition.

(7) An agricultural partnership that wishes to be granted an exemption of corporate tax under Article 66 (1) of the Act shall file its tax return, an application for tax exemption and a statement of exempted amount of tax in the forms prescribed by Ordinance of the Ministry of Economy and Finance, and a certificate of registration (registration of modification) as an agricultural or fisheries business entity under Article 4 of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereinafter referred to as"registration certificate as an agricultural or fisheries business entity"), with the head of the tax office having jurisdiction over the place of tax payment: Provided, That the same shall not apply where it has no corporate tax payable. <Amended on Dec. 30, 2003; Feb. 29, 2008; Feb. 21, 2014>

(8) A person who wishes to be granted an exemption of income tax on dividend income under Article 66 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant agricultural partnership, at the time he/she receives the relevant dividend. In such cases, the agricultural partnership shall submit the applications for tax exemption filed by its members and its registration certificate as an agricultural or fisheries business entity, to the head of the tax office having jurisdiction over withholding taxes, by the end of the month following the month in which dividends are paid. <Amended on Feb. 29, 2008; Feb. 21, 2014>

(9)"Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 66 (6) and (10) of the Act means the equivalent to the amount of tax payable under Article 66 (5) or (9) of the Act, multiplied by the period of subparagraph 1 and the rate of subparagraph 2: <Newly Inserted on Feb. 4, 2009; Feb. 21, 2014; Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the deadline for payment of capital gains tax for the provisional return on farmland, etc. invested initially in kind, until the date the amount of tax calculated under Article 66 (5) or (9) of the Act is paid;

2. The rate specified in Article 11-2 (9) 2.

(10) A person who wishes to be granted a reduction or exemption of capital gains tax or to be carried forward capital gains tax under Article 66 (8) of the Act shall file his/her tax return, an application for tax reduction or exemption or an application for taxation carried forward in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with copies of the registration certificate of the relevant agricultural partnership as an agricultural or fisheries business entity and an agreement on the investment in kind. In such cases, the application for taxation carried forward shall be filed jointly with the agricultural partnership: <Amended on Feb. 19, 2005; Feb. 29, 2008; Nov. 2, 2010; Feb. 21, 2014; Feb. 5, 2016>

1. Deleted. <Nov. 2, 2010>

2. Deleted. <Nov. 2, 2010>

(11) Upon receipt of an application for tax reduction or exemption or an application for taxation carried forward under paragraph (10), the head of the tax office having jurisdiction over the place of tax payment shall verify the certified copy of the registry of the relevant farmland by matching it against administrative information available for sharing under Article 36 (1) of the Electronic Government Act. <Newly Inserted on Nov. 2, 2010; Feb. 5, 2016>

(12) Article 28 (10) shall apply mutatis mutandis to the guidelines for determining where a farmer disposes of at least 50/100 of the stocks or equity shares he/she has acquired by making an investment in kind, for the purposes of Article 66 (9) of the Act. <Newly Inserted on Feb. 21, 2014>

(13) Capital gains tax referred to in Article 66 (9) of the Act shall be paid only where the period during which a farmer has directly used the relevant real estate before making an investment in kind with such real estate and the period from the date of the investment in kind with such real estate to the date of disposal of stocks or equity shares does not exceed eight years in total. In such cases, for the purpose of calculating the period of use of the inherited real estate, the period for which the inherited real estate has been used by the decedent shall be deemed the period for which it has been used by the heir. <Newly Inserted on Feb. 21, 2014>

(14) In calculating the cultivation period under paragraphs (4) and (6), the following taxable periods shall be excluded from the period of cultivation conducted by the relevant resident or the decedent (including the spouse in cases of the decedent; hereafter the same shall apply in this paragraph). <Amended on Feb. 29, 2024>

1. A taxable period during which the relevant resident and the decedent has at least 37 million won of the aggregate of the business income under Article 19 (2) of the Income Tax Act (excluding the income from agriculture and forestry, the income from the real estate lease business under Article 45 (2) of the Income Tax Act, and the income from the side business of a farm household under Article 9 of the Enforcement Decree of that Act; hereafter in this paragraph referred to as "business income") and the gross wages and salaries under Article 20 (2) of that Act. In such cases, if the amount of business income is a negative figure, the amount shall be deemed nil;

2. A taxable period during which the relevant resident or the decedent has the total amount of business income under Article 24 (1) of the Income Tax Act (excluding the income from agriculture and forestry, the income from the real estate lease business under Article 45 (2) of the Income Tax Act, and the income from the side business of a farm household under Article 9 of the Enforcement Decree of that Act) that is not less than the amount specified in Article 208 (5) 2 of the Enforcement Decree of that Act.

(15)"Income prescribed by Presidential Decree" in the main clause of Article 66 (4) of the Act means an amount calculated according to the following formula: <Newly Inserted on Feb. 11, 2020>

Amount of capital gains under Article 95 (1) of the Income Tax Act × Debts secured by assets invested in kind/Transfer price

(16)"Income prescribed by Presidential Decree" in the proviso to Article 66 (4) of the Act means the amount calculated by the following formula, out of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this Article, referred to as"amount of capital gains"). In such cases, if land is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where land is acquired or transferred, or where the date of incorporation into a residential area, commercial area, or industrial area under the National Land Planning and Utilization Act (hereafter in this Article through Article 66 and Articles 66-2, 66-3 and 67, referred to as"residential area, etc.") or the date of designation as land reserved for replotting arrives, before newly assessed value is publicly notified: <Newly Inserted on Feb. 7, 2017; Feb. 13, 2018; Feb. 11, 2020>

Amount of capital gains × {(assessed value as at the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting - assessed value at the time of acquisition) ÷ (assessed value at the time of transfer - assessed value at the time of acquisition)}

Article 64(Corporate Tax Exemption for Fishery Partnerships) #

(1) The income exempt from corporate tax pursuant to Article 67 (1) of the Act means an amount of the income accruing from the business referred to in any subparagraph of Article 20-5 (2) of the Enforcement Decree of theAct on Fostering and Supporting Agricultural and Fisheries Business Entities and falling under any of the following subparagraphs: <Amended on Feb. 11, 2020; May 9, 2022; Feb. 29, 2024>

1. An amount not exceeding the amount calculated according to the following formula for each business year as income generated from coastal fisheries, inland water fisheries, or aquaculture according to the Korea Standard Industrial Classification (hereafter in this Article referred to as "fishery income"):

30 million won × Number of union members × (Number of months of the relevant business year/12)

2. An amount not exceeding the amount calculated according to the following formula for each business year as income except fishery income:

12 million won × Number of union members × (Number of months of the relevant business year/12)

(2) The dividend income exempt from income tax pursuant to Article 67 (2) of the Act shall not exceed 12 million won each taxable year.

(3)"Fisherman prescribed by Presidential Decree" in Article 67 (4) of the Act means a fisherman defined under the Fisheries Act, or a business operator engaging in the production of seeds for fisheries defined under the Fisheries Seed Industry Promotion Act (limited to business operators engaging in the production of seeds for fisheries in the sea, at the seashore, or in inland waters artificially created for the purpose of producing seeds for fisheries), who has directly used land for fisheries for fishery activities for at least four years, while residing in a Si (including the Special Self-Governing City and the administrative Si 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; hereafter in this Article, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) in which he/she has land or a building for fisheries (hereinafter referred to as"land, etc.") invested in kind, or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such land, etc. for fisheries. <Amended on Feb. 19, 2005; Feb. 22, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; Jan. 22, 2016; Feb. 5, 2016; Jun. 21, 2016>

(4)"Land, etc. for fisheries prescribed by Presidential Decree" in Article 67 (4) of the Act means land and buildings used directly for the inland seawater aquaculture referred to in Article 43 (1) 1 of the Aquaculture Industry Development Act or the production of seeds and seedlings for fisheries under Article 21 (1) of the Fisheries Seed Industry Promotion Act (limited to business producing seeds for fisheries in the sea, at the seashore, or in inland waters artificially created for the purpose of producing seeds for fisheries). <Amended on May 18, 2010; Feb. 5, 2016; Jun. 21, 2016; Aug. 26, 2020>

(5) Capital gains tax referred to in Article 67 (5) of the Act shall be paid only where the period during which a fisherman has directly used the relevant land, etc. for the fisheries for fisheries activities before making an investment in kind with such land, etc. and the period from the date of the investment in kind with such land, etc. to the date of transfer of his/her equity shares does not exceed eight years in total. Where the heir continues to use inherited land, etc. (referring to using the inherited land, etc. directly for fisheries while the heir resides in a Si/Gun/Gu in which he/she has the land, etc. for fisheries invested in kind, or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from the relevant land, etc. for fisheries) directly for fisheries for at least one year, an heir shall be deemed to have used the inherited land, etc. directly for fisheries for the sum of the following periods, for the purposes of calculating the period of use of the inherited land, etc. for fisheries directly for fisheries: <Newly Inserted on Feb. 5, 2016>

1. The period during which the decedent used the land, etc. directly for fisheries after acquisition (limited to the period for which the former decedent used it directly for fisheries);

2. The period during which the decedent's spouse had used the land, etc. directly for fisheries after acquisition, if the decedent inherited it from his/her spouse and has used the land, etc. directly for fisheries.

(6) The amount of tax payable under Article 67 (5) of the Act shall be calculated by multiplying the amount of tax reduced or exempted on the relevant land, etc. for fisheries, by the ratio of equity shares transferred within three years to the total equity shares acquired by an investment in kind. <Amended on Dec. 29, 2000; Feb. 5, 2016>

(7)"Cases prescribed by Presidential Decree" in the proviso to Article 67 (5) of the Act means where all members of a household emigrate to a foreign country under the Emigration Act. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 5, 2016>

(8) A fishery partnership that wishes to be granted an exemption of corporate tax under Article 67 (1) of the Act shall file its tax return, an application for tax exemption and a statement of amount of tax exempted, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, and a registration certificate as an agricultural or fisheries business entity, with the head of the tax office having jurisdiction over the place of tax payment: Provided, That this shall not apply where it has no corporate tax payable. <Amended on Dec. 30, 2003; Feb. 29, 2008; Feb. 21, 2014; Feb. 5, 2016>

(9) A person who wishes to be granted an exemption of income tax on dividend income under Article 67 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant fishery partnership, at the time he/she receives the relevant dividend. In such cases, the fishery partnership shall submit the applications for tax exemption filed by its members and its registration certificate as an agricultural or fisheries business entity, to the head of the tax office having jurisdiction over withholding taxes, by the end of the month following the month in which dividends are paid. <Amended on Feb. 29, 2008; Feb. 21, 2014; Feb. 5, 2016>

(10) A person who intends to apply for a reduction or exemption of capital gains tax under Article 67 (6) of the Act shall file an application for tax reduction or exemption (including filing through the Home Tax Service Network) in the form prescribed by Ordinance of the Ministry of Economy and Finance, and copies of the registration certificate of the relevant fisheries partnership as an agricultural or fisheries business entity and an agreement on the investment in kind, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the relevant land, etc. for fisheries was transferred. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall verify the certificate of registered matters of the land, etc. for fisheries by matching it against administrative information available for sharing under Article 36 (1) of the Electronic Government Act. <Amended on Jun. 28, 2007; Feb. 29, 2008; May 4, 2010; Nov. 2, 2010; Feb. 21, 2014; Feb. 5, 2016; Feb. 13, 2018>

(11) Article 63 (14) shall apply mutatis mutandis to the calculation of the period during which any land, etc. for fishery is directly used for fisheries under paragraphs (3) and (5). In such cases, "income from agriculture and forestry" in the subparagraphs 1 and 2 of that paragraph shall be respectively construed as "income from fisheries." <Amended on Feb. 29, 2024>

(12)"Income prescribed by Presidential Decree" in the main clause of Article 67 (4) of the Act means an amount calculated according to the following formula: <Newly Inserted on Feb. 11, 2020>

Amount of capital gains under Article 95 (1) of the Income Tax Act × Debts secured by assets invested in kind/Transfer price

(13)"Income prescribed by Presidential Decree" in the proviso to Article 67 (4) of the Act means the amount calculated by the following formula, out of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this paragraph referred to as"amount of capital gains"). In such cases, if land is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other statute, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where land is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting arrives, before a new assessed value is publicly notified: <Newly Inserted on Feb. 7, 2017; Feb. 11, 2020>

Article 65(Tax Reductions or Exemptions for Agricultural Companies) #

(1)"Amount prescribed by Presidential Decree" in Article 68 (1) of the Act means up to the amount calculated by the following formula: <Newly Inserted on Feb. 21, 2014>

Amount of income accruing from business growing crops, other than food-crop growing business × {5 billion won × (Number of months in a business year ÷ 12) ÷ Revenues from business growing crops, other than food-crop growing business}

(2) "Income prescribed by Presidential Decree" in Article 68 (1) of the Act means the following income (excluding the income accruing from the types of business prescribed by Ordinance of the Ministry of Economy and Finance, in cases of an agricultural company prescribed by Ordinance of the Ministry of Economy and Finance which is controlled by a nonfarmer): <Amended on Feb. 22, 2008; Jun. 20, 2008; Oct. 8, 2009; Nov. 26, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 21, 2014; Dec. 22, 2015; Feb. 12, 2019; May 9, 2022; Feb. 29, 2024>

1. Income accruing from the livestock breeding business or forestry defined in Article 2 of the Enforcement Decree of theFramework Act on Agriculture, Rural Community and Food Industry;

2. Income of an agricultural company established pursuant to the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereafter in this Article referred to as"agricultural company"), accruing from any of the businesses referred to in Article 20-5 (1) 6 (a) through (e) of the Enforcement Decree of that Act;

3. Income accruing from the distribution, processing, and sale of agricultural products referred to in Article 19 (1) of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities and the cultivation of land as proxy: Provided, income generated from the distribution and sale of imported agricultural products shall be excluded herefrom.

(3)"Income prescribed by Presidential Decree" in the former part of Article 68 (4) of the Act means income referred to in each subparagraph of paragraph (2) (hereafter in this Article, referred to as"income accruing from incidental business, etc.") and income accruing from business growing crops other than food-crop growing business. <Newly Inserted on Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020>

(4) The dividend income referred to in the latter part of Article 68 (4) of the Act shall be calculated by the following formula at each dividend payment. In such cases, the amount of income shall be the income for a business year immediately preceding the business year during which distribution of the dividend is determined; and if such amount of income less than zero, it shall be deemed nil: <Amended on Feb. 2, 2012; Feb. 21, 2014>

1. Dividend income accruing from food-crop growing business:

Dividend income paid by an agricultural company × amount of income accruing from food-crop growing business ÷ total amount of revenues

2. Dividend income accruing from incidental business, etc. and business growing crops, other than food-crop growing business:

Dividend income paid by an agricultural company × (amount of income accruing from incidental business, etc. + amount of income accruing from business growing crops, other than food-crop growing business) ÷ total amount of revenues

(5) A person who wishes to be granted a reduction or exemption of corporate tax or to be carried forward corporate tax pursuant to Article 68 (1) or (3) of the Act shall file his/her tax return, an application for tax reduction or exemption, a statement of amount of tax reduced or exempted, or an application for taxation carried forward, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, and the registration certificate as an agricultural or fisheries business entity, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the person shall file the application for taxation carried forward, jointly with the relevant agricultural company. <Amended on Feb. 29, 2008; Feb. 2, 2012; Feb. 21, 2014>

(6) A person who wishes to be granted an exemption of income tax on the dividend income pursuant to Article 68 (4) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant agricultural company, at the time he/she receives the dividend income. In such cases, the agricultural company shall submit the applications for tax exemption filed by its members and its registration certificate as an agricultural or fisheries business entity, to the head of the tax office having jurisdiction over the withholding tax, by the end of the month immediately following the month during which dividends are paid. <Amended on Feb. 29, 2008; Feb. 21, 2014>

(7)"Income prescribed by Presidential Decree" in the main clause of Article 68 (2) of the Act means an amount calculated according to the following formula: <Newly Inserted on Feb. 11, 2020>

Amount of capital gains under Article 95 (1) of the Income Tax Act × Debts secured by assets invested in kind/Transfer price

(8)"Income prescribed by Presidential Decree" in the proviso to Article 68 (2) of the Act means the amount calculated by the following formula, of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as"amount of capital gains"). In such cases, if farmland or grassland is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other statute, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where the farmland or grassland is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting arrives, before a new assessed value is publicly notified: <Newly Inserted on Feb. 7, 2017; Feb. 11, 2020>

[This Article Wholly Amended on Jun. 28, 2007]

Article 66(Reduction or Exemption of Capital Gains Tax for Self-Cultivating Farmland) #

(1) "Resident prescribed by Presidential Decree who resides on farmland" in the main sentence of Article 69 (1) of the Act means a resident defined in Article 1-2 (1) 1 of the Income Tax Act, (including a person for whom two years has not passed since he/she became a non-resident) as of the date of transfer of farmland who has cultivated the farmland residing in any of the following areas (including areas that used to be following areas at the time a resident commenced cultivation, but cease to be such areas due to reorganization of administrative districts) for at least eight years (or three years where a resident transfers any parcel of farmland eligible for the retirement subsidy for farmland transfer referred to in paragraph (3) to the Korea Rural Community Corporation established under the Korea Rural Community Corporation and Farmland Management Fund Act (hereafter in this Article, referred to as the "Korea Rural Community Corporation") or to any corporation provided for in paragraph (2)): <Newly Inserted on Dec. 31, 2001; Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 22, 2008; Jun. 26, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Jan. 22, 2016; Mar. 26, 2024>

1. An area within a Si (including the Special Self-Governing City and the administrative Si 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; hereafter in this paragraph, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this paragraph, the same shall apply) where farmland is located;

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the relevant farmland.

(2)"Corporation prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the Act means an agricultural partnership established under Article 16 of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities and an agricultural company established under Article 19 of that Act. <Newly Inserted on Dec. 30, 2002; Feb. 19, 2005; Jun. 20, 2008; Oct. 8, 2009; Feb. 18, 2010>

(3) "Directly-paid subsidy for the transfer of management prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the Act means the retirement subsidy for farmland transfer prescribed under Article 4 of the Enforcement Regulations for Direct Payment System for Producers of Agricultural Products. <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005; Jan. 6, 2009; Feb. 18, 2010; Mar. 26, 2024>

(4) "Land prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the Act means farmland directly cultivated by a resident for at least eight years (or three years where a resident transfers any parcel of farmland eligible for the retirement subsidy for farmland transfer referred to in paragraph (3) to the Korea Rural Community Corporation or to the corporation provided for in paragraph (2)) from the time of acquisition of such farmland to the time of transfer, except the following farmland: <Amended on Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 22, 2008; Feb. 29, 2008; Jun. 26, 2009; Feb. 18, 2010; Jun. 3, 2011; Feb. 2, 2012; Feb. 15, 2013; Jan. 22, 2016; Mar. 26, 2024>

1. Farmland within a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act and three years have passed since its incorporation into any of such areas, among the farmland located in the Special Metropolitan City, a Metropolitan City (excluding a Gun within a Metropolitan City), a Si (excluding Eup or Myeon areas in a Si combined with function of urban and rural communities under Article 3 (4) of the Local Autonomy Act, or Eup or Myeon areas in the administrative Si 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): Provided, That the following farmland shall be excluded herefrom:

(a) Farmland incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a large-scale development project within an area (referring to a single project implementation area, the project authorization of which is publicly notified on the same day) for a development project (hereafter in this subparagraph, referred to as"large-scale development project"), in which case the number of owners of land within the project implementation area is at least one thousand, or the project implementation area is at least the scale prescribed by Ordinance of the Ministry of Economy and Finance, and three years have passed since it was incorporated into the project implementation area while the project has been implemented in phases or compensation is delayed;

(b) Farmland incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a development project, the operator of which is the State, local government, or public institution prescribed by Ordinance of the Ministry of Economy and Finance, within a development project area, and regarding which any unavoidable cause prescribed by Ordinance of the Ministry of Economy and Finance arises;

(c) Farmland incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, in which case a large-scale development project has been implemented within three years after it was incorporated, and three years have passed since it was incorporated into such area while the project has been implemented in phases or compensation is delayed (limited to farmland located within the large-scale development area);

2. Where farmland is designated as land reserved for replotting, other than farmland, prior to a disposition of land replotting pursuant to the Urban Development Act or other Acts, the farmland for which three years have passed from the date the farmland was so designated: Provided, That settlement money for land replotting granted for the disposition of land replotting shall be excluded herefrom.

(5) Farmland eligible under paragraph (4) shall be farmland as at the date of transfer, as provided for in Article 162 of the Enforcement Decree of the Income Tax Act: Provided, That the following criteria shall apply to the cases specified in the following: <Amended on Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 2, 2012; Feb. 5, 2016>

1. Where a buyer has altered the form or quality of the farmland or has commenced construction prior to the date of transfer under the terms and conditions of a sales and purchase agreement: Based on the farmland as at the date of execution of the sales and purchase agreement;

2. Where the farmland was designated as land reserved for replotting, other than farmland, and three years have not passed since the date of designation as the land reserved for replotting, and cultivating the farmland becomes impossible due to the implementation of a land development project: Based on the farmland as at the date of commencement of the land development project;

3. Where the farmland remains uncultivated in order to prevent mining damage pursuant to the Mining Damage Prevention and Restoration Act or ordinance of a local government and according to the budget of a local government: Based on the farmland as at the date of the execution of the non-cultivation contract.

(6) Where farmland has been exchanged, partitioned, combined, or substituted pursuant to Article 89 (1) 2 of the Income Tax Act and Article 70 of the Act, and the newly-acquired farmland is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, or is expropriated under any other Act, the main sentence of paragraph (1) shall apply, deeming that the period of cultivating farmland before exchange, partition, combination, or substitution, is the period of cultivating such farmland. <Amended on Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 18, 2010>

(7)"Income prescribed by Presidential Decree" in the proviso to Article 69 (1) of the Act means the amount calculated by the following formula, of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as"amount of capital gains"). In such cases, if farmland or grassland is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other statute, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where the farmland or grassland is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting arrives, before a new assessed value is publicly notified: <Amended on Dec. 31, 2001; Feb. 19, 2005; Dec. 31, 2008; Feb. 18, 2010; Feb. 3, 2015>

(8)"Where any of the grounds prescribed by Presidential Decree arises" in Article 69 (2) of the Act means any of the following circumstances: <Newly Inserted on Dec. 30, 2002; Feb. 18, 2010>

1. Where an agricultural corporation suspends or closes its business or is dissolved within three years from the date of acquisition of the relevant land;

2. Where an agricultural corporation uses the relevant land for other purposes without having cultivated it for at least three years.

(9) A person who intends to apply for a reduction or exemption of capital gains tax pursuant to Article 69 (3) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable year in which the relevant farmland is transferred. In such cases, if the person transfers farmland to the corporation provided for in paragraph (2), he/she shall file an application for tax reduction or exemption jointly with the relevant transferee. <Amended on Jan. 10, 2000; Dec. 31, 2001; Dec. 30, 2002; Feb. 29, 2008>

(10) Upon receipt of an application for tax reduction or exemption filed under the latter part of paragraph (9), the head of the relevant tax office shall promptly notify the head of the tax office having jurisdiction over the place of tax payment of the corporation provided for in paragraph (2), thereof. <Newly Inserted on Dec. 30, 2002; Dec. 30, 2003>

(11) Where an heir continues to cultivates inherited farmland (referring to cultivation while the heir resides at any of the areas specified under paragraph (1); hereafter in this paragraph and paragraph (12), the same shall apply) for at least one year, the heir shall be deemed to have cultivated the inherited farmland for the sum of the following periods, for the purposes of calculating the period of cultivation under paragraph (4): <Newly Inserted on Feb. 9, 2006; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Jun. 3, 2011; Feb. 2, 2012>

1. The period during which the decedent cultivated farmland after acquisition (limited to the period during which the former decedent cultivated farmland);

2. Where the decedent inherited farmland from his/her spouse and has cultivated such farmland, the period during which the decedent’ spouse had cultivated it after acquisition.

(12) Notwithstanding paragraph (11), an heir shall be deemed to have cultivated inherited farmland for the sum of the periods provided for in paragraph (11) 1 and 2, if the inherited farmland is designated (referring to the date the head of the relevant administrative agency issues a public notice on the Official Gazette or official report) as any of the following areas by the third anniversary from the date of inheritance (including designation before the date of inheritance) where the heir transfers the inherited land or it is purchased through negotiations or is expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes by the third anniversary from the date of inheritance although the heir does not continue to cultivate the inherited farmland for at least one year: <Newly Inserted on Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Aug. 30, 2011>

1. An area prearranged for housing site development under Article 3 of the Housing Site Development Promotion Act;

2. An industrial complex designated under Article 6, 7, 7-2, or 8 of the Industrial Sites and Development Act;

3. Areas prescribed by Ordinance of the Ministry of Economy and Finance, other than those specified in subparagraphs 1 and 2.

(13) "Mainly engaging in agriculture by the method prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the Act means either of the following cases: <Newly Inserted on Feb. 9, 2006; Feb. 4, 2009; Feb. 2, 2012; Feb. 3, 2015; Feb. 5, 2016>

1. Where a resident regularly engages in cultivating crops or growing perennial plants on his/her own farmland;

2. Where a resident conducts at least 1/2 of farming activities for cultivating or growing agricultural products on his/her own farmland with his/her own labor.

(14) If any of the following taxable period is applicable to a decedent (including his/her heir: hereafter in this paragraph, the same shall apply) or a resident respectively, out of a period of cultivation under paragraph (4), (6), (11), or (12), such period shall be excluded from the period during which the decedent or resident cultivated land: <Newly Inserted on Feb. 21, 2014; Feb. 7, 2017; Feb. 11, 2020>

1. Where the aggregate of the business income under Article 19 (2) of the Income Tax Act (excluding the income from agriculture and forestry, the income from the real estate lease business under Article 45 (2) of the Income Tax Act, and the income from the side business of a farm household under Article 9 of the Enforcement Decree of that Act; hereafter in this paragraph referred to as"business income") and the gross wage and salary income under Article 20 (2) of that Act for a certain taxable period is at least 37 million won. In such cases, if the amount of business income is a negative figure, the amount shall be deemed nil;

2. Where the total amount of business income under Article 24 (1) of the Income Tax Act (excluding the income from agriculture and forestry, the income from the real estate lease business under Article 45 (2) of the Income Tax Act, and the income from the side business of a farm household under Article 9 of the Enforcement Decree of that Act) in a certain taxable period is not less than the amount prescribed in each item in Article 208 (5) 2 of the Enforcement Decree of that Act.

[Title Amended on Dec. 31, 2001]

Article 66-2(Reduction or Exemption of Capital Gains Tax on Site for Livestock Stables) #

(1)"Resident prescribed by Presidential Decree" in the main sentence of Article 69-2 (1) of the Act means a resident defined in Article 1-2 (1) 1 of the Income Tax Act as at the date of transfer of the site of a stable for livestock (including persons in whose cases two years have not passed since they became non-residents) who has resided in any of the following areas (including areas that used to be any of the following areas at the time the resident commenced a stockbreeding business but ceases to be such areas due to the change of administrative districts, etc.) for at least eight years <Amended on Feb. 15, 2013; Feb. 3, 2015>

1. An area in a Si (including the Special Self-Governing City and the administrative Si established under the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this paragraph, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this paragraph, the same shall apply) where the stable used for breeding livestock and the land appurtenant thereto (hereafter in this Article and Article 68, referred to as"site for livestock stable") are located;

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the site for the relevant livestock stable.

(2)"Breeding livestock by the method prescribed by Presidential Decree" in the main sentence of Article 69-2 (1) of the Act means either of the following cases: <Amended on Feb. 2, 2012; Feb. 5, 2016>

1. Where a resident regularly engages in breeding livestock defined in subparagraph 1 of Article 2 of the Livestock Industry Act, on his/her own site of livestock stables;

2. Where a resident conducts at least 1/2 of livestock breeding activities in his/her own site of livestock stables with his/her own labor.

(3)"Area prescribed by Presidential Decree as a site of stables" in the main sentence of Article 69-2 (1) of the Act means a site for livestock stables used directly by a resident for breeding livestock for at least eight years from the time he/she acquires the site to the time he/she transfers it, except the following sites: <Amended on Feb. 15, 2013; Jan. 22, 2016>

1. A site for livestock stables within a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, of those sites for livestock stables located in the Special Metropolitan City, a Metropolitan City (excluding a Gun within a Metropolitan City), or a Si (excluding an Eup or Myeon area in a Si in the urban and rural complex established under Article 3 (4) of the Local Autonomy Act and in the administrative Si 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), for which three years have passed since it was incorporated into any of such areas: Provided, That the following cases shall be excluded herefrom:

(a) A site for livestock stables incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a large-scale development project within an area (referring to a single project implementation area, the project authorization of which is publicly notified on the same day) for a development project (hereafter in this subparagraph, referred to as"large-scale development project"), in which case the number of owners of land within the project implementation area is at least one thousand, or the project implementation area is at least the scale prescribed by Ordinance of the Ministry of Economy and Finance, and three years have passed since it was incorporated into the project implementation area while the project has been implemented in phases or compensation is delayed;

(b) A site for livestock stables incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a development project, the operator of which is the State, local government, or public institution prescribed by Ordinance of the Ministry of Economy and Finance, within a development project area, and regarding which any unavoidable cause prescribed by Ordinance of the Ministry of Economy and Finance arises;

(c) A site for livestock stables incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, in which case a large-scale development project has been implemented within three years after it was incorporated, and three years have passed since it was incorporated into such area while the project has been implemented in phases or compensation is delayed (limited to sites for livestock stables located within the large-scale development area);

2. Where a site for livestock stables is designated as land reserved for replotting, other than a site for livestock stables prior to a disposition of land replotting pursuant to the Urban Development Act or other statutes, the site for livestock stables for which three years have passed from the date the site for livestock stables was so designated: Provided, That settlement money for land replotting granted for the disposition of land replotting shall be excluded herefrom.

(4) Paragraph (3) shall apply based on a site for livestock stables as on the date of transfer under Article 162 of the Enforcement Decree of the Income Tax Act: Provided, That if a buyer has altered the form or quality of a site, or has commenced construction before the date of transfer pursuant to the terms and conditions of the sales and purchase agreement, it shall be based on the site for livestock stables as on the date of execution of the sales and purchase agreement, and if the relevant site for livestock stables has been designated as the land reserved for replotting, other than a site for livestock stable, before a disposition of land replotting, and the land, for which three years have not passed from the date the land was so designated, has become unavailable for livestock breeding due to the implementation of a land development project after being designated as the land reserved for replotting, it shall based on the site for livestock stables as on the commencement date of the land development project.

(5) Where a site for livestock stables is exchanged, partitioned, combined, or substituted, and the newly-acquired site for livestock stables is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects and is expropriated under any other Act, the period during which a site for livestock stables before its exchange, partition, combination, or substitution is used for livestock breeding shall be included in the period used for breeding livestock referred to in paragraph (3).

(6) When calculating the period during which the site is used for breeding livestock as referred to in paragraph (3), where the heir continues using the inherited site for breeding livestock (referring to use of the inherited site for breeding livestock while residing in any of the areas specified under paragraph (1); hereafter in this paragraph and paragraph (7), the same shall apply) for at least one year, the following applicable period shall be deemed the period during which the heir uses such site for breeding livestock: <Amended on Feb. 2, 2012>

1. The period during which the decedent has used such site for breeding livestock after acquisition (limited to a period during which the former decedent has used such site for breeding livestock);

2. Where the decedent inherited a site for livestock stables from his/her spouse and has used such site for breeding livestock, the period during which the decedent’s spouse had used the site for breeding livestock after acquiring it.

(7) Notwithstanding paragraph (6), where the heir transfers the inherited site for livestock stables by the date three years lapse since the date of inheritance or it is purchased through a negotiation or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes although the heir fails to continue using the inherited site for livestock stables for at least one year, if the site for livestock stables is designated (referring to the date the head of a relevant administrative agency issues a public notice on the Official Gazette or official report) as any of the following areas by the date three years lapse since the date of inheritance (including designation before the date of inheritance), the period referred to in paragraph (6) 1 and 2 shall be deemed the period during which the heir has used the site for livestock stables for livestock breeding:

1. An area prearranged for housing site development under Article 3 of the Housing Site Development Promotion Act;

2. An industrial complex designated under Article 6, 7, 7-2, or 8 of the Industrial Sites and Development Act;

3. Areas prescribed by Ordinance of the Ministry of Economy and Finance, other than those specified in subparagraphs 1 and 2.

(8) Business closure referred to in the main sentence of Article 69-2 (1) of the Act means that a resident practically stops breeding livestock and such business closure is certified by a letter of confirmation on the period of operation of the livestock business and business closure prescribed by Ordinance of the Ministry of Economy and Finance that is issued by the head of a Si (including the head of an administrative Si established under the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City)/Gun/Gu (referring to the head of an autonomous Gu) having jurisdiction over the place where the relevant site for livestock stables is located.

(9) The amount of tax to be exempted under Article 69-2 (1) of the Act shall be calculated by the following formula: <Amended on Feb. 12, 2019>

Amount of tax to be exempted = Amount of capital gains tax calculated × (Area of the site for livestock stables ÷ Total area transferred)

(10)"Income prescribed by Presidential Decree" in the proviso to Article 69-2 (1) of the Act means the amount calculated by the following formula, out of the amount of capital gains under Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as"amount of capital gains"). In such cases, if farmland or grassland is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other statute, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where the farmland or grassland is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting arrives, before a new assessed value is publicly notified: <Amended on Feb. 3, 2015>

(11)"Cases prescribed by Presidential Decree, such as inheritance" in the proviso to Article 69-2 (2) of the Act means where a person whose capital gains tax on the site for livestock stables has been exempted pursuant to Article 69-2 (1) of the Act becomes engaged in the livestock business due to inheritance since then.

(12) A person who wishes to be granted an exemption of capital gains tax under Article 69-2 (3) of the Act shall file an application for tax exemption and a letter of confirmation on the period of operation of the livestock business and business closure referred to in paragraph (8) (or documents evidencing the period of operation of the livestock business and business closure, if the relevant business is the livestock breeding business defined under Article 22 (3) of the Livestock Industry Act, and it is impossible to confirm the period of operation of the livestock business and business closure referred to in paragraph (8)), in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable period in which the relevant site for livestock stables was transferred. <Amended on Feb. 5, 2016>

(13) Article 66 (14) shall apply mutatis mutandis to the calculation of the period during which a site for livestock stables is used for breeding livestock under paragraph (3). <Newly Inserted on Feb. 21, 2014>

[This Article Newly Inserted on Jul. 25, 2011]

Article 66-3(Reduction or Exemption of Capital Gains Tax on Land. for Fishery) #

(1)"Resident prescribed by Presidential Decree who resides at any land, etc. for fishery" in the main sentence of Article 69-3 (1) of the Act means a resident defined in Article 1-2 (1) 1 of the Income Tax Act (including persons in whose cases two years have not passed since they became non-residents defined in subparagraph 2 of the same paragraph) as at the date the land, etc. for fishery is transferred, as fishery business personnel defined in the Framework act on Fisheries and Fishing Villages Development who have resided in any of the following areas (including areas that used to be any of the following areas at the time the resident commenced a cultivation business, etc. under paragraph (2) but cease to be such areas due to the change of administrative districts, etc.) for at least eight years:

1. An area in a Si (including the Special Self-Governing City and the administrative Si established under the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this paragraph, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this paragraph, the same shall apply) where the land, etc. for fishery used for cultivation is located;

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the relevant land, etc. for fishery.

(2)"Land, etc. for fishery prescribed by Presidential Decree, used directly for fishery by the method prescribed by Presidential Decree" in the main sentence of Article 69-3 (1) of the Act means the land falling under either of the following cases: <Amended on Feb. 12, 2019; Aug. 26, 2020>

1. Where a resident regularly engages in inland sea water aquatic farming business under the Aquaculture Industry Development Act, inland fresh water tank aquatic farming business under the Enforcement Decree of that Act, or business for producing seeds for fisheries under the Fisheries Seed Industry Promotion Act (hereafter in this Article, referred to as"cultivation, etc.") on his/her own land, etc. for fishery;

2. Where a resident performs at least one half of cultivation activities, etc. on his/her own land, etc. for fishery with his/her own labor.

(3)"Land, etc. for fishery prescribed by Presidential Decree" in the main sentence of Article 69-3 (1) of the Act means any land, etc. for fishery used directly by a resident for cultivation, etc. for at least eight years from the time he/she acquires the relevant land, etc. to the time he/she transfers it, except the following sites: <Amended on Feb. 12, 2019>

1. Any land, etc. for fishery within a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, among the land, etc. for fishery located in the Special Metropolitan City, a Metropolitan City (excluding a Gun within a Metropolitan City), or a Si (excluding an Eup or Myeon area in a Si in the urban and rural complex established under Article 3 (4) of the Local Autonomy Act and in the administrative Si 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), for which three years have passed since it was incorporated into any of such areas: Provided, That the following cases shall be excluded herefrom:

(a) Any land, etc. for fishery incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a large-scale development project within an area (referring to a single project implementation area, the project authorization of which is publicly notified on the same day) for a development project (hereafter in this subparagraph, referred to as"large-scale development project"), in which case the number of owners of land within the project implementation area is at least one thousand, or the project implementation area is at least the scale prescribed by Ordinance of the Ministry of Economy and Finance, and three years have passed since it was incorporated into the project implementation area while the project has been implemented in phases or compensation is delayed;

(b) Any land, etc. for fishery incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a development project, the operator of which is the State, local government, or public institution prescribed by Ordinance of the Ministry of Economy and Finance, within a development project area, and regarding which any unavoidable cause prescribed by Ordinance of the Ministry of Economy and Finance arises;

(c) Any land, etc. for fishery incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, in which case a large-scale development project has been implemented within three years after it was incorporated, and three years have passed since it was incorporated into such area while the project has been implemented in phases or compensation is delayed (limited to any land, etc. for fishery located within the large-scale development area);

2. Where any land, etc. for fishery is designated as land reserved for replotting, other than land, etc. for fishery prior to a disposition of land replotting pursuant to the Urban Development Act or other Acts, the land, etc. for fishery for which three years have passed from the date the land, etc. for fishery was so designated: Provided, That settlement money for land replotting granted for the disposition of land replotting shall be excluded herefrom.

(4) Paragraph (3) shall apply based on land, etc. for fishery as on the date of transfer under Article 162 of the Enforcement Decree of the Income Tax Act: Provided, That if a buyer has altered the form or quality of the land or has commenced construction before the date of transfer pursuant to the terms and conditions of the sales and purchase agreement, it shall be based on the land, etc. for fishery as on the date of execution of the sales and purchase agreement, and if the relevant land, etc. for fishery has been designated as the land reserved for replotting, other than land, etc. for fishery, before a disposition of land replotting, and the land, for which three years have not passed from the date the land was so designated, has become unavailable for cultivation, etc. due to the implementation of a land development project after being designated as the land reserved for replotting, it shall be based on the land, etc. for fishery as on the commencement date of the land development project.

(5) Where any land, etc. for fishery is exchanged, partitioned, combined, or substituted, and the newly-acquired site for livestock stables is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act, the period during which the land, etc. for fishery is used for cultivation, etc. before its exchange, partition, combination, or substitution shall be included in the period used for cultivation, etc. referred to in paragraph (3).

(6) When calculating the period during which the land, etc. for fishery is used for cultivation, etc. as referred to in paragraph (3), where the heir continues using the inherited land, etc. for fishery for cultivation, etc. (referring to use of the inherited land, etc. for cultivation, etc. while residing in any of the areas specified in any subparagraph of paragraph (2); hereafter in this paragraph and paragraph (7), the same shall apply) for at least one year, the following applicable period shall be deemed the period during which the heir uses such land, etc. for cultivation, etc.:

1. The period during which the decedent has used such land, etc. for cultivation, etc. after acquisition (limited to a period during which the immediately preceding decedent has used such land, etc. for cultivation, etc.);

2. Where the decedent inherited any land, etc. for fishery from his/her spouse and has used it for cultivation, etc., the period during which the decedent’s spouse had used the acquired land, etc. for fishery for cultivation, etc.

(7) Notwithstanding paragraph (6), where the heir transfers the inherited land, etc. for fishery by the date three years lapse since the date of inheritance or it is purchased through a negotiation or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or other Acts although the heir fails to continue using the inherited land, etc. for fishery for cultivation, etc. for at least one year, if the land, etc. for fishery is designated (referring to the date the head of a relevant administrative agency issues a public notice on the Official Gazette or official report) as any of the following areas by the date three years lapse since the date of inheritance (including designation before the date of inheritance), the period during which the land, etc. for fishery has been used for cultivation, etc. under paragraph (6) 1 and 2 shall be deemed the period during which the heir has used it for cultivation, etc.:

1. An area prearranged for housing site development under Article 3 of the Housing Site Development Promotion Act;

2. An industrial complex designated under Article 6, 7, 7-2, or 8 of the Industrial Sites and Development Act;

3. Areas prescribed by Ordinance of the Ministry of Economy and Finance, other than those specified in subparagraphs 1 and 2.

(8)"Income prescribed by Presidential Decree" in the proviso to Article 69-3 (1) of the Act means the amount calculated by the following formula, out of the amount of capital gains under Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as"amount of capital gains"). In such cases, if the site for livestock stables is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act, the assessed value on which the calculation of the amount of compensation is based, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period shall apply where the land is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation of the land reserved for replotting arrives, before a new assessed value is publicly notified:

Amount of capital gains × {(assessed value as at the date of incorporation into a residential area, etc. or the date of designation of the land reserved for replotting - assessed value at the time of acquisition) ÷ (assessed value at the time of transfer - assessed value at the time of acquisition)}

(9) A person who wishes to be granted an exemption of capital gains tax under Article 69-3 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable period in which the relevant land, etc. for fishery was transferred.

(10) Article 66 (14) shall apply mutatis mutandis to the calculation of the period during which any land, etc. for fishery is used for cultivation, etc. under paragraph (3). In such cases,"income from agriculture and forestry" in the former part of Article 66 (14) shall be deemed"income from fishery and forestry." <Amended on Feb. 12, 2019>

[This Article Newly Inserted on Feb. 13, 2018]

Article 66-4(Reduction or Exemption of Capital Gains Tax on Self-Cultivated Mountainous Districts) #

(1)"Resident prescribed by Presidential Decree" in the main sentence of Article 69-4 (1) of the Act means a resident defined in Article 1-2 (1) 1 of the Income Tax Act (including persons in whose cases two years have not passed since they became non-residents defined in subparagraph 2 of the same paragraph) as at the date a mountainous district is transferred, as a forest manger defined in the Forestry and Mountain Villages Development Promotion Act who has resided in any of the following areas (including areas that used to be any of the following areas at the time the resident commenced forestry but ceases to be such areas due to the change of administrative districts, etc.) for not less than the period of direct management specified in the table of Article 69-4 (1) of the Act:

1. An area in a Si (including the Special Self-Governing City and the administrative Si 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; hereafter in this paragraph, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this paragraph, the same shall apply) where the mountainous district is located;

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the relevant mountainous district.

(2)"Mountainous district that he/she has managed directly by the method prescribed by Presidential Decree" in the main sentence of Article 69-4 (1) of the Act means a mountainous district managed by either of the following methods:

1. Where a resident engages in forestry under the Forestry and Mountain Villages Development Promotion Act (hereafter in this Article, referred to as"forestry") full time in his/her own mountainous district;

2. Where a resident performs at least one half of forestry in his/her own mountainous district with his/her own labor.

(3)"Mountainous district prescribed by Presidential Decree" in the main sentence of Article 69-4 (1) of the Act means a preserved mountainous district under Article 4 (1) 1 of the Mountainous Districts Management Act used directly by a resident for forestry for not less than the period of direct management specified in the table of Article 69-4 (1) of the Act during the period from the date the authorization of a forest management plan under Article 13 of the Creation and Management of Forest Resources Act is obtained after acquiring the relevant land to the time he/she transfers it, except any of the following:

1. A mountainous district within a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, among the mountainous districts located in the Special Metropolitan City, a Metropolitan City (excluding a Gun within a Metropolitan City), or a Si (excluding an Eup or Myeon area in a Si in the urban and rural complex established under Article 3 (4) of the Local Autonomy Act and in the administrative Si 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), for which three years have passed since it was incorporated into any of such areas: Provided, That the following cases shall be excluded herefrom:

(a) A mountainous district incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a large-scale development project within an area (referring to a single project implementation area, the project authorization of which is publicly notified on the same day) for a development project (hereafter in this subparagraph, referred to as"large-scale development project"), in which case the number of owners of land within the project implementation area is at least one thousand, or the project implementation area is at least the scale prescribed by Ordinance of the Ministry of Economy and Finance, and three years have passed since it was incorporated into the project implementation area while the project has been implemented in phases or compensation is delayed;

(b) A mountainous district incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act for the implementation of a development project, the operator of which is the State, local government, or public institution prescribed by Ordinance of the Ministry of Economy and Finance, within a development project area, and regarding which any unavoidable cause prescribed by Ordinance of the Ministry of Economy and Finance arises;

(c) A mountainous district incorporated into a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, in which case a large-scale development project has been implemented within three years after it was incorporated, and three years have passed since it was incorporated into such area while the project has been implemented in phases or compensation is delayed (limited to mountainous districts located within the large-scale development area);

2. Where a mountainous district is designated as land reserved for replotting, other than a mountainous district prior to a disposition of land replotting pursuant to the Urban Development Act or other Acts, the mountainous district for which three years have passed from the date the mountainous district was so designated: Provided, That settlement money for land replotting granted for the disposition of land replotting shall be excluded herefrom.

(4) Paragraph (3) shall apply based on a mountainous district as on the date of transfer under Article 162 of the Enforcement Decree of the Income Tax Act: Provided, That if a buyer has altered the form or quality of the land or has commenced construction before the date of transfer pursuant to the terms and conditions of the sales and purchase agreement, it shall be based on the mountainous district as on the date of execution of the sales and purchase agreement, and if the relevant mountainous district has been designated as the land reserved for replotting, other than a mountainous district, before a disposition of land replotting, and the land, for which three years have not passed from the date the land was so designated, has become unavailable for forestry due to the implementation of a land development project after being designated as the land reserved for replotting, it shall be based on the mountainous district as on the commencement date of the land development project.

(5) Where a mountainous district is exchanged, partitioned, combined, or substituted, and the newly-acquired mountainous district is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects and is expropriated under other statutes, the period during which the mountainous district is used for forestry before its exchange, partition, combination, or substitution shall be included in the period used for forestry referred to in paragraph (3).

(6) When calculating the period during which a mountainous district is used for forestry as referred to in paragraph (3), where the heir continues using the inherited mountainous district for forestry (referring to use of the inherited mountainous district for forestry while residing in any area specified in subparagraphs of paragraph (2); hereafter in this paragraph and paragraph (7), the same shall apply) for at least one year, the following applicable period shall be deemed the period during which the heir uses such mountainous district for forestry:

1. The period during which the decedent has used such mountainous district for forestry after acquisition (limited to a period during which the former decedent has used such land, etc. for cultivation, etc.);

2. Where the decedent inherited any mountainous district from his/her spouse and has used it for forestry, the period during which the decedent’s spouse had used the acquired mountainous district for forestry.

(7) Notwithstanding paragraph (6), where the heir transfers an inherited mountainous district by the date on which three years lapse since the date of inheritance or it is purchased through a negotiation or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes, although the heir fails to continue using the inherited mountainous district for forestry for at least one year, if the mountainous district is designated (referring to the date the head of a relevant administrative agency issues a public notice on the Official Gazette or official report) as any of the following areas by the date three years lapse since the date of inheritance (including designation before the date of inheritance), the period during which the mountainous district has been used for forestry under paragraph (6) 1 and 2 shall be deemed the period during which the heir has used it for forestry:

1. An area prearranged for housing site development under Article 3 of the Housing Site Development Promotion Act;

2. An industrial complex designated under Article 6, 7, 7-2, or 8 of the Industrial Sites and Development Act;

3. Areas prescribed by Ordinance of the Ministry of Economy and Finance, other than those specified in subparagraphs 1 and 2.

(8)"Income prescribed by Presidential Decree" in the proviso to Article 69-4 (1) of the Act means the amount calculated by the following formula, out of the amount of capital gains under Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as"amount of capital gains"). In such cases, if the site for livestock stables is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes, the assessed value on which the calculation of the amount of compensation is based, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period shall apply where the land is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation of the land reserved for replotting arrives, before a new assessed value is publicly notified:

(9) A person who wishes to be granted an exemption of capital gains tax under Article 69-4 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable period in which the relevant mountainous district was transferred.

(10) Article 66 (14) shall apply mutatis mutandis to the calculation of the period during which a mountainous district is used for forestry under paragraph (3).

[This Article Newly Inserted on Feb. 13, 2018]

Article 67(Requirements for Reducing or Exempting Capital Gains Tax for Substitute Land for Farmland) #

(1) "Resident prescribed by Presidential Decree" in Article 70 (1) of the Act means a resident defined in Article 1-2 (1) 1 of the Income Tax Act (including persons in whose cases two years have not passed since they became non-residents), who has lived in an area specified in any of the following subparagraphs (including areas that fell in the relevant subparagraph as at the time the resident commenced cultivation but no longer fell in the relevant subparagraph due to the restructuring of administrative districts, etc.; hereafter in this Article, referred to as "location of farmland") for at least 4 years as at the date of transfer of the farmland before being replotted for substitute land: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Jan. 22, 2016; Feb. 29, 2024>

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the relevant farmland.

(2)"Directly cultivated by the method prescribed by Presidential Decree" in the main sentence of Article 70 (1) of the Act means either of the following cases: <Amended on Feb. 9, 2006; Feb. 2, 2012; Feb. 3, 2015; Feb. 5, 2016>

1. Where a resident regularly engages in cultivating crops or growing perennial plants on his/her own farmland;

2. Where a resident conducts at least 1/2 of farming activities for cultivating or growing agricultural products on his/her own farmland with his/her own labor.

(3)"Conditions prescribed by Presidential Decree" in Article 70 (1) of the Act means farmland substituted as necessary for cultivation, which falls under any of the following cases: <Amended on Feb. 28, 2007; Feb. 18, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 11, 2020>

1. Any of the following farmland if a person, who resided at the location of the previous farmland for at least four years and acquired (excluding acquisition by inheritance or conveyance as a gift; hereafter in this Article, the same shall apply) new farmland within one year (or two years where the land is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or is expropriated under other statutes) from the date of transfer of the previous farmland, has commenced cultivation within one year (or within a period set by Ordinance of the Ministry of Economy and Finance, where it is impracticable to cultivate due to any extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as recuperation from a disease) while residing at the location of the new farmland: Provided, That this shall be limited to where the aggregate of the period during which he/she has continuously cultivated the new farmland while residing at the location of such farmland after commencing the cultivation thereof and the period of cultivation of the previous farmland is at least eight years:

(a) The area of the newly-acquired farmland shall be at least 2/3 of the area of the farmland to be transferred;

(b) The value of the newly-acquired farmland shall be at least 1/2 of the value of the farmland to be transferred;

2. Any of the following farmland, if a person, who resided at the location of the previous farmland for at least four years and transferred the previous farmland within one year from the date of acquisition of new farmland, has commenced cultivation within one year (or within a period set by Ordinance of the Ministry of Economy and Finance, where it is impracticable to cultivate due to unavoidable reasons prescribed by Ordinance of the Ministry of Economy and Finance, such as recuperation from a disease) while residing at the location of the new farmland: Provided, That this shall be limited where the aggregate of the period during which he/she has continuously cultivated the new farmland while residing at the location of such farmland after commencing the cultivation thereof and the period of cultivation of the previous farmland is at least eight years:

(a) The area of the newly-acquired farmland shall be at least 2/3 of the area of the farmland to be transferred;

(b) The value of the newly-acquired farmland shall be at least 1/2 of the value of the farmland to be transferred;

(4) For the purposes of paragraph (3) 1 and 2, where newly-acquired farmland is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or is expropriated under other statutes within four years from the date of acquisition, the owner of the newly-acquired farmland shall be deemed to have cultivated for at least four years while residing at the location of such farmland. <Amended on Feb. 21. 2014>

(5) For the purposes of paragraph (3) 1 and 2, where an owner of farmland had cultivated the previous farmland after acquisition of new farmland and the new farmland for a total period not exceeding eight years before the owner died and the heir has continuously cultivated while residing at the location of such farmland, the period of cultivation by the decedent and the heir shall be summed up. <Amended on Feb. 21. 2014>

(6) For the purposes of paragraph (3) 1 and 2, Article 66 (14) shall apply mutatis mutandis to the calculation of the period during which the previous farmland and new farmland have been cultivated. In such cases, where any period referred to in Article 66 (14) exists before an eight-year period passes during which the previous farmland and new farmland are cultivated after commencing the cultivation of new farmland, the new farmland shall be deemed not cultivated continuously. <Newly Inserted on Feb. 21, 2014>

(7) "Income prescribed by Presidential Decree" in the proviso to Article 70 (1) of the Act means the amount calculated by the following formula out of the amount of capital gains under Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as the "amount of capital gains"). In such cases, if the land is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or is expropriated under other statutes, the assessed value on which the calculation of the amount of compensation is based, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where the land is acquired or transferred or the date of incorporation into a residential area, etc. or the date of designation of the land reserved for replotting arrives, before a new assessed value is publicly notified: <Newly Inserted on Feb. 18, 2010; Feb. 21, 2014; Feb. 3, 2015>

(8)"Land prescribed by Presidential Decree" in Article 70 (2) of the Act means any of the following farmland: <Amended on Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Jun. 3, 2011; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Jan. 22, 2016>

1. Farmland within a residential, commercial, or industrial area designated under the National Land Planning and Utilization Act, among the farmland located in the Special Metropolitan City, a Metropolitan City (excluding a Gun within a Metropolitan City), a Si (excluding Eup or Myeon areas in a Si in the urban and rural complex under Article 3 (4) of the Local Autonomy Act, or Eup or Myeon areas in the administrative Si 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), for which three years have passed since its incorporation into any of such areas: Provided, That the following farmland shall be excluded herefrom:

(9) Any person who intends to apply for a reduction or exemption of capital gains tax pursuant to Article 70 (3) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable year in which the relevant farmland is transferred. <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 21, 2014>

(10)"Grounds prescribed by Presidential Decree" in Article 70 (4) of the Act means any of the following cases. Paragraphs (4) and (5) shall apply mutatis mutandis to the calculation, etc. of the period of cultivation in such cases: <Newly Inserted on Feb. 21, 2014>

1. Where a resident fails to acquire new farmland within one year (within two years, where the previous farmland is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects, or is expropriated under any other Act) from the date of transfer of the previous farmland, or the area or value of the newly-acquired farmland does not meet the criteria for area or value provided for in the items of paragraph (3) 1;

2. Where a resident fails to commence cultivation of new farmland while residing thereat within one year (or within the period set by Ordinance of the Ministry of Economy and Finance, where it is impracticable to cultivate due to any extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as recuperation from a disease) from the date of acquisition (or the date of transfer of the previous farmland, in cases falling under paragraph (3) 2) thereof;

3. Where a resident has continuously cultivated new farmland residing thereat after commencing cultivation thereof and the previous farmland for a total period of less than eight years;

4. Where any period referred to in Article 66 (14) exists before the lapse of a total eight-year period for continuous cultivation of new farmland while residing thereat after commencing cultivation thereof and the cultivation of the previous farmland.

(11)"Equivalent to interest calculated, as prescribed by Presidential Decree" in Article 70 (5) of the Act means an amount calculated by multiplying an amount equivalent to the amount of tax payable under Article 70 (4) of the Act by the period of subparagraph 1 and by the rate of subparagraph 2: <Newly Inserted on Feb. 21, 2014; Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the deadline for payment of capital gains tax on previous farmland, until the date the capital gains tax is paid under Article 70 (4) of the Act;

2. The rate specified in Article 11-2 (9) 2.

[This Article Newly Inserted on Dec. 31, 2005]

Article 67-2(Special Taxation for Capital Gains Tax on Sale of Farmland to Support Business Workout) #

(1) A person who intends to receive a refund of capital gains tax under Article 70-2 (1) and (5) of the Act shall file an application for refund in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the following documents, with the head of a tax office having jurisdiction over the place of tax payment: <Amended on Feb. 29, 2024>

1. A copy of a sales contract under which he/she has transferred farmland, etc. to the Korea Rural Community Corporation established under the Korea Rural Community Corporation and Farmland Management Fund Act (hereafter referred to as the"Korea Rural Community Corporation" in this Act);

2. A copy of a buy-back contract under which he/she has bought back the relevant farmland, etc. from the Korea Rural Community Corporation.

(2) Article 51 of the Framework Act on National Taxes shall apply mutatis mutandis where the head of a tax office having jurisdiction over the place of tax payment in receipt of an application for refund filed under paragraph (1) makes a refund. In such cases, Article 52 of that Act stipulating provisions on the additional refund of national tax shall not apply.

(3) If a farmer who has received a refund of capital gains tax under Article 70-2 (1) and (5) of the Act re-transfers the farmland, etc. bought back, Article 66 or 66-2 shall apply, deeming that the period of direct cultivation or directly using the farmland, etc. on livestock farming within the lease period under Article 24-3 (3) of the Korea Rural Community Corporation and Farmland Management Fund Act as a period during which a person who has transferred the relevant farmland, etc. to the Rural Community Corporation has directly cultivated the farmland, etc. or directly used it on livestock farming. <Amended on Feb. 29, 2024>

(4) Where an application for buy-back of a parcel of farmland, etc. is filed under Article 19-6 (2) of the Enforcement Decree of theKorea Rural Community Corporation and Farmland Management Fund Act, the amount of tax to be refunded under paragraph (2) shall be the amount equivalent to the capital gains tax paid for the farmland, etc. bought back.

[This Article Newly Inserted on Feb. 21, 2014]

Article 68(Reduction or Exemption of Gift Tax for Farmland Gifted to Farming Offspring) #

(1) "Resident prescribed by Presidential Decree" in Article 71 (1) of the Act, with the exception of its subparagraphs, means a person who satisfies each of the following requirements (hereafter in this Article, referred to as "self-cultivating farmer, etc."): <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 3, 2015; Feb. 5, 2016; Feb. 13, 2018; Feb. 29, 2024>

1. The resident shall reside in a Si, Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) in which he/she has the farmland, etc. referred to in Article 71 (1) of the Act with the exception of its subparagraphs (hereafter in this Article, referred to as"farmland, etc.") or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from the relevant farmland, etc.;

2. The resident has directly engaged in farming under Article 18-3 (1) of the Inheritance Tax and Gift Tax Act (hereinafter referred to as "farming") continuously for at least 3 years retroactively from the date the farmland, etc. was transferred as a gift.

(2) Deleted. <Feb. 5, 2016>

(3) "Lineal descendants prescribed by Presidential Decree" in Article 71 (1) of the Act, with the exception of its subparagraphs, means persons who satisfy each of the following requirements (hereafter in this Article, referred to as "farming offspring, etc."): <Amended on Feb. 3, 2015; Feb. 13, 2018; Feb. 29, 2024>

1. To be a lineal descendant who has attained the age of 18 years as at the date of conveyance of farmland, etc. as a gift;

2. To be a person who meets the requirement provided for in paragraph (1) 1 by no later than the deadline for filing a tax return on gift tax under Article 68 of the Inheritance Tax and Gift Tax Act and engages directly in farming in the farmland, etc. conveyed as a gift.

(4)"Other development project zones prescribed by Presidential Decree" in Article 71 (1) 3 of the Act means project zones prescribed in attached Table 6-2. <Amended on Feb. 18, 2010>

(5)"Just grounds prescribed by Presidential Decree, such as the death of farming offspring, etc." in Article 71 (2) of the Act means any of the following cases: <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 13, 2018>

1. Where the land is purchased through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or is expropriated under any other Act;

2. Where the land is transferred to the State or a local government;

3. Where it is impracticable to use the land as farmland, etc. because the category of such land is changed following a disposition of land replotting under the Agricultural and Fishing Villages Improvement Act or other statutes;

4. Where the farming offspring, etc. emigrates to a foreign country pursuant to the Emigration Act;

5. Where the farmland was exchanged, partitioned, combined, or substituted pursuant to Article 89 (1) 2 of the Income Tax Act or Article 70 of the Act, and the aggregate of the period during which the farmland, etc. had been previously self-cultivated and the period during which the farmland, etc. has been self-cultivated after such exchange, partition, combination, or substitution, is at least eight years;

6. Where any other unavoidable reason prescribed by Ordinance of the Ministry of Economy and Finance, arises.

(6)"Just grounds prescribed by Presidential Decree, such as having a disease or attending school" in Article 71 (2) of the Act means any of the following cases: <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 13, 2018>

1. Where the farming offspring, etc. is under medical treatment or convalescence due to a disease that requires medical treatment or convalescence for at least one year;

2. Where the farming offspring, etc. becomes unable to engage in farming temporarily because such farm offspring, etc. enters a school specializing in agriculture (excluding the case of engaging in fisheries) or fisheries (limited to the case of engaging in fishery) among schools under the Higher Education Act;

3. Where the farming offspring is conscripted pursuant to the Military Service Act;

4. Where the farming offspring takes a public office through an election under the Public Official Election Act;

5. Where any other unavoidable reason prescribed by Ordinance of the Ministry of Economy and Finance arises.

(7) "Amount corresponding to interest calculated as prescribed by Presidential Decree" in Article 71 (2) of the Act means an amount calculated by multiplying the amount prescribed in subparagraph 1 by the period prescribed in subparagraph 2 and the rate prescribed in subparagraph 3: <Newly Inserted on Feb. 29, 2024>

1. The amount equal to the reduced or exempted amount of gift tax on farmland, etc. originally gifted;

2. The period from the day following a deadline for filing the return of tax base of gift tax on the originally gifted farmland, etc., to the date on which the person ceases to directly engage in farming;

3. The rate pursuant to Article 27-4 of the Enforcement Decree of the National Tax Act.

(8) "Fine prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 71 (3) of the Act means any of the fines prescribed in the subparagraphs of Article 15 (19) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. <Newly Inserted on Feb. 29, 2024>

(9) "Amount corresponding to interest calculated as prescribed by Presidential Decree" in Article 71 (3) 2 of the Act means an amount calculated by multiplying the amount prescribed in subparagraph 1 by the period prescribed in subparagraph 2 and the rate prescribed in subparagraph 3: <Newly Inserted on Feb. 29, 2024>

1. The amount equal to the reduced or exempted amount of gift tax on farmland, etc. originally gifted;

2. The period from the day after the deadline for filing a tax base return on gift tax on farmland, etc. originally received as a gift to the day on which any of the events referred to in Article 71 (3) 2 of the Act occurs;

3. The rate pursuant to Article 27-4 of the Enforcement Decree of the National Tax Act.

(10) Where a parcel of farmland, etc. is transferred, and a parcel of farmland, etc. conveyed as a gift under Article 71 (1) of the Act is included in the parcel, the amount of capital gains accruing from the part for which the gift tax was reduced or exempted shall be calculated separately from the one accruing from the part on which the tax was imposed. <Amended on Feb. 29, 2024>

(11) When any farming offspring, etc. receives at least two parcels of farmland, etc. as a gift simultaneously and files an application for reduction or exemption, the framing offspring, etc. shall determine the priority of the parcel of farmland, etc. for which he/she desires to be granted a reduction or exemption of gift tax: Provided, That, where such farming offspring, etc. files an application for reduction or exemption without specifying the priority of the parcel of farmland, etc. for which he/she desires to be granted a reduction or exemption of gift tax, it shall be deemed that he/she files the application for reduction of or exemption for the parcel of farmland, etc., whichever has the higher value at the time when the farmland is conveyed as a gift. <Amended on Feb. 13, 2018; Feb. 29, 2024>

(12) Any farming offspring, etc. who intends to file an application for reduction or exemption under Article 71 (1) of the Act shall file an application for reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the following documents: <Amended on Feb. 29, 2008; Nov. 2, 2010; Feb. 13. 2018; Feb. 29, 2024>

1. A tax payment certificate for the agricultural income tax paid by the self-cultivating farmer or farming offspring or a document evidencing the farming;

2. A copy of the purchase contract executed to acquire the relevant farmland, etc.;

3. A copy of the contract for conveyance of the relevant farmland, etc. as a gift;

4. A description of the farmland, etc. conveyed as a gift;

5. A certificate of investment in an agricultural partnership or fishery partnership, where the relevant farmland, etc. is invested in kind in the agricultural partnership or fishery partnership;

6. A family relation certificate of the self-cultivating farmers, etc.;

7. Other documents specified by Ordinance of the Ministry of Economy and Finance.

(13) Upon receipt of an application for reduction or exemption filed under paragraph (12), the head of the tax office having jurisdiction over the place of tax payment shall verify the following documents through administrative data matching under Article 36 (1) of the Electronic Government Act: Provided, That he/she shall require the applicant to submit the relevant documents, if the applicant does not consent to the verification of the documents referred to in subparagraphs 1 and 2: <Amended on Jun. 28, 2007; May 4, 2010; Nov. 2, 2010; Feb. 13, 2018; Feb. 29, 2024>

1. A certified copy of household register of the self-cultivating farmer, etc.;

2. A certified copy of the applicant's household register;

3. A certificate of registered matters of the farmland, etc. conveyed as a gift;

4. A written verification on the land use plan of the land, etc. conveyed as a gift.

(14) Article 16 (4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to the criteria for determining whether a person "directly engages in farming" in paragraphs (1) 2 and (3) 2. In such cases, "decedent" shall be construed as "self-cultivating farmer, etc."; and "heir" as "farming offspring, etc." <Amended on Feb. 5, 2016; Feb. 13, 2018; Feb. 29, 2024>

(15) A person who files a tax return on gift tax and interest thereon pursuant to the main clause of Article 71 (4) of the Act shall submit a statement of the reasons for violation of the reduction or exemption of gift tax for farmers' offspring and a statement of voluntary payment, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Newly Inserted on Feb. 28, 2023; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 13, 2018]

Article 69(Special Taxation concerning Corporate Tax on Incorporated Associations) #

(1)"Amount calculated by applying the provisions concerning the calculation of the amount of non-deductible expenses prescribed by Presidential Decree" in the main sentence of Article 72 (1) of the Act, with the exception of its subparagraphs, means the amount of non-deductible expenses provided for in Articles 19-2 (2), 24 through 28, 33, and 34 (2) of the Corporate Tax Act (only applicable to the amount related to the profit-making business of the relevant corporation). <Newly Inserted on Feb. 15, 2013; Feb. 21, 2014; Feb. 12, 2019>

(2) A corporation that wishes to waive the taxation on its current net income under the proviso to Article 72 (1) of the Act shall file (including filing through the Home Tax Service Network) an application prescribed by Ordinance of the Ministry of Economy and Finance, by the end of the business year immediately preceding that for which it intends to waive the taxation on its current net income (in cases of a newly-incorporated corporation, the date of filing an application for issuance of the business registration certificate), with the head of a tax office having jurisdiction over the place of tax payment. <Amended on Mar. 17, 2004; Feb. 29, 2008; Feb. 15, 2013>

(3) For the purposes of Article 72 (1) of the Act, the amount disbursed for the projects directly performed to achieve the objectives of incorporation (limited to any projects other than the profit-making projects referred to in Article 3 (1) of the Enforcement Decree of the Corporate Tax Act), which are provided for in the statutes or regulations governing an incorporation of the relevant cooperative corporation, etc. or its articles of incorporation (including the rules set forth under delegation by such statutes or regulations, or its articles of incorporation), shall not be deemed the donations or business promotion expenses under Article 24 or 25 of the Corporate Tax Act, and the proviso of Article 25 (4) 2 of that Act shall not apply to the revenues accrued from the transactions with the members or partners investing in the relevant cooperative corporation, etc. <Newly Inserted on Dec. 29, 2000; Feb. 19, 2005; Feb. 15, 2013; Feb. 12, 2019; Feb. 28, 2023>

(4) In calculating the donations of a cooperative corporation, etc. not added to the deductible expenses under Article 72 (1) of the Act, the amount of standard income referred to in Article 24 (2) 2 of the Corporate Tax Act shall be the aggregate of the current net profit on the closing financial statements of the relevant cooperative corporation, etc., the donations under Article 24 (2) 1 of that Act, the donations under Article 24 (3) 1 of that Act, and the donations under Article 76 of the Act. <Newly Inserted on Dec. 29, 2000; Feb. 19, 2005; Dec. 30, 2010; Feb. 15, 2013; Feb. 12, 2019; Feb. 17, 2021>

(5) Matters necessary for the calculation, etc. of the amount of non-deductible expenses referred to in paragraph (1), shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 15, 2013>

[Title Amended on Feb. 15, 2013]

Article 71(Donation Incentives) #

(1)"Requirements prescribed by Presidential Decree, in terms of the performance of duties to cooperate in tax payment, including the duty to prepare and keep statements of issuance of donation receipts and transparency in accounting" in Article 75 (2) of the Act are as follows: <Amended on Feb. 7, 2017; Feb. 17, 2021>

1. No donation receipt shall be issued with any false statement therein;

2. A statement of issuance of donation receipts to each donor shall be prepared and kept pursuant to Article 160-3 of the Income Tax Act or Article 112-2 of the Corporate Tax Act and shall be submitted pursuant to Article 160-3 (3) of the Income Tax Act or Article 112-2 (3) of the Corporate Tax Act;

3. Supporting documents for tax credits for donations shall be submitted to the Commissioner of the National Tax Service pursuant to Article 165 of the Income Tax Act;

4. A website shall be opened, and the amount of donations collected each year and the use of the donations shall be made public by posting a statement of the amount of donations collected each year and the use of the donations, in the form prescribed by Ordinance of the Ministry of Economy and Finance, on the relevant website and the website of the National Tax Service by April 30 of the following year (referring to the year in which an application for designation is filed, if it is filed pursuant to paragraph (2)): Provided, That if the matters prescribed in Article 50-3 (1) 2 of the Inheritance Tax and Gift Tax Act are disclosed to the public in standard forms prescribed in Article 43-4 (4) of the Enforcement Decree of that Act, the collected amount of donations and the use of the donations are deemed to have been made public;

5. The donee shall be audited by the auditor specified in Article 3 of the Act on External Audit of Stock Companies;

6. An exclusive account shall be opened and used pursuant to Article 50-2 of the Inheritance Tax and Gift Tax Act;

7. A settlement of accounts, etc. specified in Article 50-3 (1) (excluding subparagraph 5) of the Inheritance Tax and Gift Tax Act shall be disclosed on the website referred to in subparagraph 4 or the website of the National Tax Service;

8. If the designation was revoked under Article 75 (8) 1, 2, or 4 of the Act, five years shall have passed from the date of revocation.

(2) An entity that wishes to be designated as an organization eligible for donation incentives defined under Article 75 (3) of the Act (hereafter in this Article, referred to as"organization eligible for donation incentives"), shall file an application for designation of an organization eligible for donation incentives in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the Commissioner of the National Tax Service, during the period from the first day to the last day of the month immediately preceding the last month of each semi-annual term (the period from March 1 to March 31 shall be added as for the year of 2016), along with the following documents: <Amended on Feb. 5, 2016>

1. The permit for incorporation (only if the applicant is a corporation);

2. Annual reports for the most recent five years and the budget for the relevant business year;

3. The audit report on the annual reports for the most recent five years.

(3) Upon receipt of an application filed under paragraph (2), the Commissioner of the National Tax Service shall recommend the Minister of Economy and Finance to designate an organization eligible for donation incentives, by the end of the month immediately following the last month of the semi-annual term in which the application is filed (or by May 31, 2016, if an application for designation of an organization eligible for donation incentives is filed under paragraph (2) during the period from March 1 to March 31, 2016); and the Minister of Economy and Finance, upon receipt of such recommendation, shall determine whether to designate the relevant applicant as an organization eligible for donation incentives by the end of the second month after the month in which he/she receives the recommendation. In such cases, the designation of an organization eligible for donation incentives shall be valid for six years from January 1 of the year in which it is designated. <Amended on Feb. 5, 2016>

(4) An organization eligible for donation incentives designated under paragraph (3), shall report to the Commissioner of the National Tax Service on whether it meets the requirements provided for in paragraph (1) (hereafter in this Article, referred to as"whether the requirements are met"), in the form prescribed by Ordinance of the Ministry of Economy and Finance. If the organization eligible for donation incentives fails to report whether the requirements are met in such cases, the Commissioner of the National Tax Service shall request the organization to report thereon, as prescribed by Ordinance of the Ministry of Economy and Finance.

(5) If a donor files an application for donation incentives for at least two organizations eligible for donation incentives, the head of the tax office having jurisdiction over the place of tax payment shall determine the amount calculated by the following formula as the donation incentives for each organization eligible for donation incentives: <Amended on Feb. 7, 2017>

Donation incentives calculated under Article 75 (4) of the Act × (Donated amount according to the donor's application for donation incentives for each organization eligible for donation incentives ÷ Total amount of donations according to the donor's application for donation incentives)

(6)"Interest rate prescribed by Presidential Decree" in Article 75 (7) 2 of the Act means the rate specified in Article 11-2 (9) 2. <Amended on Feb. 12, 2019; Feb. 15, 2022>

(7)"If the organization eligible for donation incentives violates statutes or regulations, or engages in any unauthorized business, or if any of the grounds prescribed by Presidential Decree arises" in Article 75 (8) 4 of the Act means the following cases: <Amended on Feb. 13, 2018; Feb. 17, 2021>

1. Where the organization eligible for donation incentives fails to meet any of the requirements provided for in paragraph (1) 1 through 4 and 8 or fails to report whether the requirements are met, despite a request made under the latter part of paragraph (4);

2. Where the representative, agent, employee, or worker of the organization eligible for donation incentives, is sentenced to a fine or any heavier punishment as a corporation or an individual under Article 16 of the Act on Collection and Use of Donations for violating that Act;

3. Where the organization eligible for donation incentives becomes subject to additional collection of inheritance tax (including penalty tax imposed thereon) or gift tax (including penalty tax imposed thereon) of at least ten million won under Article 48 (2), (3), and (8) through (11) and Article 78 (5) 3, (10), and (11) of the Inheritance Tax and Gift Tax Act;

4. Where the organization eligible for donation incentives engages in any unauthorized business activity, breaches any condition for permission for establishment, or violates the purpose of public good;

5. Where the organization eligible for donation incentives does not spend at least 80/100 of its expenditure, except the expenditure for profit-making business for the relevant business year, directly for its proper purpose business activities.

(8) Where any of the events specified under Article 75 (8) of the Act or paragraph (7) of this Decree occurs in relation to an organization eligible for donation incentives, the Commissioner of the National Tax Service may request the Minister of Economy and Finance to revoke the designation of the organization.

(9) Upon revoking the designation of an organization eligible for donation incentives under Article 75 (8) of the Act, the Minister of Economy and Finance shall publicly announce the name of the organization eligible for donation incentives, the fact that the designation is revoked, and the period for which it cannot be designated as an organization eligible for donation incentives (referring to the period specified in Article 75 (9) of the Act) on the Official Gazette by December 31 of the year in which the designation is revoked (or by January 31 of the following year, if the designation is revoked in December).

(10) In order for a donor to make an organization eligible for donation incentives that has received his/her donations to be granted an amount equivalent to the tax credit on the donations under Article 75 (1) of the Act, the donor shall file an application for donation incentives in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the organization eligible for donation incentives. <Newly Inserted on Feb. 5, 2016>

[This Article Newly Inserted on Feb. 3, 2015]

Article 72(Reduction or Exemption of Capital Gains Tax for Land for Public Works Projects) #

(1)"Bonds prescribed by Presidential Decree" in Article 77 (1) of the Act with the exception of its subparagraphs, means compensation bonds prescribed in Article 45 of the Land Expropriation Act repealed under Article 2 of Addenda to the Act on Acquisition of and Compensation for Land for Public Works Projects (Act No. 6656) or Article 63 of the Act on Acquisition of and Compensation for Land for Public Works Projects (hereafter in this Article, referred to as"compensation bond"). <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 22, 2008; Feb. 18, 2010>

(2)"The Special Act on Public Housing and other Acts prescribed by Presidential Decree" in Article 77 (1) of the Act, with the exception of its subparagraphs, means the following Acts: <Newly Inserted on Dec. 18, 2010; Apr. 29, 2014; Dec. 28, 2015>

1. The Special Act on Public Housing;

2. The Housing Site Development Promotion Act;

3. The Act on Acquisition of and Compensation for Land for Public Works Projects;

4. Other statutes similar to those referred to in subparagraphs 1 through 3, which prescribe matters concerning purchase through negotiations or expropriation for public works projects.

(3)"Manner prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 77 (1) of the Act means holding compensation bonds in an account opened by the project operator as the account management institution under Article 19 of the Act on Electronic Registration of Stocks and Bonds until the maturity of such compensation bonds. <Newly Inserted on Feb. 22, 2008; Feb. 18, 2010; Jun. 25, 2019>

(4) Where a person who has transferred land, etc. for a public project pursuant to Article 77 (2) of the Act wishes to be granted a reduction or exemption of capital gains tax, the implementer of the public project referred to in Article 77 (1) 1 of the Act or the relevant project implementer referred to in Article 77 (1) 2 of the Act (hereafter in this Article, referred to as"project implementer"), shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance accompanied with documents certifying as the relevant project implementer, with the head of the tax office having jurisdiction over the place, where the transferor pays taxes within two months from the date of designation as the project implementer. <Newly Inserted on Dec. 30, 2010>

(5)"Time limit prescribed by Presidential Decree" in Article 77 (3) 2 of the Act means the first anniversary from the date of designation as a project operator under the Act on the Improvement of Urban Areas and Residential Environments in cases of authorization of an implementation plan of the relevant project; and the date of completion as stated in the implementation plan of the relevant project, the implementation plan of which has been authorized under the Act on the Improvement of Urban Areas and Residential Environments, in cases of the completion of the project. <Amended on Jun. 30, 2003; Dec. 30, 2003; Feb. 19, 2005; Feb. 18, 2010; Dec. 30, 2010; Feb. 9, 2018>

(6) If a person who concluded a special agreement to hold the compensation bonds until maturity pursuant to Article 77 (1) of the Act (hereafter in this Article, referred to as"person who concluded a special agreement"), violates the special agreement, the project implementer shall notify the head of the tax office having jurisdiction over the place of tax payment of the violation and details of compensation for the person who concluded a special agreement by the end of the month following the month in which the person commits such violation. <Newly Inserted on Feb. 22, 2008; Feb. 18, 2010; Dec. 30, 2010>

(7) A project implementer who wishes to be granted a tax reduction or exemption pursuant to Article 77 (6) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents certifying that he/she is the project implementer, (including the documents certifying the conclusion of a special agreement and the holding of compensation bonds, in cases of a person who has concluded a special agreement), with the head of the tax office having jurisdiction over the tax payment of the transferor, along with his/her tax return for the taxable year in which the relevant land, etc. is transferred. <Amended on Jun. 30, 2003; Dec. 30, 2003; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Jun. 25, 2019>

(8) Any person who wishes to be granted a tax reduction or exemption pursuant to Article 77 (7) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents certifying that the relevant land has been expropriated (including the documents certifying the conclusion of a special agreement and the holding of compensation bonds, in cases of a person who has concluded a special agreement), with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return in cases of a resident or a nonprofit domestic corporation which has filed a provisional return under Article 62-2 (7) of the Corporate Tax Act) for the taxable year in which the relevant land, etc. is transferred. <Amended on Jan. 10, 2000; Dec. 31, 2001; Feb. 19, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Jun. 25, 2019>

[Title Amended on Dec. 31, 2001; Dec. 30, 2003]

Article 73(Special Taxation for Capital Gains Tax on Compensation by Substitute Land) #

(1) Where a resident has transferred land, etc. to a project operator and is paid for the price for the transfer of the land, etc. in full or partially with the land developed by implementing the relevant public project (hereafter in this Article, referred to as"substitute land") under Article 77-2 (1) of the Act, the resident is entitled to special taxation for capital gains tax as follows: <Amended on Feb. 3, 2015; Feb. 5, 2016; Feb. 11, 2020>

1. Where the resident applies for tax reduction or exemption: The resident is entitled to a reduction of an amount of tax equivalent to 40/100 of capital gains tax on the amount calculated by the following formula, out of the capital gains on the transfer of the relevant land, etc. to the project operator:

Capital gains on the transfer of the relevant land, etc. under Article 95 (1) of the Income Tax Act minus the amount of special deduction for long-term holding defined under Article 95 (2) of that Act × (Equivalent to compensation by substitute land ÷ Total amount of compensation)

2. Where the resident applies for tax deferral: The resident is exempt from capital gains tax on the amount calculated by the following formula (hereafter in this Article, referred to as"tax-deferred amount"), out of capital gains on the transfer of the relevant land, etc. to the project operator, but shall be levied capital gains tax at the time of transferring substitute land, deeming the acquisition value of the substitute land minus the tax-deferred amount to be the acquisition value. Where the substitute land is transferred in such cases, the period from the time of acquisition of the substitute land to the time of transfer thereof shall be deemed the holding period for the purposes of calculating the amount of special deduction for long-term holding under Article 95 (2) of the Income Tax Act:

(2)"Manner prescribed by Presidential Decree" in Article 77-2 (2) of the Act means notifying the head of the tax office having jurisdiction over the place of tax payment of a statement of compensation made to a person who has received compensation with substitute land under Article 77-2 (1) of the Act (hereinafter referred to as"person compensated with substitute land"), by the end of the following month.

(3) Upon changing compensation with substitute land to cash compensation, the project operator shall notify the head of the tax office referred to in paragraph (2) of the details thereof by the end of the following month.

(4) In any of the following cases, a resident who had capital gains tax reduced or deferred under Article 77-2 (1) of the Act shall file a return on the full amount of capital gains tax reduced under paragraph (1) 1 [referring to the amount calculated by subtracting the amount of tax that the resident has already paid upon receiving compensation in cash, in bonds, etc. from the amount of tax on total compensation (the amount of tax calculated by applying the tax reduction rate under Article 77 of the Act to the amount of capital gains on the transfer of the relevant land, etc. by the resident to the project operator), if the resident was allowed to defer tax under paragraph (1) 2; hereafter in this Article, referred to as"amount of tax equivalent to the tax-deferred amount"] and shall pay such full amount plus the equivalent to interest thereon, as calculated by applying mutatis mutandisArticle 63 (9), within two months from the end of the month in which the relevant cause arises: <Amended on Dec. 30, 2010; Feb. 15, 2013; Feb. 3, 2015>

1. Where compensation with substitute land is changed to cash compensation because the resident has violated prohibition against resale under Article 63 (3) of the Act on Acquisition of and Compensation for Land for Public Works Projects;

2. Where the resident transfers the relevant substitute land within three years after completing the registration of transfer of ownership in such substitute land: Provided, That the same shall not apply where the substitute land is purchased through negotiations or is expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or is expropriated under other statutes within three years after the acquisition of the substitute land.

(5) In any of the following cases, a resident who had capital gains tax reduced or deferred under Article 77-2 (1) of the Act (referring to the heir to the relevant resident, in cases of inheritance under subparagraph 3) shall file a return on the capital gains tax and shall pay the difference in the reduced or exempted amount of capital gains tax (or an amount of tax equivalent to the tax-deferred amount, where the resident was allowed to defer tax under paragraph (1) (ii)) between compensation with substitute land and cash compensation (referring to compensation by bonds under a special agreement concluded to hold the bonds until the maturity of three years under Article 77 (1) of the Act in cases of subparagraph 4 or referring to compensation by bonds where no special agreement has been concluded to hold the bonds until the maturity, if stocks received through investment in kind do not meet the requirements under Article 26-3 (4) 1 of the Real Estate Investment Company Act) within two months (or three months in cases of donation under subparagraph 3; and six months in cases of inheritance under that subparagraph) from the end of the month in which the relevant cause arises: <Amended on Feb. 15, 2013; Feb. 3, 2015; Feb. 7, 2017; Feb. 11, 2020; May 4, 2021; Feb. 29, 2024>

1. Where the cause for registering the transfer of ownership in the relevant substitute land is not stated as compensation with substitute land (excluding cases subject to subparagraph 4);

2. Where compensation with substitute land has been changed to cash compensation due to any cause other than the cause provided for in paragraph (4) 1;

3. Where the gift or inheritance of the substitute land is made within 3 years after the registration of transfer of ownership of the relevant substitute land is completed;

4. Where the right determined to be compensated with land pursuant to the proviso of the provisions, with the exception of the subparagraphs, of Article 63 (1) of the Act on Acquisition of and Compensation for Land for Public Works Projects is invested in kind in a real estate investment company under the Real Estate Investment Company Act.

(6) A person who intends to apply for a capital gains tax reduction or deferral pursuant to Article 77-2 (4) of the Act shall file an application for tax reduction or deferral in the form prescribed by Ordinance of the Ministry of Economy and Finance and copies of an application for compensation with substitute land and an agreement on compensation with substitute land, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the relevant land, etc. is transferred. <Amended on Feb. 29, 2008; Feb. 3, 2015>

(7) A project operator shall submit an application for tax reduction in the form prescribed by Ordinance of the Ministry of Economy and Finance and the documents certifying the identity of the project operator (including documents certifying the conclusion of a special agreement and the holding of compensation bonds, if the project operator has concluded a special agreement), to the head of the tax office having jurisdiction over the place of tax payment of the transferor, along with its tax return for the taxable year in which the relevant land, etc. is transferred, and shall submit a certificate of registered matters, to the head of the tax office having jurisdiction over the place of tax payment of the transferor, upon completing the registration of the transfer of ownership in the relevant substitute land. <Amended on Feb. 3, 2015; Feb. 13, 2018; Jun. 25, 2019>

(8) Where an investment in kind is made pursuant to paragraph (5) 4, the in-kind investor and the real estate investment company that received the investment in kind shall submit a copy of the in-kind investment agreement to the head of the tax office having jurisdiction over the tax payment of the in-kind investor. <Newly Inserted on Feb. 11, 2020>

[This Article Newly Inserted on Feb. 22, 2008]

Article 74(Reduction or Exemption of Capital Gains Tax for Land subject to Purchase following Designation of Development Restriction Zones) #

(1)"Resident prescribed by Presidential Decree residing on the land, etc." in Article 77-3 (1) 1 and 2 and (2) 1 and 2 of the Act means a person who resides in any of the following areas (including areas that used to be any of the following areas when a resident began to reside therein, but cease to be such area due to the reorganization of administrative districts, etc.): <Amended on Apr. 21, 2009; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Jan. 22, 2016>

2. An area within a Si/Gun/Gu adjacent to the area referred to in subparagraph 1;

3. An area within the radius of 30 kilometers from the relevant land, etc.

(2)"Area prescribed by Presidential Decree, such as a free economic zone under the Special Act on Designation and Management of Free Economic Zones" in the proviso to Article 77-3 (2) of the Act, with the exception of its subparagraphs, means any of the following zones or areas: <Newly Inserted on Apr. 21, 2009; Jul. 30, 2009; Aug. 30, 2011>

1. A free economic zone designated under Article 4 of the Special Act on Designation and Management of Free Economic Zones;

2. An area prearranged for housing site development designated under Article 3 of the Housing Site Development Promotion Act;

3. An industrial complex designated under Article 6, 7, 7-2, or 8 of the Industrial Sites and Development Act;

4. An area to be developed as an enterprise city designated under Article 5 of the Special Act on the Development of Enterprise Cities;

5. Areas prescribed by Ordinance of the Ministry of Economy and Finance, similar to those provided for in subparagraphs 1 through 4.

(3) Any person who intends to apply for a reduction or exemption of capital gains tax pursuant to Article 77-3 (4) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents verifying the fact that the relevant land, etc. has been requested for purchase or has been purchased through negotiations, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (including a provisional return) for the taxable year in which the relevant land, etc. is transferred. <Amended on Apr. 21, 2009>

(4) For the purpose of calculating the period of residence under Article 77-3 (4) of the Act, the period during which the decedent has resided on the land, etc. after he/she bought them, shall be deemed the period during which the heir has resided; and the period during which the decedent could not reside on the relevant land, etc. due to school attendance, enlistment, recuperation from a disease, or other unavoidable reasons prescribed by Ordinance of the Ministry of Economy and Finance, shall be deemed the period during which he/she has resided. <Amended on Apr. 21, 2009>

[This Article Newly Inserted on Feb. 4, 2009]

Article 78(Special Taxation for Capital Gains Tax for Relocating Museums) #

(1)"Capital gains tax, calculated as prescribed by Presidential Decree" in the main sentence of Article 83 (1) of the Act, with the exception of its subparagraphs, means capital gains tax calculated by multiplying the amount of subparagraph 1 by the ratio of subparagraph 2:

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the acquisition value (the ratio shall not exceed 100/100) of the newly-acquired building of a museum and appurtenant land (hereafter in this Article, referred to as"new establishment") to the transfer value of the building of any of the establishments specified under Article 83 (1) of the Act (hereafter in this Article, referred to as"museum, etc.") and appurtenant land (hereafter in this Article, referred to as"existing establishment"), which are transferred after having been operated by a resident for at least three years.

(2) The relocation of establishments eligible under Article 83 (1) of the Act shall be either of the following cases:

1. Where a resident acquires a new establishment and transfers the existing establishment within two years from the opening date of the new establishment;

2. Where a resident acquires and opens a new establishment within one year from the date of transfer of the existing establishment (or three years if a new building is constructed for the new establishment).

(3) Where a resident does not acquire a new establishment by the end of the taxable year in which the existing establishment is transferred in cases falling under paragraph (2) 2, the estimated value on the statement of (planned) relocation referred to in paragraph (5) shall be deemed the acquisition value of the new establishment.

(4) For the purposes of Article 83 (1) of the Act, where a resident has been permitted to pay capital gains tax in installments based on the estimated acquisition value referred to in paragraph (3), the resident shall pay the amount exceeding the amount calculated under paragraph (1), based on the actual acquisition value, as capital gains tax by the deadline for filing the tax return for the taxable year in which such resident acquires and opens a new establishment. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount payable as capital gains tax.

(5) A resident who wishes to pay capital gains tax in installments under Article 83 (1) of the Act shall file an application for payment in installments and a statement of (planned) relocation in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return (or provisional return) for the taxable year in which the existing establishment is transferred.

(6) Where a resident acquires and opens a new establishment after the application of paragraph (3), the resident shall file a relocation completion report in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the resident opens a new establishment.

(7)"Amount calculated as prescribed by Presidential Decree" in the main sentence of Article 83 (2) of the Act means the amount of capital gains tax calculated under paragraph (1): Provided, That, if the capital gains tax has been paid partially in accordance with Article 83 (1) of the Act, the relevant amount shall be excluded.

(8)"Extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 83 (2) of the Act means the following cases:

1. Where the relevant new establishment is expropriated under other statutes listed under Article 72 (2);

2. Where the relevant new establishment is closed or disposed of in compliance with a closure or relocation order, etc. issued under statutes or regulations.

[This Article Newly Inserted on Feb. 7, 2017]

Article 79-3(Special Taxation for Relocating Factories in Areas subject to Development Plans of Administrative City and Innovation Cities to Rural Areas) #

(1)"Area outside the administrative city, etc. prescribed by Presidential Decree" in Article 85-2 (1) of the Act, with the exception of its subparagraphs, means any area outside the prearranged area for the administrative city defined in Article 2 of the Special Act on the Construction of Administrative City in Yeongi-Gongju Area for Follow-Up Measure for New Administrative Capital or the prearranged area for the development of an innovation city under the Special Act on the Construction and Development of Innovation Cities (hereafter in this Article and Articles 79-8 and 79-10, referred to as"administrative city, etc."), which is not any of the following areas (hereafter in this Article, referred to as"rural area"): <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 27, 2018>

1. The over-concentration control region of the Seoul Metropolitan area;

2. Areas within the jurisdiction of Busan Metropolitan City (excluding Gijang-gun), Daegu Metropolitan City (excluding Dalseong-gun), Gwangju Metropolitan City, Daejeon Metropolitan City, and Ulsan Metropolitan City: Provided, That the industrial areas designated pursuant to the Industrial Sites and Development Act shall be excluded herefrom.

(2)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-2 (1) 1 of the Act means the amount of subparagraph 1 multiplied by the rates of subparagraphs 2 and 3: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 12, 2019>

1. The amount calculated by subtracting the sum of the book value of a factory located in the administrative city, etc. (hereafter in this Article, referred to as"existing factory") and the carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act, as at the end of the immediately preceding business year, from the transfer value of the existing factory;

2. The ratio of the acquisition value of a factory (including acquisition through construction of the factory in a province; hereafter in this Article, the same shall apply) in a province (hereafter in this Article, referred to as"provincial factory"), to the transfer value of the existing factory (the ratio shall not exceed 100/100).

3. The area ratio of the factory in the rural area: The ratio calculated by the following formula (the ratio shall not exceed 100/100):

1 - {(Area of the factory in the rural area - Area equivalent to 120/100 of the area of the existing factory) ÷ (Area equivalent to 120/100 of the area of the existing factory)}

(3) The amount that can be tax deferred under Article 85-2 (1) 2 of the Act shall be the amount of subparagraph 1 multiplied by the rates of subparagraphs 2 and 3:

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the acquisition value of a provincial factory to the transfer value of the existing factory (the ratio shall not exceed 100/100).

3. The area ratio of the factory in the rural area: The ratio calculated by the following formula (the ratio shall not exceed 100/100):

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(4) For the purposes of paragraphs (2) and (3), the acquisition value and the area of the factory in the rural area shall be based on the estimated value and the estimated acquisition area on the statement of (planned) relocation, if the factory in the rural area has not been acquired by the end of the taxable year in which the existing factory was transferred.

(5) Relocation to rural areas eligible under Article 85-2 (1) of the Act shall be either of the following cases: Provided, That, where the site of an existing factory or a factory in a rural area exceeds the standard area for factory siting prescribed by Ordinance of the Ministry of Economy and Finance, Article 85-2 (1) of the Act shall not apply to such excess: <Amended on Feb. 29, 2008; Feb. 18, 2010>

1. Where transferring the existing factory within two years from the date he/she starts a business after acquiring a provincial factory;

2. Where a resident or domestic corporation commences a business after having acquired the factory in the rural area within three years (or six years in extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as delay in permission or authorization for construction works) from the date of transfer of the existing factory.

(6)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-2 (2) of the Act means any of the following: <Amended on Feb. 18, 2010>

1. Full amount of the capital gains not included in the gross income as prescribed in Article 85-2 (1) 1 of the Act;

2. Full amount of the tax (referring to the amount of tax calculated by multiplying the tax-deferred amount by the tax rate under Article 104 of the Income Tax Act) on the tax-deferred amount, where tax deferral is allowed under Article 85-2 (1) 2 of the Act.

(7) For the purposes of Article 85-2 (1) of the Act, where a domestic corporation has been permitted not to include capital gains in its gross income or a resident has been permitted to defer capital gains tax based on the estimated acquisition value or estimated acquisition area referred to in paragraph (4), the domestic corporation shall include the amount exceeding the amount calculated under paragraphs (2) based on the actual acquisition value and actually acquired area in its gross income, at the time of calculating the income for the taxable year in which it acquires the factory in the rural area and commences a business, or the resident shall pay the amount exceeding the amount calculated under paragraph (3) based on the actual acquisition value and actually acquired area, as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount that shall be included in the gross income or payable as capital gains tax.

(8) A domestic corporation that wishes to be eligible under Article 85-2 (1) 1 of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of (planned) relocation in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the business year in which the existing factory is transferred. <Amended on Feb. 29, 2008>

(9) A resident who wishes to defer tax under Article 85-2 (1) 2 of the Act shall submit an application for tax deferral and a statement of (planned) relocation in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return (including the provisional return) for the taxable year in which the existing factory is transferred. <Amended on Feb. 29, 2008>

(10) Where a domestic corporation or resident commences a business at the factory in the rural area acquired after the application of paragraph (4), the domestic corporation or resident shall file a relocation completion report in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the taxable year in which the business commences. <Amended on Feb. 29, 2008>

(11)"Factory" in Article 85-2 of the Act means a factory provided for in Article 54 (1). <Newly Inserted on Feb. 22, 2008>

(12)"Amount of tax deferred, calculated as prescribed by Presidential Decree" in Article 85-2 (4) of the Act, with the exception of its subparagraphs, means the full amount of tax on the tax-deferred amount under paragraph (6) 2. <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 22, 2008]

Article 79-4(Special Taxation for Corporate Tax on Investment in Kind with Land Located in Enterprise City Development Project District) #

(1)"Enterprise prescribed by Presidential Decree" in Article 85-3 (1) 1 of the Act means an enterprise that takes exclusive charge pursuant to Article 14 (1) 1 and 2 of the Enforcement Decree of the Special Act on the Development of Enterprise Cities; and"enterprise prescribed by Presidential Decree" in Article 85-3 (1) 2 of the Act means an enterprise that takes exclusive charge pursuant to Article 13 (4) 2 of the Enforcement Decree of the Special Act on the Promotion of Development Investments in Underdeveloped Areas. <Amended on Feb. 18, 2010; Oct. 1, 2010>

(2) Where a domestic corporation has made investment in kind with land in possession in an enterprise that takes exclusive charge of enterprise city development projects under Article 85-3 (1) 1 of the Act or in an enterprise that takes exclusive charge of development projects for the development promotion districts of underdeveloped areas under Article 85-3 (1) 2 of the Act (hereinafter referred to as"enterprise, etc. taking exclusive charge of enterprise city development projects"), an amount calculated by subtracting the amount in subparagraph 2 (where such amount exceeds the amount calculated by subtracting the book value of the land from its market price, such excess shall be excluded) from the amount in subparagraph 1 shall be included in the deductible expenses when calculating the amount of income for the business year in which such land was invested in kind. In such cases, such amount shall be appropriated as advanced depreciation provision for the relevant stocks: <Amended on Feb. 18, 2010>

1. The value of shares (which referring to the appraised market value under Article 52 (2) of the Corporate Tax Act) of the enterprise, etc. taking exclusive charge of the development of the enterprise city as at the date of investment in kind;

2. The book value of the land as at the day immediately before the date of investment in kind.

(3) The advanced depreciation provision accounted for in accordance with paragraph (2), shall be included in gross income for the business year in which the corresponding shares of the enterprise, etc. taking exclusive charge of enterprise city development projects, are transferred (where there are shares acquired in any other way in addition to those acquired by investment in kind, the shares acquired by investment in kind shall be deemed first transferred). In such cases, where some of the shares are transferred, the amount calculated by the following formula shall be included in gross income: <Amended on Feb. 18, 2010>

{Advanced depreciation provision - (Number of shares transferred out of the shares of the enterprise, etc. taking exclusive charge of the development of the enterprise city, acquired by investment of land in kind / Number of the shares of the enterprise, etc. taking exclusive charge of the development of the enterprise city, acquired by investment of land in kind)}

(4) Paragraphs (2) and (3) shall apply mutatis mutandis to the deferment of taxation of corporate tax under Article 85-3 (2) of the Act. In such cases, the amount that shall be accounted for as advanced depreciation provision shall be the aggregate of the amount of tax deferred under paragraph (2) and the gain from the transfer of shares, generated as a result of paying the land price by the shares acquired through investment in kind at the time of purchasing a parcel of the developed land from the enterprise, etc. taking exclusive charge of enterprise city development projects, and the advanced depreciation provision shall be included in the gross income for the business year in which the purchased parcel of land is transferred. <Amended on Feb. 18, 2010>

(5) A domestic corporation that intends to be eligible under Article 85-3 (1) and (2) of the Act shall submit a statement on investment in kind prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the business year in which such investment in kind was made. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 18, 2010]

Article 79-5(Special Taxation for Corporate Tax on Investment in Kind with Land for Free Economic Zone Development Projects) #

(1)"Domestic corporation prescribed by Presidential Decree" in Article 85-4 (1) of the Act means a domestic corporation established for the purpose of the development of the land, which shall be invested in kind, within the area designated as a free economic zone under Article 2 of the Special Act on Designation and Management of Free Economic Zones, in accordance with the free economic zone development projects under Article 6 of the said Act (hereafter in this Article, referred to as"corporation subject to investment in kind"). <Amended on Jul. 30, 2009; Feb. 18, 2010>

(2) Where a domestic corporation invested its own land in kind in the corporation subject to investment in kind under Article 85-4 (1) of the Act, the amount calculated by subtracting the amount under subparagraph 2 (if the amount exceeds an amount calculated by subtracting the book value of the land from its market value, such excess shall be excluded herefrom) from the amount under subparagraph 1 shall be included in the deductible expenses, at the time of calculating the income for the business year in which the land was invested in kind. In such cases, the amount shall be accounted for as the advanced depreciation provision for the corresponding shares:

1. The value of shares (referring to the appraised market value under Article 52 (2) of the Corporate Tax Act) of the corporation subject to investment in kind as at the date of investment in kind;

2. The book value of the land as at the day immediately before the date of investment in kind.

(3) The advanced depreciation provision accounted for in accordance with paragraph (2), shall be included in gross income for the business year in which the corresponding shares of the corporation subject to investment in kind, are transferred (where there are shares acquired in any other way in addition to those acquired by investment in kind, the shares acquired by investment in kind shall be deemed first transferred). In such cases, where some of the shares are transferred, the amount calculated by the following formula shall be included in gross income:

{Advanced depreciation provision - (Number of shares transferred out of the shares of the corporation subject to investment in kind, acquired by investment of land in kind / Number of the shares of the corporation subject to investment in kind, acquired by investment of land in kind)}

(4) A domestic corporation that intends to be eligible under Article 85-4 (1) of the Act shall submit a statement on investment in kind, as prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the business year in which such investment in kind was made. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 28, 2007]

Article 79-6(Special Taxation for Capital Gains from Transferring Land for Child-Care Centers) #

(1)"Amount calculated as prescribed by Presidential Decree" in Article 85-5 (1) 1 of the Act means the amount of subparagraph 1 multiplied by the ratio of subparagraph 2: <Amended on Feb. 18, 2010; Dec. 8, 2011; Feb. 12, 2019>

1. The amount calculated by subtracting the sum of the book value of the previous child-care center under Article 85-5 (1) of the Act (hereinafter referred to as"previous child-care center") and the carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act, as at the end of the immediately preceding business year from the transfer value of the previous child-care center;

2. The ratio of the acquisition value of the new child-care center under Article 85-5 (1) of the Act (hereinafter referred to as"new child-care center") to the transfer value of the previous child-care center (the ratio shall not exceed 100/100).

(2) The amount that can be tax deferred under Article 85-5 (1) 2 of the Act shall be calculated by multiplying the amount of subparagraph 1 by the ratio of subparagraph 2: <Amended on Dec. 8, 2011>

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the transfer value of the previous child-care center to the acquisition value of the new child-care center (the ratio shall not exceed 100/100).

(3) For the purposes of paragraphs (1) and (2), the acquisition value of the new child-care center shall be based on the estimated value on the statement on (planned) relocation, if the new child-care center has not been acquired by the end of the taxable year in which the previous child-care center was transferred. <Amended on Dec. 8, 2011>

(4)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-5 (2) of the Act means any of the following: <Amended on Feb. 18, 2010>

1. Full amount of the capital gains not included in gross income as prescribed in Article 85 (1) 1 of the Act;

(5) For the purposes of Article 85-5 (1) of the Act, where a corporation has been permitted not to include capital gains in its gross income or an individual has been permitted to defer capital gains tax based on the estimated acquisition value referred to in paragraph (3), the corporation shall include the amount exceeding the amount calculated under paragraph (1) based on the actual acquisition value in its gross income at the time of calculating the income for the taxable year in which it starts to operate the new child-care center after acquisition, or the individual shall pay the amount exceeding the amount calculated under paragraph (2) based on the actual acquisition value, as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount that shall be included in the gross income or payable as capital gains tax. <Amended on Dec. 8, 2011>

(6) A corporation that wishes to be eligible under Article 85-5 (1) 1 of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of (planned) relocation in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the business year in which the previous child-care center is transferred. <Amended on Feb. 29, 2008; Dec. 8, 2011>

(7) An individual who wishes to be granted deferred taxation under Article 85-5 (1) 2 of the Act shall submit an application for tax deferral and a statement of (planned) relocation in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return (including the provisional return) for the business year in which the previous child-care center is transferred. <Amended on Feb. 29, 2008; Oct. 7, 2008; Dec. 8, 2011>

(8) Where a corporation or resident starts to operate a new child-care center acquired after the application of paragraph (3), the corporation or resident shall file a relocation completion report in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the taxable year in which the date of start falls. <Amended on Feb. 29, 2008; Dec. 8, 2011>

(9)"Amount of tax deferred, calculated as prescribed by Presidential Decree" in Article 85-5 (3) of the Act, with the exception of its subparagraphs, means the full amount of tax equivalent to the tax-deferred amount under paragraph (4) 2. <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Dec. 8, 2011]

Article 79-8(Special Taxation for Relocating Factories due to Expropriation for Public Works Projects) #

(1)"Area prescribed by Presidential Decree" in Article 85-7 (1) of the Act, with the exception of its subparagraphs, means an area other than the area where the relevant public works project is implemented, which does not fall under any of the following areas (hereafter in this Article, referred to as"provinces"): <Amended on Jun. 7, 2023>

1. The over-concentration control region of the Seoul Metropolitan area;

2. Jurisdictions of Busan Metropolitan City (excluding Gijang-gun), Daegu Metropolitan City (excluding Dalseong-gun and Gunwi-gun), Gwangju Metropolitan City, Daejeon Metropolitan City, and Ulsan Metropolitan City: Provided, That the industrial areas designated pursuant to the Industrial Sites and Development Act shall be excluded therefrom;

3. Administrative city, etc.

(2)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-7 (1) 1 of the Act means the amount calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2: <Amended on Feb. 12, 2019>

1. Amount calculated by subtracting the aggregate of the book value and the loss carried-forward under Article 13 (1) 1 of the Corporate Tax Act as at the end of immediately preceding business year, from the transfer value of the factory (hereafter in this Article, referred to as"existing factory") located in the area where the relevant public works project is implemented;

(3)"Capital gains tax calculated as prescribed by Presidential Decree" in the former part of Article 85-7 (1) 2 of the Act means the capital gains tax calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2:

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the acquisition value of a provincial factory to the transfer value of the existing factory (the ratio shall not exceed 100/100).

(4) For the purposes of paragraphs (2) and (3), where a provincial factory is not acquired by the end of the taxable year in which the existing factory is transferred, the estimated amount for acquisition on the detailed statement of (expected) relocation shall be the acquisition value of the provincial factory. <Amended on Feb. 4, 2009>

(5) Relocation to provinces to which Article 85-7 (1) of the Act applies shall be any of the following cases: Provided, That, where the site of the existing factory or provincial factory exceeds the standard size for factory sites prescribed by Ordinance of the Ministry of Economy and Finance, Article 85-7 (1) of the Act shall not apply to such excess: <Amended on Feb. 29, 2008; Feb. 18, 2010>

1. Where transferring the existing factory within two years from the date he/she starts a business after acquiring a provincial factory;

2. Where starting a business by acquiring a provincial factory within three years (or six years in extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as delay, etc. of permission or authorization of construction) from the date the existing factory is transferred.

(6)"Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 85-7 (2) of the Act means any of the following amounts:

1. All of the amount that has not been included in gross income where the proceeds from transfer were not included in gross income under Article 85-7 (1) 1 of the Act;

2. All of the amount of tax to pay in installments where installment payment is applied under Article 85-7 (1) 2 of the Act.

(7) For the purposes of Article 85-7 (1) of the Act, when it is not included in gross income according to the estimated amount of acquisition under paragraph (4) or payment by installments is applied, the amount being applied in excess of the amount calculated according to paragraphs (2) and (3) on the basis of actual acquisition value shall be either included in gross income of the taxable year in which business commences after acquiring a provincial factory, or shall be paid as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount to be included in gross income or to be paid as capital gains tax. <Amended on Feb. 4, 2009>

(8) A domestic corporation that intends to be eligible under Article 85-7 (1) 1 of the Act shall submit details of proceeds from transfer and reconciliation sheet of inclusion in gross revenue by installments prescribed by Ordinance of the Ministry of Economy and Finance and details of (expected) relocation, to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return of the taxable year in which the existing factory is transferred. <Amended on Feb. 29, 2008>

(9) A resident who intends to have the payment by installments under Article 85-7 (1) 2 of the Act applied shall submit an application for payment by installments prescribed by Ordinance of the Ministry of Economy and Finance and details of (expected) relocation, to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return (including provisional return) of the taxable year in which the existing factory is transferred. <Amended on Feb. 29, 2008>

(10) When he/she commences business by acquiring a provincial factory after being applied paragraph (4), he/she shall submit a report of completion of relocation prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return of the taxable year in which the business commences. <Amended on Feb. 29, 2008>

(11)"Factory" in Article 85-7 of the Act means a factory prescribed in Article 54 (1).

[This Article Newly Inserted on Feb. 22, 2008]

Article 79-9(Special Taxation for Relocation of Factory of Small or Medium Enterprises) #

(1)"Areas prescribed by Presidential Decree" in Article 85-8 (1) of the Act, with the exception of its subparagraphs, means the over-concentration control region of the Seoul Metropolitan area (excluding the industrial complex designated under the Industrial Sites and Development Act).

(2)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-8 (1) 1 of the Act means the amount calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2: <Amended on Feb. 12, 2019>

1. Amount obtained by subtracting the sum total of the book value of the factory (hereafter referred to as"existing factory" in this Article) located in the area immediately before relocation and the carried over deficit under Article 13 (1) 1 of the Corporate Tax Act as of the end of immediately previous business year from the transfer value of the existing factory;

2. The ratio of the acquisition value (including acquisition through construction of a factory; hereafter the same shall apply in this Article) of a new factory (hereafter referred to as"new factory" in this Article) to the transfer value of the existing factory (the ratio shall not exceed 100/100).

(3)"Capital gains tax calculated as prescribed by Presidential Decree" in the former part of Article 85-8 (1) 2 of the Act means the capital gains tax calculated by multiplying the amount under subparagraph 1 by the rate under subparagraph 2:

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the acquisition value of the new factory to the transfer value of the existing factory (the ratio shall not exceed 100/100).

(4) Where a new factory is not acquired by the end of the taxable year to which the transfer date of existing factory belongs when paragraphs (2) and (3) are applied, the estimated value for acquisition on the detailed statement of (expected) relocation shall be the acquisition value of the new factory.

(5) The relocation of factories to which Article 85-8 (1) of the Act applies shall be a case falling under any of the following subparagraphs: Provided, That in cases the site of existing factory or new factory exceeds the standard size for factory sites prescribed by Ordinance of the Ministry of Economy and Finance, Article 85-8 (1) of the Act shall not apply to such excess part: <Amended on Feb. 18, 2010>

1. Cases of transferring the existing factory within two years from the day business started after acquiring a new factory;

2. Cases of starting business after acquiring a new factory within three years (six years where there are unavoidable reasons prescribed by Ordinance of the Ministry of Economy and Finance, such as delay in the permission for construction or authorization thereof, etc.) from the day existing factory was transferred.

(6)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-8 (2) of the Act means the amount falling under any of the following subparagraphs:

1. Total amount that has not been included in the gross income where transfer margin is not included in the gross income under Article 85-8 (1) 1 of the Act;

2. Total tax amount where payment on an installment basis has been applied under Article 85-8 (1) 2 of the Act.

(7) When a small or medium enterprise has been applied non-inclusion of estimated amount for acquisition under paragraph (4) in the gross income or payment in installment in the application of Article 85-8 (1) of the Act, the amount which has been applied in excess of the amount calculated as prescribed in paragraphs (2) and (3) on the basis of actual acquisition value shall be included in the gross income for the taxable year to which the date on which business started after acquiring a new factory belongs, or shall be paid as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount to be included in gross income or to be paid as capital gains tax.

(8) Any domestic corporation that intends to have Article 85-8 (1) 1 of the Act applied shall submit a detailed statement of transfer gains from transfer, reconciliation sheet of inclusion in gross income on an installment basis and a detailed statement of (expected) relocation prescribed by Ordinance of the Ministry of Economy and Finance together with a report of tax base for the taxable year to which the transfer date of existing factory belongs to the head of tax office having jurisdiction over the place of tax payment.

(9) Any resident who intends to have payment on an installment basis applied as prescribed in Article 85-8 (1) 2 of the Act shall submit an application for payment on an installment basis and a detailed statement of (expected) relocation prescribed by Ordinance of the Ministry of Economy and Finance together with a report of tax base (including expected report) for the taxable year to which the date of transfer of existing factory belongs to the head of tax office having jurisdiction over the place of tax payment.

(10) When business has started following acquisition of a new factory after paragraph (4) was applied, a report of completion of relocation prescribed by Ordinance of the Ministry of Economy and Finance together with a report of tax base for the taxable year to which the date of business start belongs to the head of tax office having jurisdiction over the place of tax payment.

(11)"Factory" in Article 85-8 of the Act means a factory prescribed in Article 54 (1).

[This Article Newly Inserted on Feb. 4, 2009]

Article 79-10(Special Taxation for Relocating Logistics Facilities due to Expropriation for Public Works Projects) #

(1)"Logistics facilities prescribed by Presidential Decree" in Article 85-9 (1) of the Act, with the exception of its subparagraphs, means any of the following facilities prescribed by Ordinance of the Ministry of Economy and Finance:

1. Facilities to keep, assemble, repair, etc. products (including parts used to manufacture such products) manufactured by manufacturers;

2. Logistics facilities owned by persons engaging in the logistics business under Article 2 of the Framework Act on Logistics Policies.

(2)"Area prescribed by Presidential Decree" in Article 85-9 (1) of the Act, with the exception of its subparagraphs, means an area outside the area where the relevant public works project is implemented, which does not fall under any of the following areas (hereafter in this Article, referred to as"provinces") <Amended on Jun. 7, 2023>

1. The over-concentration control region of the Seoul Metropolitan area;

3. Administrative city, etc.

(3)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-9 (1) 1 of the Act means an amount calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2: <Amended on Feb. 12, 2019>

1. Amount obtained by subtracting the aggregate of the book value of logistics facilities (hereafter in this Article, referred to as"existing logistics facilities") situated in the area where the relevant public works project is implemented, and deficit carried-forward under Article 13 (1) 1 of the Corporate Tax Act as at the end of immediately previous business year, from the transfer value of such existing logistics facilities;

2. The ratio of the acquisition value of logistics facilities (including acquisition through construction of logistics facilities in a province; hereafter in this Article, the same shall apply) situated in a province (hereafter referred to as"provincial logistics facilities") to the transfer value of existing logistics facilities (the ratio shall not exceed 100/100).

(4)"Capital gains tax calculated as prescribed by Presidential Decree" in the former part of Article 85-9 (1) 2 of the Act means capital gains tax calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2:

1. Proceeds from transfer provided for in Article 95 (1) of the Income Tax Act;

2. The ratio of the acquisition value of provincial logistics facilities to the transfer value of existing logistics facilities (the ratio shall not exceed 100/100).

(5) For the purposes of paragraphs (3) and (4), where provincial logistics facilities are not acquired by the end of taxable year in which existing logistics facilities are transferred, the estimated price on the detailed statement of (scheduled) relocation shall be the acquisition value of provincial logistics facilities.

(6) Relocation to provinces to which Article 85-9 (1) of the Act applies shall be any of the following cases:

1. Where existing logistics facilities are transferred within two years from the date business commences after acquiring provincial logistics facilities;

2. Where business commences after acquiring provincial logistics facilities within three years (or six years where there are unavoidable reasons prescribed by Ordinance of the Ministry of Economy and Finance, such as delay in the permission for construction or authorization thereof, etc.) from the date existing logistics facilities are transferred.

(7)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 85-9 (2) of the Act means any of the following amounts:

1. Where proceeds from transfer have not been included in the gross income as prescribed in Article 85-9 (1) 1 of the Act, the full amount that has not been included in the gross income;

2. Where payment by installment has been allowed as prescribed in Article 85-9 (1) 2 of the Ac, the full amount of tax to be paid in installment.

(8) For the purposes of Article 85-9 (1) of the Act, where the equivalent to transfer gains has not been included in the gross income according to the estimated value under paragraph (5) or payment by installment of capital gains tax has been allowed, the amount that has been applied in excess of the amount calculated as prescribed in paragraphs (3) and (4) on the basis of actual acquisition value shall be included in the gross income for the taxable year in which business commences after acquiring provincial logistics facilities, or shall be paid as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount to be included in the gross income or to be paid as capital gains tax.

(9) A domestic corporation that intends to be eligible under Article 85-9 (1) 1 of the Act shall submit a detailed statement of proceeds from transfer, detailed statement of adjustment of divided inclusion in the gross income, and detailed statement of (scheduled) relocation, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing a tax return for the business year in which the existing logistics facilities are transferred.

(10) A domestic corporation that intends to have payment by installment applied as prescribed in Article 85-9 (1) 2 of the Act shall submit an application for payment by installment and a detailed statement of (scheduled) relocation, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing a tax return (including a provisional return) for the taxable year in which the existing logistics facilities are transferred.

(11) When business commences following the acquisition of provincial logistics facilities after having had paragraph (5) applied, a report on the completion of relocation prescribed by Ordinance of the Ministry of Economy and Finance shall be submitted to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing a tax return for the taxable year in which the business commences.

[This Article Newly Inserted on Feb. 18, 2010]

Article 80-3(Income Deductions for Mutual Aid Funds for Small Enterprises and Micro Enterprises) #

(1)"Mutual aid fund prescribed by Presidential Decree" in Article 86-3 (1) of the Act means a mutual aid fund in which installments not exceeding three million won shall be deposited on a quarterly basis. <Amended on Feb. 21, 2014; Feb. 3, 2015>

(2) Notwithstanding paragraph (1), an installment deposited in a mutual aid fund at the time specified in either of the following shall be deemed an installment deposited in the mutual aid fund for the relevant quarter: <Amended on Feb. 3, 2015>

1. Where installments are deposited in a mutual aid fund for a period not exceeding one year and six months before the lapse of one year and six months after the end of the month in which the last installment was deposited;

2. Where installments for six months are deposited in advance in a mutual aid fund before the beginning of the quarter, out of the installments to be deposited in the mutual aid fund for the relevant year.

(3) "Number of years...determined by the method prescribed by Presidential Decree" in the latter part of Article 86-3 (3) of the Act shall be calculated by dividing the number of months for which installments have been deposited in a mutual aid fund by 12 (a period of less than one year shall be deemed one year): Provided, That if the mutual aid is paid by interim settlement, it shall be the number of years calculated by dividing the number of payment months after the date of settlement by 12 (a period of less than one year shall be deemed one year). <Newly Inserted on Feb. 3, 2015; Feb. 29, 2024>

(4) "Any of the causes prescribed by Presidential Decree" in the former part of Article 86-3 (3) and the main clause of Article 86-3 (4) of the Act means any of the following: <Amended on Feb. 3, 2015; Feb. 11, 2020; Feb. 29, 2024>

1. When a small enterprise or a micro enterprise closes the business (including where a person who joined the mutual aid fund as a sole proprietor closes his/her business for investment in kind in order to incorporate a corporation, and where a person who joined the mutual aid fund as a sole proprietor closes his/her business for transferring all of his/her business to his/her spouse or offspring) or is dissolved (only in cases of a corporation);

2. When a member of the mutual aid fund dies;

3. When a person who joined the mutual aid fund as the representative of a corporation loses his/her position as the representative of the corporation;

4. When a member of the mutual aid fund, who is aged 60 or oder and has deposited installments for at least 120 months in the mutual aid fund, claims the payment of the mutual aid money.

5. Any ground specified in Article 37 (1) 5 through 8 of the Enforcement Decree of the Small and Medium Enterprise Cooperatives Act.

(5)"Any of the grounds prescribed by Presidential Decree, such as emigration to abroad" in the proviso of the provisions, with the exception of the formula, of Article 86-3 (4) of the Act means any of the following events that occur within six months before termination: <Amended on Feb. 3, 2015; Feb. 28, 2023>

1. A natural disaster;

2. Emigration of a member of the mutual aid fund to a foreign country;

3. Any injury or disease to a member of the mutual aid fund, which requires hospitalization or recuperation for at least three months;

4. Dissolution of the Korea Federation of Small and Medium Business established under the Small and Medium Enterprise Cooperatives Act (hereafter referred to as the"Korea Federation of Small and Medium Business" in this Article).

5. Where a member of the mutual aid suffers damage that requires hospitalization for at least 15 days due to a disaster referred to in Article 66 (1) 2 of the Framework Act on the Management of Disasters and Safety.

(6) A person who wishes to obtain an income deduction under Article 86-3 (1) of the Act shall submit a certificate of deposits in a mutual aid fund, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over his/her domicile or to the relevant withholding agent at the time he/she files his/her final return on the tax base of income tax or at the time of year-end settlement: Provided, That the certificate of deposits in a mutual aid fund may be substituted with a copy of the bankbook evidencing the amount of installments deposited in the mutual aid fund for the year following the year in which the certificate is first submitted and for the subsequent years. <Amended on Feb. 29, 2008; Feb. 3, 2015>

(7) When a supporting document for income deductions shall be submitted to the Commissioner of the National Tax Service pursuant to Article 216-3 of the Enforcement Decree of the Income Tax Act, a document issued by the Commissioner of the National Tax Service with a full list of installments deposited in a mutual aid fund may be submitted in lieu of the supporting document, notwithstanding paragraph (6). <Amended on Feb. 3, 2015>

(8) A person who intends to terminate a mutual aid due to an occurrence of any of the causes or events specified in paragraph (5) shall submit a report on the ground for special termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the Korea Federation of SMEs. <Amended on Feb. 29, 2008; Feb. 3, 2015>

(9) For the purpose of calculating miscellaneous incomes by the formula prescribed in Article 86-3 (4) of the Act, if the cumulative total of installments deposited in excess of the amount of income deductions that a person has actually obtained (limited to the amount verified by the supporting documents submitted by the person who has received the mutual aid money) exceeds the refund paid upon termination, such miscellaneous incomes shall be deemed nil. <Amended on Feb. 3, 2015>

(10) Methods and procedures for calculating income deductions for installments deposited in a mutual aid fund and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008; Feb. 3, 2015>

[This Article Newly Inserted on Aug. 6, 2007]

Article 81(Scope of Long-Term Savings Account for Housing Purchase) #

(1)"One house not larger than the size prescribed by Presidential Decree" in Article 87 (1) 1 (b) of the Act means a house in the size of national housing unit defined in the Housing Act (including land appurtenant to a house, and the house shall be excluded herefrom where the appurtenant land exceeds the area calculated by multiplying the area on which the house stands by the multiplying factor determined by area). In such cases, when the relevant house is a multi-unit house, it shall be determined based on the exclusive area for each unit.

(2)"Multiplying factor determined by area" in paragraph (1) means the following:

1. Five times in cases of land within an urban area (hereinafter referred to as"urban area") designated under subparagraph 1 of Article 6 of the National Land Planning and Utilization Act;

2. Ten times in cases of land outside an urban area.

(3)"Requirements prescribed by Presidential Decree, including the limits on installment savings and the contract period" in Article 87 (1) 2 of the Act means the following requirements that: <Amended on Feb. 18, 2010>

1. The account shall be a savings account offered by any of the financial institutions specified under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which is transacted by a bankbook bearing an indication income tax-free long-term savings account for house purchase under Article 87 of the Act;

2. No quarterly deposit (referring to the total quarterly deposit in savings accounts opened at all financial institutions) shall exceed three million won. In such cases, savings payments for a later quarter or for a past quarter shall not be made, however, as for the case of insurance or mutual aid fund, the savings payments for the mean time may be made before two years and two months pass from the end of the month in which the last day of payment falls;

3. The contract period of the savings account shall be at least seven years, and no withdrawal of principal, interest, etc. shall be made during such period.

(4) Deleted. <Feb. 18, 2010>

(5)"Document prescribed by Presidential Decree" in Article 87 (4) of the Act, with the exception of its subparagraphs, means a non-homeowner certificate in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 18, 2010; Feb. 2, 2017; Feb. 12, 2019>

(6)"Reason prescribed by Presidential Decree" in the proviso of Article 87 (6) of the Act, with the exception of its subparagraphs, means the acquisition of a house within three months before or after termination (limited to a long-term savings account for housing purchase), winning a draw to acquire a house in the size of national housing unit built upon obtaining approval of its project plan under the Housing Act (limited to a collective savings account for housing subscription giving preferential treatment to youths), or any of the following grounds that arise within six months from termination: <Amended on Feb. 29, 2008; Feb. 15, 2013; Feb. 3, 2015; Feb. 12, 2019>

1. A natural disaster;

2. Retirement of the savings account holder;

3. Closure of the place of business;

4. Any injury or disease that requires the savings account holder to be hospitalized for medical treatment or recuperation for at least three months;

5. Business suspension, revocation of authorization or permission for business, resolution on dissolution, or adjudication of bankruptcy of the institution dealing with savings.

(7) A person who intends to terminate his/her long-term savings account for housing purchase or collective savings account for housing subscription giving preferential treatment to youths due to any of the grounds specified in the proviso to Article 87 (6) of the Act, with the exception of its subparagraphs, shall submit a report on the ground for special termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the relevant financial institution dealing with the relevant savings account for housing purchase. If a long-term savings account for housing purchase is terminated due to the acquisition of a house within three months after termination in such cases, the equivalent to the amount of tax reduced as no income tax is imposed on interest income and dividend income shall be additionally collected at the time of terminating the savings account, but the additionally collected tax shall be refunded, if the person files an application for refund, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant financial institution dealing with the long-term savings account for housing purchase within one month after acquiring a house. <Newly Inserted on Feb. 3, 2015; Feb. 12, 2019>

(8)"Period prescribed by Presidential Decree" in Article 87 (9) 1 of the Act means the six-month period from the end of the month in which a person opens a savings account. <Amended on Feb. 3, 2015; Feb. 12, 2019>

(9) If a holder of the long-term savings account for housing purchase or collective savings account for housing subscription giving preferential treatment to youths has any objection to a notice given by the Commissioner of the National Tax Service to the institution dealing with the savings account under Article 87 (9) 1 or 2 or (10) 3 of the Act, he/she may present his/her opinion to the Commissioner of the National Tax Service in the manner prescribed by Ordinance of the Ministry of Economy and Finance, and the Commissioner of the National Tax Service shall notify the financial institution dealing with the savings of whether he/she accepts the opinion, within 14 days after receipt of the opinion. <Amended on Feb. 29, 2008; Feb. 3, 2015; Feb. 12, 2019>

(10)"Household prescribed by Presidential Decree" in Article 87 (1) 1 (a) of the Act means a household that includes a resident, his/her spouse, and lineal ascendants and descendants (including their spouses), and siblings of the resident and of his/her spouse living together with the resident at the same domicile or abode: Provided, That the resident and his/her spouse shall be deemed to constitute one household, even where they live apart from each other, but either one of them shall be deemed the head of the household, if the resident and his/her spouse are heads of the household, respectively. <Newly Inserted on Feb. 4, 2009; Feb. 3, 2015>

(11) "Reason prescribed by Presidential Decree" in the proviso of Article 87 (7) 1 of the Act means any of the following reasons: <Newly Inserted on Feb. 18, 2010; Feb. 15, 2013; Feb. 12, 2019; Feb. 29, 2024>

1. Where a person wins a draw to acquire a house in the size of national housing unit built upon obtaining approval of its project plan under the Housing Act;

2. Where a person falls under any of the grounds prescribed in subparagraphs of paragraph (6) that arise within six months from termination;

3. Where a person who holds a collective savings account for housing subscription terminates it to open a collective savings account for housing subscription giving preferential treatment to youths.

4. Where a person who has subscribed to a collective savings account for housing subscription giving preferential treatment to youths under subparagraph 3 terminates the collective savings account for housing subscription giving preferential treatment to youths, and the aggregate of the subscription period for the collective savings account for housing subscription that is terminated in order to subscribe to a collective savings account for housing subscription giving preferential treatment to youths and the subscription period for a collective savings account for housing subscription giving preferential treatment to youths exceeds 5 years.

(12) A person who intends to terminate his/her collective savings account for housing subscription due to any of the grounds specified in the proviso to Article 87 (7) 1 of the Act shall submit a report on the ground for special termination in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the institution handling such comprehensive savings account. <Newly Inserted on Feb. 18, 2010; Feb. 12, 2019>

(13)"Any ground other than winning a draw to acquire a house or any ground other than the one prescribed by Presidential Decree" in the proviso to Article 87 (2) of the Act means cases where a resident wins a draw to acquire a house or a holder of a collective savings account for housing subscription opens a collective savings account for housing subscription giving preferential treatment to youths. <Newly Inserted on Feb. 12, 2019>

(14)"Youth prescribed by Presidential Decree" in Article 87 (3) 1 of the Act, with the exception of its items, means a person whose age is between 19 and 34 years as at the date of opening a collective savings account for housing subscription giving preferential treatment to youths (where the military service set forth in any item of Article 27 (1) 1 has been performed, including the person whose age after subtracting the relevant military service period (which shall not exceed six years) from his/her age as at the date of opening a collective savings account for housing subscription giving preferential treatment to youths does not exceed 34). <Newly Inserted on Feb. 12, 2019>

(15) A resident who wishes to be granted a non-taxation on the interest income accruing from his/her collective savings account for housing subscription giving preferential treatment to youths shall submit the following data to the institution dealing with the savings account when he/she opens the relevant savings account: <Newly Inserted on Feb. 12, 2019; Feb. 17, 2021>

1. An income certificate issued by the head of a tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That, if it is impracticable to ascertain whether the resident meets the requirement prescribed in items of Article 87 (3) 1 of the Act because such resident’s business income or earned income first accrues during the taxable period immediately preceding the taxable period in which the relevant account is opened, he/she may submit a certificate of payment of business income or earned income, a business registration certificate, or a withholding tax receipt in lieu of the income certificate;

2. An evidentiary document of his military service period in the form prescribed by Ordinance of the Ministry of Economy and Finance (limited to persons who are at least 35 years of age as at the date of opening the account).

(16)"Deadline prescribed by Presidential Decree" in Article 87 (10) 1 of the Act means any of the following dates: <Newly Inserted on Feb. 12, 2019>

1. In cases of a collective savings account for housing subscription: March 5 of the year following the taxable period for which the person wishes to be granted an income deduction;

2. In cases of a collective savings account for housing subscription giving preferential treatment to youths: The fifth day from the end of a half-year term in which the date the account holder submits a non-homeowner certificate falls.

(17)"Time prescribed by Presidential Decree" in Article 87 (10) 2 of the Act means any of the following time: <Newly Inserted on Feb. 12, 2019>

1. In cases of a collective savings account for housing subscription: During the taxable period for which the person wishes to be granted an income deduction;

2. In cases of a collective savings account for housing subscription giving preferential treatment to youths: As at the date of opening the savings account.

(18)"Date prescribed by Presidential Decree" in Article 87 (10) 2 of the Act means any of the following dates: <Newly Inserted on Feb. 12, 2019>

1. In cases of a collective savings account for housing subscription: April 30 of the year following the taxable period for which the person wishes to be granted an income deduction;

2. In cases of a collective savings account for housing subscription giving preferential treatment to youths: The date on which two months pass from the end of the half-year term in which the account holder submits a non-homeowner certificate falls.

(19)"Period prescribed by Presidential Decree" in Article 87 (10) 3 of the Act means the period until the end of February of the year immediately following the year in which a collective savings account for housing subscription giving preferential treatment to youths is opened (or the year in which a decision or correction is made with regard to the relevant account holder pursuant to Article 80 of the Income Tax Act, if such decision or correction is made). <Newly Inserted on Feb. 12, 2019>

(20) Where an institution dealing with saving accounts is notified under Article 87 (10) 3 of the Act that any holder of a collective savings account for housing subscription giving preferential treatment to youths fails to meet the requirements set forth in Article 87 (3) 1 of the Act, it shall notify such fact to the relevant account holder. <Newly Inserted on Feb. 12, 2019>

(21) Deleted; <Feb. 17, 2021>

[This Article Wholly Amended on Jun. 22, 2008]

Article 81-3(Investment Rate in Rental Housing) #

(1)"Rental housing prescribed by Presidential Decree" in the former part of Article 87-6 (1) of the Act means private rental housing defined in Article 2 of the Special Act on Private Rental Housing, or public rental housing defined in Article 2 of the Special Act on Public Housing (hereinafter in this Article, referred to as"rental house"), where the total assessed value of such house and land appurtenant thereto does not exceed 600 million won at the time of its acquisition, and the total area (or an area for exclusive use in cases of multi-family housing) of the house does not exceed 149 square meters. <Amended on Feb. 7, 2017>

(2)"Ratio prescribed by Presidential Decree" in the former part of the Article 87-6 (1) of the Act means 50/100.

(3) The ratio prescribed under paragraph (2) shall be calculated by dividing the aggregate of daily ratios, as calculated by the following formula, for the period from the date of creation or establishment (referring to the date of business authorization in cases of a real estate investment company; or the date following the date of final settlement and distribution for the immediately preceding term if final settlement and distribution were done after the date of creation or establishment or the date of business authorization) of a real estate fund, etc. defined in the former part of Article 87-6 (1) of the Act (hereafter in this Article, referred to as"real estate fund, etc."), until the date of final settlement and distribution, by the total number of days for such period. In such cases, initial three months from the date of creation or establishment of the real estate fund, etc., or the date of business authorization and three months before the date of termination or dissolution shall be excluded from calculation: <Amended on Feb. 7, 2017>

(Total amount of assets or funds invested by a real estate fund, etc. in rental houses + Total amount of assets or funds invested in rental houses by a real estate fund, etc. through other real estate funds, etc.) ÷ Total amount of assets held in the real estate fund, etc.

(4) In the formula of paragraph (3), the total amount of assets or funds invested in rental houses by a real estate fund, etc. through other real estate funds, etc., shall be the aggregate of the amounts computed by the following formula for each of such real estate funds, etc.: <Newly Inserted on Feb. 7, 2017>

(Amount invested by the real estate fund, etc. in other real estate funds, etc. × Total amount of assets or funds invested in rental houses by other real estate funds, etc.) ÷ Total amount of assets held in other real estate funds, etc.

(5) Where a real estate fund, etc. issues collective investment securities defined in the former part of Article 87-6 (1) of the Act in excess of par value, the total par value referred to in that paragraph shall be deemed the total issue price. <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on Jun. 3, 2011]

Article 81-4(Management of Collective Investment Property of Publicly Offered Real Estate Funds) #

(1)"Cases prescribed by Presidential Decree" in Article 87-7 (1) 3 of the Act means where collective investment property is invested in short-term financial instruments falling under any of the subparagraphs of Article 241 (1) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act with a remaining maturity of one year or less (except cases where more than 10/100 of collective investment property is invested in such financial instruments).

(2) A person who wishes to be granted a special tax exemption pursuant to Article 87-7 (1) of the Act shall submit an application for the special tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance to the investment dealer or investment broker entrusted with the sale and purchase by the resident (if the collective investment securities of a publicly offered real estate fund are not deposited, it shall be a publicly offered real estate fund; hereafter in this Article, the same shall apply)

(3) The term "investment by converting it into collective investment securities of another publicly offered real estate fund, as prescribed by Presidential Decree" in Article 87-7 (4) 1 of the Act means a case where all of the following requirements are satisfied: <Newly Inserted on Feb. 29, 2024>

1. The ownership of collective investment securities of a publicly offered real estate fund previously invested in (hereafter referred to as "existing collective investment securities" in this paragraph) falling under any of the following items shall be transfered after an existing investment is made:

(a) Collective investment securities of a real estate fund under Article 87-7 (1) 1 of the Act: Provided, That collective investment securities listed on the securities market pursuant to Article 230 (3) of the Financial Investment Services and Capital Markets Act and collective investment securities of exchange-traded fund under Article 234 of the same Act shall be excluded.

(b) Collective investment securities of a collective investment scheme (excluding publicly offered real estate investment companies under Article 49-3 (1) of the Real Estate Investment Company Act) under Article 87-7 (1) 3 of the Act: Provided, That collective investment securities listed on the securities market pursuant to Article 230 (3) of the Financial Investment Services and Capital Markets Act and collective investment securities of exchange-traded fund under Article 234 of the same Act shall be excluded;

2. The entire amount received by transferring the ownership of the existing collective investment securities by the last day of the month following the month in which the day of transfer of the ownership of the existing collective investment securities falls, shall be invested to any of the collective investment securities of another publicly offered real estate collective investment scheme that falls under any item of subparagraph 1 (limited to cases where it is deposited in the same account as existing collective investment securities);

3. The sum of the investment periods of the existing collective investment securities and the collective investment securities under subparagraph 2 shall be at least 3 years;

(4) "Unavoidable circumstances prescribed by Presidential Decree" in Article 87-7 (4) 2 of the Act means reasons falling under any of the following items: <Amended on Feb. 17, 2021; Feb. 29, 2024>

1. The resident’ death or emigration to abroad;

2. Any of the following events that occurred within 6 months prior to the transfer of ownership:

(a) Natural disasters;

(b) The occurrence of an injury or disease requiring the resident's inpatient treatment or medical care for at least 3 months.;

(c) Suspension of business, revocation of business license or permit, resolution of dissolution or declaration of bankruptcy of an entity handling publicly offered real estate funds;

(d) Where a collective investment business entity terminates the relevant publicly offered real estate fund pursuant to subparagraph 3 or 4 of Article 223 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act;

(5) A resident who intends to transfer the ownership of collective securities of a publicly offered real estate fund due to unavoidable circumstances under any subparagraph of Article 87-7 (4) of the Act shall submit a report on the special reason for termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to an investment dealer or investment broker referred to in paragraph (2). <Amended on Feb. 17, 2021; Feb. 29, 2024>

(6) A person who wishes to be granted special treatment under Article 87-7 (5) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the competent tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 29, 2024>

[This Article Newly Inserted on Feb. 11, 2020]

Article 82-2(Requirements for Tax-Free Comprehensive Savings) #

(1)"Savings account prescribed by Presidential Decree" in the main sentence of Article 88-2 (1) of the Act, with exception of its subparagraphs, means a savings account that meets each of the following requirements (hereafter referred to as"tax-free comprehensive savings account" in this Article): <Amended on May 10, 2016>

1. The savings account (including an account for investment trust, insurance, mutual aid fund, securities savings, bond savings, etc.) shall be offered by any of the finance companies, etc. referred to in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article, referred to as"finance company, etc.") or any of the following associations or credit unions:

(a) The Military Personnel Mutual Aid Association established under the Military Personnel Mutual Aid Association Act;

(b) The Korea Teachers' Credit Union established under the Korean Teachers' Credit Union Act;

(d) The Police Mutual Aid Association established under the Police Mutual Aid Association Act;

(e) The Korea Fire Officials Credit Unit established under the Korea Fire Officials Credit Union Act;

(f) The Korea Scientists and Engineers Mutual-Aid Association established under the Korea Scientists and Engineers Mutual-Aid Association Act;

2. The holder of the savings account shall apply for non-taxation at the time he/she opens the account.

(2) The total amount of contracts on the tax-free comprehensive savings accounts opened at all finance companies, etc. and mutual aid associations and credit unions shall be deemed the principal of savings referred to in Article 88-2 (1) of the Act. In such cases, the interest, dividends, etc. generated from tax-free comprehensive savings accounts and transferred to the principal of such savings shall be deemed tax-free comprehensive savings, but shall be disregarded for the purpose of calculating the total amount of contracts.

(3) A partial withdrawal from a tax-free comprehensive savings account shall be deemed a withdrawal from the principal of the savings account. <Newly Inserted on Feb. 5, 2016>

(4) Every finance company, etc. and mutual aid association and credit unit that handles tax-free comprehensive savings accounts shall mark"tax-free comprehensive savings" on the covers and inner sheets of tax-free comprehensive savings bankbooks or transaction cards used only for depositing and withdrawing tax-free comprehensive savings or statements of transactions. <Amended on Feb. 5, 2016>

(5) Article 88-2 (1) of the Act shall not apply to any interest income, dividend income, and financial investment income generated from tax-free comprehensive savings accounts upon the expiration of the contract term. <Amended on Feb. 5, 2016; Feb. 15, 2022>

(6) A person who wishes to be granted special treatment under Article 88-2 (2) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

(7) Deleted. <Feb. 17, 2021>

(8) Deleted. <Feb. 17, 2021>

Article 82-4(Special Taxation for Members of Employee Stock Ownership Associations) #

(1) The definitions of terms used in this Article shall be as follows: <Amended on Feb. 19, 2005; Feb. 28, 2007; Feb. 4, 2009; Feb. 18, 2010; Dec. 7, 2010; Feb. 17, 2021>

1. The term"current price" means the value of stocks computed by applying mutatis mutandisArticle 63 (1) and (2) of the Inheritance Tax and Gift Tax Act. In such cases,"respective two months before and after the assessment standard date" in Article 63 (1) 1 (a) of that Act shall be deemed"one month before the assessment standard date";

2. The term"purchase value, etc." means the actual transaction price required for an employee stock ownership association to acquire the relevant treasury stocks [in cases of treasury stocks contributed by the relevant corporation or its stockholders (excluding the minor stockholders referred to in Article 27 (7) of the Enforcement Decree of the Income Tax Act), or acquired by the price smaller than 70/100 of current prices, the value equivalent to 70/100 of the current price as of the date of contribution or acquisition];

3. The term"taxable stocks" means those excluding treasury stocks falling under each subparagraph of Article 88-4 (5) of the Act from treasury stocks distributed to the members of an employee stock ownership association;

4. The terms"employee stock ownership association" and"members of an employee stock ownership association" mean an employee stock ownership association and the members of an employee stock ownership association established under the Framework Act on Labor Welfare;

5. The term"securities finance company" means any securities finance company established under the Financial Investment Services and Capital Markets Act;

6. The term"gross wage and salary income" means the gross wage and salary income prescribed under Article 20 (2) of the Income Tax Act which is paid by the relevant corporation.

(2)"Limits set by Presidential Decree" in Article 88-4 (4) of the Act means the amount equivalent to 20/100 of the annual gross wage and salary income of a member of an employee stock ownership association for the immediately preceding year (five million won if such amount does not exceed five million won) based on the purchase value, etc. of treasury stocks. <Amended on Feb. 28, 2007; Feb. 18, 2010>

(3) In applying Article 88-4 (4) of the Act, the purchase value, etc. of treasury stocks distributed in excess of the limits computed under paragraph (2) shall be deemed the earned incomes of a member of an employee stock ownership association. <Amended on Feb. 28, 2007>

(4)"Amount calculated as prescribed by Presidential Decree" in Article 88-4 (5) of the Act means the purchase value, etc. of taxable withdrawn stocks under that paragraph or the current price as of the date of withdrawing relevant stocks (0 won if the relevant corporation is declared bankrupt), whichever is smaller. <Amended on Feb. 28, 2007; Feb. 18, 2010>

(5) In calculating the number and holding period of the taxable withdrawn stocks under Article 88-4 (5) and (6) of the Act, the treasury stocks first distributed to the members of an employee stock ownership association (in cases of concurrently distributed treasury stocks, treasury stocks other than the taxable stocks) shall be deemed first withdrawn. <Amended on Feb. 28, 2007>

(6) Deleted. <Feb. 28, 2007>

(7) The following shall apply where the treasury stocks deposited to the account of each member of an employee stock ownership association at the securities finance company (hereafter referred to as"old stocks" in this paragraph) are switched to new stocks (hereafter referred to as"new stocks" in this paragraph) due to a merger or division (including a merger by division; hereafter in this paragraph, the same shall apply): <Amended on Feb. 28, 2007>

1. The switch of old stocks to new stocks due to a merger or division shall not be deemed a withdrawal under Article 88-4 (5) of the Act;

2. Where money, etc., other than new stocks, is given in return for old stocks as the price for a merger or division (hereafter referred to as"money, etc." in this paragraph,), the amount calculated by the following formula shall be deemed the withdrawn amount under Article 88-4 (6) of the Act:

Total amount of money, etc. × (number of taxable stocks out of the old stocks ÷ total number of old stocks)

3. None of the following amounts shall be deemed the withdrawn amount under Article 88-4 (5) and (6) of the Act, notwithstanding the provisions of subparagraph 2:

(a) Where the money, etc. is given only to an odd-lot stock less than one stock, the relevant money, etc.;

(b) Where the total amount of the money, etc. given in return for old stocks for the price of a merger or division exceeds the purchase value, etc. of the old stocks, the relevant excess amount;

4. The purchase value, etc. per share of the new stocks shall be the amount computed by dividing the purchase value, etc. of old stocks (total amount of money, etc. other than money, etc. referred to in subparagraph 3 shall be deducted) by the number of new stocks;

5. In applying the latter part of Article 88-4 (6) of the Act, the holding period of new stocks shall be the period from the date immediately after the end of the period during which old stocks equivalent to new stocks shall be deposited compulsorily, to the date of withdrawing the relevant new stocks;

6. The stocks taxable at the time of withdrawal among new stocks (hereafter referred to as"taxable new stocks" in this subparagraph,) shall be those equivalent to taxable old stocks, and the number of taxable new stocks shall be computed by the following formula. In such cases, the stock less than one among the computed taxable new stocks shall be deemed non-existent:

Number of new stocks × (number of taxable stocks among old stocks ÷ total number of old stocks)

(8) Where any member of an employee stock ownership association transfers the treasury stocks on which the income tax has been imposed under Article 88-4 (3) through (6), and (8) of the Act, the purchase value, etc. of such treasury stocks shall be the acquisition value under Article 97 (1) 1 of the Income Tax Act. <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 28, 2007>

(9)"Price prescribed by Presidential Decree" in Article 88-4 (8) 2 of the Act means the price equivalent to 70/100 of the current price as of the date of acquisition of the treasury stocks: Provided, That where a member of an employee stock ownership association, being a minority stockholder prescribed under Article 27 (7) of the Enforcement Decree of the Income Tax Act, is preferentially allocated treasury stocks under Article 38 of the Framework Act on Labor Welfare, such price shall be the value equivalent to 70/100 of the current price as of the date of acquisition of the treasury stocks or the face value, whichever is smaller. <Newly Inserted on Dec. 30, 2002; Feb. 19, 2005; Feb. 28, 2007; Feb. 18, 2010; Dec. 7, 2010; Feb. 17, 2021>

(10) An employee stock ownership association shall spend contributions by its members to acquire treasury stocks by classifying such contributions into the amount eligible for income deductions under Article 88-4 (1) of the Act and the amount ineligible for income deductions, and shall enter in the books the details of contributions to acquire treasury stocks by its member, and the details of distribution of treasury stocks or of withdrawing them, and where the treasury stocks are deposited in the securities finance company, the following shall be notified to such securities finance company: <Amended on Feb. 15, 2022>

1. Purchase value, etc. of the treasury stocks to be distributed to the members of the employee stock ownership association;

2. Whether the treasury stocks to be distributed to the members of the employee stock ownership association are the taxable stocks (an odd-lot stock less than one share shall be deemed nil).

(11) If there is a discrepancy between the details of treasury stocks notified by the employee stock ownership association as taxable pursuant to Paragraph (10) 2 and the details of actual income deductions received by members of the employee stock ownership association for such treasury stocks at year-end settlement, the employee stock ownership association shall immediately reflect the details and notify the securities financial company again of whether there are taxable stocks (an odd-lot stock shall be deemed nil). <Amended on Feb. 15, 2022>

(12) When any member of an employee stock ownership association withdraws the treasury stocks deposited in the securities finance company, the employee stock ownership association shall submit a statement of stock withdrawal issued by the aforementioned company to the relevant corporation.

(13) Any corporation referred to in Article 88-4 (3) and (4) of the Act shall submit a statement of withdrawal of employee stocks and of taxation thereon in the forms stipulated by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over tax withholding by the end of February of the year following the year in which the date of withdrawing the relevant treasury stocks falls (in the case of suspension or closure of business, the end of the month next to the month after that in which the date of suspension or closure falls). <Amended on Feb. 28, 2007; Feb. 29, 2008>

(14) In applying Article 88-4 (9) of the Act, the stocks provisionally distributed to the individual account of a member under Article 2 of the Addenda (Presidential Decree No. 19074) to the Enforcement Decree of the Framework Act on Labor Welfare shall be deemed employee stocks deposited in a securities finance company after the member of an employee stock ownership association acquires them through the association. <Newly Inserted on Feb. 28, 2007>

(15) Where the withholding agent intends to impose no tax on the dividend income of the member of an employee stock ownership association or refunds the withheld tax under Article 88-4 (9) and (10) of the Act, he/she shall submit a statement of non-taxation on the dividend of the employee stock ownership association and of refund of withheld tax in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over tax withholding by the end of February of the year following the business year in which the date of non-taxation or refund falls. <Amended on Dec. 30, 2002; Feb. 28, 2007; Feb. 29, 2008; Feb. 12, 2019>

(16) Any member of an employee stock ownership association who seeks the benefit of non-taxation on dividend income under Article 88-4 (9) of the Act shall submit a certificate for stock deposits issued by a securities finance company to the withholding agent. <Amended on Dec. 30, 2002; Feb. 28, 2007>

(17)"Minority stockholders prescribed by Presidential Decree" in Article 88-4 (9) 2 of the Act means minority stockholders prescribed in Article 27 (7) of the Enforcement Decree of the Income Tax Act. <Newly Inserted on Feb. 15, 2013; Feb. 17, 2021>

[This Article Wholly Amended on Dec. 31, 2001]

Article 83(Special Cases for Withholding on Tax-Favored Comprehensive Savings) #

(1)"Savings in bonds prescribed by Presidential Decree" in Article 89 (1) 1 of the Act means the savings satisfying each of the following requirements: <Amended on Dec. 31, 2001; Feb. 19, 2005; Feb. 18, 2010; Jun. 25, 2019>

1. Bonds or securities prescribed in Article 46 (1) of the Income Tax Act (hereafter referred to as"bonds, etc." in this paragraph), the redemption period of which is at least one year, shall be continuously held or deposited for at least one year after opening an account at any financial institution referred to in any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality and completing electronic registration (referring to the electronic registration under subparagraph 2 of Article 2 of the Act on Electronic Registration of Stocks and Bonds);

2. They shall not be the bonds, etc. acquired from a financial institution under repurchase or resale terms by applying the pre-agreed interest rate depending on the repurchase period;

3. Such bonds, etc. shall not be withdrawn from their accounts. If such bonds, etc. are withdrawn, the tax-favored comprehensive savings for the relevant bonds, etc. shall be deemed terminated from the date of withdrawal.

(2) Deleted. <Feb. 28, 2007>

(3) Deleted; <Dec. 31, 2001>

(4)"Unavoidable reasons prescribed by Presidential Decree" in Article 89 (7) of the Act means an account holder’s death or emigration to a foreign country, or any of the reasons prescribed under subparagraphs of Article 81 (6) which occur within six months from termination. <Amended on Feb. 9, 2006; Feb. 18, 2010; Feb. 15, 2013>

(5) In cases of installment savings, the calculation of the total contract amount of a tax-favored comprehensive savings account shall be based on the amount that the account holder has agreed to deposit. <Amended on Feb. 3, 2015>

(6) In cases of investment trusts, the calculation of the total contract amount of an investment trust shall be based on its beneficiary. <Amended on Dec. 30, 2003>

(7) Financial institutions shall deal in the tax-favored comprehensive savings using the passbook for the tax-favored comprehensive savings, through which only the tax-favored comprehensive savings deposited or withdrawn and the words"passbook for tax-favored comprehensive savings" shall be marked on the cover of each passbook for tax-favored comprehensive savings.

(8) Financial institutions shall indicate the limit of the contract amount, inquiries, and other matters necessary for the tax-favored comprehensive savings in the terms and conditions of the tax-favored comprehensive savings.

(9) A merger of investment trusts under Article 193 of the Financial Investment Services and Capital Markets Act and a merger of investment companies under Article 204 of that Act shall not be deemed the termination of the tax-favored savings for the purposes of Article 89 of the Act. <Newly Inserted on Feb. 9, 2006; Feb. 4, 2009>

(10) Anyone who intends to terminate his/her tax-favored saving account upon the occurrence of the grounds referred to in paragraph (4) shall submit a report on the grounds for special termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the relevant financial institution. <Newly Inserted on Feb. 9, 2006; Feb. 29, 2008>

(11) Article 89 (1) of the Act shall not apply to the interest income, dividend income, and financial investment income accruing after expiration of the contract period of tax-favored comprehensive savings. <Newly Inserted on Feb. 22, 2008; Feb. 4, 2009; Feb. 15, 2022>

(12) A person who wishes to be granted special treatment under Article 89 (2) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

[This Article Wholly Amended on Jan. 10, 2000]

Article 92-11(Special Taxation on Investment Trusts for Exclusive Use of Overseas Koreans) #

(1)"Overseas Korean prescribed by Presidential Decree" in Article 91-12 (1) of the Act means a non-resident having no domestic place of business under Article 120 of the Income Tax Act, who is either of the following:

1. A Korean national residing abroad under subparagraph 1 of Article 2 of the Act on the Immigration and Legal Status of Oversea Koreans. In such cases, if he/she is an emigrant overseas defined under Article 2 of the Emigration Act referred to in Article 2 (2) of the Enforcement Decree of the Act on the Immigration and Legal Status of Oversea Koreans, who has not obtained permanent residency from the residing country, it shall refer only to the persons who has been residing in a foreign country for at least two years;

2. A Korean having foreign nationality under subparagraph 2 of Article 2 of the Act on the Immigration and Legal Status of Oversea Koreans.

(2)"Investment trusts and investment companies for exclusive use of overseas Koreans prescribed by Presidential Decree" (hereafter referred to as"investment trust, etc. for exclusive use of overseas Koreans" in this Article) in Article 91-12 (1) of the Act means those meeting each of the following requirements:

1. All members shall be eligible under paragraph (1) 1 or 2;

2. The investment trust, etc. for exclusive use of overseas Koreans shall be a collective investment scheme under Article 9 (18) 1 or 2 of the Financial Investment Services and Capital Markets Act;

3. Investment shall be made only in domestic assets. In such cases, other collective investment schemes in which the investment trust, etc. for exclusive use of overseas Koreans invests shall invest in domestic assets only.

(3)"Inevitable causes prescribed by Presidential Decree" in the proviso of Article 91-12 (2) of the Act, with the exception of its subparagraphs, means any of the following:

1. Suspension of business, revocation of authorization or a license for business, resolution of dissolution, or declaration of bankruptcy of the institution handling an investment trust, etc. for exclusive use of overseas Koreans;

2. Where a collective investment business operator under subparagraph 3 of Article 223 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act terminates an investment trust, etc. for exclusive use of overseas Koreans.

(4) Any person who intends to repurchase or transfer securities upon the occurrence of unavoidable causes under the proviso of Article 91-12 (2) of the Act, with the exception of its subparagraphs, shall submit a report on the grounds for special termination prescribed by Ordinance of the Ministry of Economy and Finance to the institution handling an investment trust, etc. for exclusive use of overseas Koreans.

(5) A person who intends to open an account for an investment trust, etc. for exclusive use of overseas Koreans shall submit the following documents certifying that he/she is an overseas Korean, to an institution handling the investment trust, etc. for exclusive use of overseas Koreans: <Amended on Dec. 30, 2009; Sep. 18, 2018>

1. Cases falling under paragraph (1) 1: A certified copy of a register of Korean national residing abroad under Article 7 (1) of the Registration of Overseas Korean Nationals Act or a copy of a permanent residency passport under Article 6 (4) of the Enforcement Decree of the Passport Act;

2. Cases falling under paragraph (1) 2: Each documents listed in following items: Provided, That if the person is entitled to stay as an overseas Korean (F-4) under subparagraph 26 of the attached Table 1-2 of Enforcement Decree of the Immigration Act, he/she may submit a copy of visa in which such entitlement to stay is indicated, in lieu of the following documents:

(a) A person who had Korean nationality and has acquired a foreign citizenship: A certificate concerning family relationship record or a family census removal registration, documents proving reason why a citizenship of a foreign country is acquired and date or a copy of passport of the residing country;

(b) A person who has acquired a citizenship of a foreign country as a person one of whose parents or one of whose grandparents retained the citizenship of ROK: A certificate concerning family relationship record or a family census removal registration, documents proving reason why a citizenship of a foreign country is acquired and date or a copy of passport of the residing country, documents proving that a person is in relationship of lineal ascendant/descendant, such as birth certificate, etc.

(6) Any person who has opened an account for an investment trust, etc. for exclusive use of overseas Koreans and intends to be accorded special treatment under Article 91-12 (1) of the Act shall submit documents certifying that he/she is a non-resident, as prescribed by the Commissioner of the National Tax Service.

[This Article Newly Inserted on Jun. 19, 2009]

Article 92-13(Non-Taxation on Asset-Building Savings) #

(1) A resident who intends to open an asset-building savings account shall obtain a certificate of verification of income issued by the head of a tax office, in the form prescribed by Ordinance of the Ministry of Economy and Finance, and submit it to the institution handling savings accounts. In such cases, a resident who meets the requirements of Article 91-14 (3) 1 (c) of the Act shall also submit a certificate of verification of eligibility for opening an asset-building savings account for youths that indicates his/her final education background, employment at a small or medium enterprise, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 21, 2014; Feb. 3, 2015>

(2) The Commissioner of the National Tax Service shall examine whether the holder of an asset-building savings account meets the requirements of Article 91-14 (1) 1 or (3) 1 of the Act and notify the relevant institution handling savings accounts of the findings thereof by the end of February of the year following the year in which the account holder opens the account (or the year in which a decision or correction is made, if any decision or correction is made with respect to the account holder under Article 80 of the Income Tax Act). <Amended on Feb. 3, 2015>

(3) Where the holder of an asset-building savings account objects to the matters notified by the Commissioner of the National Tax Service to the institution handling savings accounts pursuant to paragraph (2), he/she may present his/her opinion to the Commissioner of the National Tax Service, as prescribed by Ordinance of the Ministry of Economy and Finance, who shall notify the institution handling savings accounts of whether he/she accepts such opinion within 14 days after receipt of such opinion.

(4) The installment savings account referred to in Article 91-14 (1) 2 of the Act includes a savings account opened in the feeder fund established or created under Article 233 of the Financial Investment Services and Capital Markets Act.

(5)"Any other ground prescribed by Presidential Decree" in the proviso to Article 91-14 (3) of the Act means any of the grounds provided for in the subparagraph of Article 81 (6) which has occurred within six months from termination, and a person who intends to terminate his/her asset-building savings account upon the occurrence of the ground prescribed in the proviso to Article 91-14 (3) of the Act shall submit a report on the grounds for special termination prescribed by Ordinance of the Ministry of Economy and Finance to the institution handling savings accounts.

(6)"Enterprise prescribed by Presidential Decree" in Article 91-14 (3) 1 (c) of the Act means an enterprise defined under Article 27 (3), and"youth prescribed by Presidential Decree" in Article 91-14 (3) 1 (c) of the Act means a resident who has graduated from a high school or a lower school as at the date of opening an asset-building savings account and falls between the ages of 15 and 29 years [including any person who is 29 years of age or under, as calculated by subtracting the period of military service (six years maximum) from his/her age at the time of opening the asset-building savings account, if he has performed any military service specified in the items of Article 27 (1) 1]. <Newly Inserted on Feb. 3, 2015>

(7) An institution handling savings accounts shall deal in the asset-building savings using the asset-building savings passbook through which only the asset-building savings are deposited or withdrawn, and the words"asset-building savings passbook" shall be marked on the cover of each asset-building savings passbook. <Amended on Feb. 3, 2015>

(8) An institution handling savings accounts shall indicate the limit of the contract amount of the asset-building savings, inquires, and other necessary matters in the terms and conditions of the asset-building savings. <Amended on Feb. 3, 2015>

(9) Article 91-14 (1) of the Act shall not apply to the interest income, dividend income, and financial investment income generated on or after the expiration date of the contract term of the asset-building savings (where the expiration date is extended pursuant to Article 91-14 (2) of the Act, on or after such extended expiration date). <Amended on Feb. 3, 2015; Feb. 15, 2022>

(10) A person who wishes to be granted special treatment under Article91-14 (4) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

[This Article Newly Inserted on Feb. 15, 2013]

Article 93(Special Taxation for High-Yield, High-Risk Bond Investment Trusts) #

(1)"Investment trust, etc. prescribed by Presidential Decree, the portfolio of which includes at least a certain ratio of the bonds prescribed by Presidential" in Article 91-15 (1) of the Act means a collective investment scheme, discretionary investment property, or specified money trust created under the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as"investment trust, etc.") which meets each of the following requirements that:

1. The following requirements shall be met:

(a) In cases of an investment trust, etc. that are publicly offered collective investment schemes (referring to those that are not private equity funds under Article 9 (19) of the Financial Investment Services and Capital Markets Act, among collective investment schemes under Article 9 (18) of that Act): The average holding ratio of bonds with a credit rating (referring to the lower of the credit ratings assessed by two or more persons authorized for credit rating business pursuant to Article335-3 of the Financial Investment Services and Capital Markets Act; hereafter in this Article, the same shall apply) of BBB+ or lower (or A3+ or lower, in cases of bonds falling under short-term bonds, etc. under Article 59 of the Act on Electronic Registration of Stocks and Bonds (hereafter in this Article referred to as"short-term bonds"), among bonds under subparagraph 1 (b) of Article 2 of that Act) shall be at least 45/100; and the average holding ratio of debentures, including such bonds, shall be at least 60/100;

(b) In cases of an investment trusts etc. other than publicly offered collective investment schemes: The average holding ratio of bonds with a credit rating of A+, A or A- (or A2+, A2 or A2- in cases of short-term bonds) shall be at least 15/100; and the average holding ratio of bonds with a credit rating of not higher than BBB+ (or not higher than A3+ in cases of short-term bonds) shall be least 45/100;

2. The investment trusts, etc. shall invest only in assets in the Republic of Korea.

(2) For the purpose of calculating the average holding ratio pursuant to paragraph (1) 1 (a) and (b), the credit rating of bonds shall be determined as at the date the bonds are included in an investment trust, etc.: Provided, That if the relevant bonds were not rated A+ or lower (or A2+ or lower in cases of short-term bonds) at the time of inclusion in the investment trust, etc. but become bonds with a credit rating of A+ or lower (hereafter in this Article referred to as"high-risk high-yield bonds") after inclusion in the investment trust, etc., the average holding ratio shall be calculated based on the credit rating as at the day the bonds become high-risk high-yield bonds.

(3) The average holding ratio under paragraph (1) 1 (a) and (b) shall be the ratio calculated by aggregating the daily ratio on each day of the assessed value of the relevant bonds to the assessed value of the investment trust, etc. (hereafter in this Article referred to as"daily holding ratio") for three months and then dividing the aggregate by the total number of days in the three-month period; and the ratio shall be calculated at the end of each quarter.

(4) In any of the following cases, the daily holding ratio of the relevant bonds shall be deemed the ratio specified in the corresponding subparagraph for the purpose of calculating the daily holding ratio on a day when the assessed value of an investment trust, etc. is less than the principal of an investment amount:

1. Where the daily holding ratio of bonds with a credit rating of BBB+ or lower (or A3+ or lower in cases of short-term bonds) in cases of an investment trust, etc. that are publicly offered collective investment schemes is less than 45/100: 45/100;

2. Where the daily holding ratio of bonds, including the bonds referred to in subparagraph 1 in cases of an investment trust, etc. that are publicly offered collective investment schemes is less than 60/100: 60/100;

3. Where the daily holding ratio of bonds with a credit rating of A+, A, or A- (or A2+, A2 또는 A2- in cases of short-term bonds) in cases of an investment trust, etc. that are not publicly offered collective investment schemes is less than 15/100: 15/100;

4. Where the daily holding ratio of bonds, including the bonds with a credit rating of BBB+ or lower (or A3+ in cases short-term bonds) in cases of an investment trust, etc. that are not publicly offered collective investment schemes is less than 45/100: 45/100;

(5) Notwithstanding paragraph (3), an investment trust, etc. shall be deemed to meet the requirement of paragraph (1) 1 in a quarter in which the date of creation, the date of incorporation, or the maturity date of the investment trust, etc. falls; and the average holding ratio for a quarter that includes a part of the period of three months from the date of creation, the date of incorporation, or the date of maturity or a part of the period of three months retroactively from the date of maturity shall be calculated by aggregating the daily holding ratios for the remaining period except such included period and then dividing the aggregate by the total number of days in such remaining period.

(6) If an accounting period of an investment trust includes a quarter that does not meet the requirement of paragraph (1) 1 or a day that does not meet the requirement of paragraph (1) 2, the interest income and dividend income accruing during the accounting period shall be excluded from the income eligible for the special tax exemption under Article 91-15 (1) of the Act.

(7)"Unavoidable circumstances prescribed by Presidential Decree, such as where the account holder’s death or emigration to abroad" in the proviso of Article 91-15 (4) of the Act means any of the following:

1. The resident’ death or emigration to abroad;

2. Any of the following events that occur within six months before the termination or resale of an account in a high-yield, high-risk bond investment trust under Article 91-15 (1) of the Act or the transfer of the right therein:

(a) Natural disasters;

(b) The account holder’s retirement;

(d) The occurrence of an injury or disease requiring the account holder's inpatient treatment or medical care for at least three months;

(e) The suspension of business, the revocation of a business license or permit, the resolution of dissolution, or the declaration of bankruptcy of the institution handing the high-yield, high-risk bond investment trust under Article 91-15 (1) of the Act.

(8) A person who intends to terminate or resell an account in a high-risk high-yield bond investment trust under Article 91-15 (1) of the Act or transfer the right therein due to the occurrence of an event referred to in paragraph (7) shall submit a report on the special reason for termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the institution handling the high-risk high-yield bond investment trust.

[This Article Wholly Amended on Jun. 7, 2023]

Article 93-2(Income Deductions for Long-Term Collective Investment Securities Savings) #

(1) A person who intends to open an account of the long-term collective investment securities savings under Article 91-16 (1) of the Act shall be issued a certificate of income verification in the form prescribed by Ordinance of the Ministry of Economy and Finance by the head of a tax office, and submit it to an institution dealing in such savings.

(2) The Commissioner of the National Tax Service shall examine whether an account holder of the long-term collective investment securities savings meets the requirements prescribed in Article 91-16 (1) 1 of the Act, and notify the relevant institution dealing in the relevant savings of the results thereof by the end of February of the year following the year in which the account is opened (where any determination or correction is made against the account holder under Article 80 of the Income Tax Act, by the end of February of the year following the relevant year in which such determination or correction is made).

(3) Where an account holder of the long-term collective investment securities savings objects to the matters notified by the Commissioner of the National Tax Service to the institution dealing in the savings pursuant to paragraph (2), he/she may present his/her opinion to the Commissioner of the National Tax Service, as prescribed by Ordinance of the Ministry of Economy and Finance, who shall notify the institution dealing in the savings of whether or not he/she accepts such opinion within 14 days after receipt of such opinion.

(4) At least 40/100 of its total amount of assets referred to in Article 91-16 (1) 2 of the Act means where the daily holding ratio of stocks issued and traded in Korea (limited to the stocks listed on a securities market under the Financial Investment Services and Capital Markets Act) since the date of creation or establishment of the long-term collective investment securities savings is at least 40/100 of the total amount of assets.

(5) For the purpose of Article 91-16 (1) 2 of the Act, the requirement for holding at least 40/100 of the total assets (hereafter referred to as"minimum holding requirement" in this Article) shall not apply in any of the following cases. In such cases, in cases falling under subparagraph 4 or 5, the minimum holding requirement shall be met within 15 days from the date on which the long-term collective investment securities savings fail to meet such requirement:

1. For one month from the date the long-term collective investment securities savings were first established or created;

2. For one month from the end of the fiscal year of the long-term collective investment securities savings (limited to where a fiscal period is at least three months);

3. For one month from the date of dissolution or cancellation of the long-term collective investment securities savings (limited to where the period from the date of the first establishment or creation to the date of dissolution or cancellation is at least three months);

4. Where additional creation or requests for cancellation for three business days has respectively accumulated in excess of 10/100 of the total asset of the long-term collective investment securities savings;

5. Where the long-term collective investment securities savings fail to meet the minimum holding requirement due to changes in the price of its assets.

(6) Where long-term collective investment securities savings are established or created as a feeder fund under Article 233 of the Financial Investment Services and Capital Markets Act, indirect acquisition of stocks referred to in Article 91-16 (1) 2 of the Act by investing in a master fund shall be deemed investment in stocks for the purpose of calculating the holding ratio.

(7) Where long-term collective investment securities savings have been established or created as an umbrella fund under Article 232 of the Financial Investment Services and Capital Markets Act, and an account holder thereof switches them with other collective investment securities under the collective investment agreement, he/she shall not be deemed to have withdrawn or terminated such savings under Article 91-16 (1) 3 of the Act or Article 91-16 (4) of the Act.

(8)"Account holder’s death, or emigration to a foreign country, or unavoidable circumstances prescribed by Presidential Decree" in the proviso to Article 91-16 (5) of the Act means any of the following:

1. Account holder’s death or emigration to a foreign country;

2. Any of the following causes that occurs six months before termination:

(a) Natural disasters;

(b) Account holder’s retirement;

(d) Any injury or disease that requires the account holder to be hospitalized for medical treatment or recuperation for at least three months;

(e) Suspension of business, revocation of authorization or permission for business, resolution of dissolution, or declaration of bankruptcy of the savings institution;

(f) Where the collective investment business operator terminates the relevant collective investment scheme because the principal of the collective investment scheme is less than five billion on the first anniversary of the date of first establishment or creation thereof, or because the principal of the collective investment scheme is less than five billion won for one month running from the first anniversary of the date of first establishment or creation thereof.

(9) A person who intends to terminate his/her savings contract due to any of the causes specified in paragraph (8) shall submit a report on the ground for special termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the institution dealing in savings.

(10) Every institution dealing in the savings shall deal in the long-term collective investment savings using the passbooks for the long-term collective investment savings, through which only the long-term collective investment savings are deposited or withdrawn, and the words"long-term collective investment savings eligible for income deductions" shall be marked on the cover of each passbook for the long-term collective investment savings passbook.

(11) An institution dealing in savings shall indicate the limit of the contract amount of long-term collective investment savings, inquiries, and other necessary matters in the terms and conditions of the long-term collective investment savings.

[This Article Newly Inserted on Feb. 21, 2014]

Article 93-3(Special Taxation for Collective Investment Schemes Only for Investment in Foreign Stocks) #

(1)"Account prescribed by Presidential Decree for collective investment securities savings only for investment in foreign stocks" in Article 91-17 (1) 1 of the Act means an account of a savings product that meets both of the following requirements (hereafter referred to as"exclusive savings product" in this Article):

1. The savings product shall be provided by a financial institution specified in any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, and transactions of the savings product shall be made by a passbook bearing an indication that it is for collective investment securities savings only for investment in foreign stocks;

2. The savings product shall be only for investments in collective investment securities of a collective investment scheme only for investments in foreign stocks referred to in Article 91-17 (1) of the Act (hereafter referred to as"exclusive collective investment scheme" in this Article), and the contract term of the savings product shall not exceed ten years.

(2)"Stocks listed on a foreign exchange" in the main sentence of Article 91-17 (1) of the Act, with the exception of its subparagraphs, means stocks that meet both of the following requirements:

1. Such stocks shall have been issued by a foreign corporation established pursuant to the statutes or regulations of a foreign country: Provided, That stocks of a corporation established for the purpose of collective investment shall be excluded herefrom;

2. Such stocks shall have been listed on a market in a foreign country defined under subparagraph 1 of Article 2 of the Securities Transaction Tax Act (hereafter referred to as"foreign stock exchange" in this Article).

(3) Notwithstanding paragraph (2), depository receipts that meet both of the following requirements shall be deemed stocks that meet both of the requirements provided for in paragraph (2):

1. Depository receipts shall have been issued based on individual stocks that meet both of the requirements of paragraph (2);

2. Depository receipts shall have been listed on a foreign stock exchange.

(4) An exclusive collective investment scheme shall ensure that the holding ratio of stocks listed on a foreign stock exchange under paragraphs (2) and (3) (referring to the aggregate of the ratio of direct investments by the exclusive collective investment scheme in stocks listed on a foreign stock exchange and the ratio of investments in stocks listed on a foreign stock exchange via other collective investment schemes that directly invest in stocks listed on a foreign exchange; hereafter referred to as"holding ratio" in this Article) is at least 60/100 of daily total assets in making investments (hereafter referred to as"duty to maintain minimum holding" in this Article): Provided, That, even where the holding ratio is less than 60/100 during any of the following periods, the holding ratio shall be deemed at least 60/100:

1. One month from the date of initial creation or establishment of the exclusive collective investment scheme;

2. One month before the end of the accounting period of the exclusive collective investment scheme (limited to where the accounting period is not less than three months);

3. One month before the date of dissolution or termination of the exclusive collective investment scheme (limited to where the period from the date of initial establishment or creation to the date of dissolution or termination is not less than three months);

4. One month from the day on which the accumulated amount of additional establishment or the accumulated amount of claims for termination for three business days exceeds 10/100 of the total assets of the exclusive collective investment scheme, respectively, and consequently the exclusive collective investment scheme breaches the duty to maintain minimum holding;

5. One month from the day on which the exclusive collective investment scheme breaches the duty to maintain minimum holding due to fluctuation of prices of assets in which it has made investments.

(5)"Sum of the amounts deposited in the accounts . . . <omitted> . . . for collective investment securities savings only for investment in foreign stocks" in Article 91-17 (1) 2 of the Act means the aggregate of the principal in each exclusive savings account (referred to the maximum limit, if such maximum limit is set for the principal that may be deposited in each exclusive savings account), which shall be calculated as follows:

1. By the investment period specified in Article 91-17 (1) of the Act (hereafter referred to as"investment period" in this Article): Where some or all of the collective investment securities held in each exclusive savings account are redeemed and re-invested in collective investment securities without being withdrawn from the exclusive account, the re-invested amount shall not be added to the principal of the exclusive savings account, while an amount partially withdrawn from the exclusive savings account shall be deemed to be withdrawn from the principal of the relevant savings account;

2. After the lapse of the investment period: Where some or all of the collective investment securities held in each exclusive savings account are redeemed and re-invested in collective investment securities of an exclusive collective investment scheme (referring to the collective investment securities held in the savings account as invested during the investment period), the re-invested amount shall be added to the principal of the exclusive savings account, while an amount partially withdrawn from the exclusive savings account shall be deemed to be not withdrawn from the relevant savings account;

3. For the purposes of subparagraphs 1 and 2, where gains from an exclusive collective investment scheme are re-invested under Article 242 of the Financial Investment Services and Capital Markets Act, such gains shall not be added to the principal of the exclusive savings account.

(6) Where an additional investment is made in collective investment securities of an exclusive collective investment scheme, which have been held as invested during the investment period, such additional investment shall be deemed an investment under Article 91-17 (1) of the Act.

(7) Deleted. <Feb. 15, 2022>

(8) The holder of an exclusive savings account shall redeem collective investment securities of an exclusive collective investment scheme, which he/she holds in the exclusive savings account, by no later than the end of the contract term for the exclusive savings account.

(9) A person who wishes to be granted special treatment under Article 91-17 (2) of the Act shall submit an application for aggregate taxation of financial investment income, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the deadline for filing the final tax return on the tax base of financial investment income pursuant to Article 87-23 of the Income Tax Act. <Newly Inserted on Feb. 15, 2022>

(10) The scope of stocks listed on foreign stock exchanges, operation of exclusive savings accounts, and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on, Feb. 5, 2016]

Article 93-4(Special Taxation for Individual Savings Accounts) #

(1) A person who intends to open an individual savings account pursuant to the provisions, with the exception of the subparagraphs, of Article 91-18 (1) of the Act (hereafter in this Article referred to as"individual savings account") or extend a contract period shall submit the following documents to the trust business entity, etc. under paragraph (6) of that Article (hereafter in this Article referred to as"trust business entity, etc."): <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

1. In cases of Article 91-18 (1) 2 or (2) 1 of the Act: An income certificate issued by the head of the competent tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That if it is impracticable to ascertain with the income certificate whether the resident meets the requirement because such resident’s business income or earned income first accrueㅇ during the relevant taxable period immediately preceding the taxable period in which the account was opened or the contract period was extended, the person may submit a certificate of payment of business income or earned income, a business registration certificate, or a withholding tax receipt in lieu of the income certificate;

2. In cases of a farmer or fisher under Article 91-18 (2) 1 (c) of the Act: Any of the following documents:

(a) A certificate of farmer issued by the head of the relevant regional branch or office of the National Agricultural Products Quality Management Service;

(b) A certificate of fisher issued by the administrator of the relevant Regional Office of Oceans and Fisheries or the head of the Jeju Oceans and Fisheries Management Division;

(c) A certificate of registration of an agricultural business entity issued by the head of the National Agricultural Products Quality Management Service or a certificate of registration of a fishery business entity issued by the administrator of the relevant Regional Office of Oceans and Fisheries (limited to a farmer or a fisher who is the proprietor of an agricultural or fishery business entity whose information about management of agriculture or fishery is registered under Article 4 (1) of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities).

(2)"Farmers and fishermen prescribed by Presidential Decree" in Article 91-18 (2) 1 (c) of the Act means a farmer under subparagraph 2 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry or a fisher under subparagraph 3 of Article 3 of the Framework Act on Fisheries and Fishing Villages Development. <Amended on Feb. 17, 2021>

(3) The Commissioner of the National Tax Service shall examine whether a holder of the individual savings account meets the relevant requirements and shall give notice by not later than the either of the following dates to the association designated by the Financial Services Commission (hereinafter referred to as"Korea Federation of Banks"), among associations established by banks under the Banking Act as members. <Amended on Feb. 17, 2021>

1. In cases of Article 91-18 (1) 2 (limited to the requirement for earned income): August 31 of the year following the year in which the account is opened or the contract period is extended (referring to the year in which a determination or correction is made under Article 80 of the Income Tax Act with regard to the relevant resident; hereafter in this paragraph, the same shall apply) if such determination or correction is made;

2. In cases of Article 91-18 (2) 1 of the Act (limited to the requirement for the global income amount in cases of item (c)): The end of February of the year following the year in which the account is opened or the contract period is extended.

(4) Article 123-2 (5) shall apply mutatis mutandis to the procedure for presenting the account holder’s opinion on the notice given by the Commissioner of the National Tax Service under paragraph (3). <Amended on Feb. 17, 2021> (1) “Contract . . . prescribed by Presidential Decree” in Article 91-18 (3) 2 (a) of the Act means a contract that meets all of the following requirements that: <Amended on Feb. 17, 2021>

1. The contract is in the form of a consignment trading contract or a trading contract;

2. Credit extension under Article 72 of the Financial Investment Services and Capital Markets Act shall be prohibited;

3. The transfer of property under Article 91-18 (3) 3 of the Act (hereafter in this Article referred to as assets subject to investment") held in an account other than the individual savings account shall be restricted.

(6)"Contract . . . prescribed by Presidential Decree" in Article 91-18 (3) 2 (b) of the Act means a contract that meets all of the following requirements that: <Amended on Feb. 17, 2021>

1. The contract shall be in the form of an agreement on individual savings in an asset portfolio under Article 98 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act;

2. The requirement of paragraph (5) 3 shall be met.

(7)"Financial instruments prescribed by Presidential Decree" in Article 91-18 (3) 3 (a) of the Act means the following financial products: <Amended on Feb. 17, 2021>

1. Deposits in financial institutions under Article 106 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (excluding financial investment instruments under Article 3 of the Financial Investment Services and Capital Markets Act);

2. Bonds or securities traded under the condition of repurchase or resale under Article 24 of the Enforcement Decree of the Income Tax Act.

(8) "Assets determined by Presidential Decree" in Article 91-18 (3) 3 (g) of the Act means the following property: <Amended on Dec. 17, 2021; Feb. 15, 2022; Feb. 28, 2023; Feb. 29, 2024>

1. Stocks of real estate investment companies under subparagraph 3 (a) of Article 2 of the Real Estate Investment Company Act;

2. Certificates of preemptive right to new stocks under Article 420-2 (1) of the Commercial Act, acquired through assets subject to investment held in the individual savings account;

3. Bonds or securities under Article 16 (1) 1 or 2 of the Income Tax Act;

4. The following stocks traded through over-the-counter transactions under Article 286 (1) 5 of the Financial Investment Services and Capital Markets Act conducted by the Korea Financial Investment Association established pursuant to Article 283 of that Act;

(a) Stocks of a company that qualifies as a small and medium enterprise under Article 2 of the Framework Act on Small and Medium as of the date of incorporation of the relevant stocks into an individual savings account;

(b) Stocks of an enterprise falling under subparagraph 1 of Article 2 of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises as of the date of incorporation of the relevant stocks into an individual savings account.

(9) “Method prescribed by Presidential Decree” in Article 91-18 (5) of the Act means the method of aggregating the amounts of interest income, dividend income, and financial investment income under Article 87-7 (1) of the Income Tax Act (hereinafter referred to as"financial investment income"); and if financial investment income is less than 0, it shall be added to dividend income first, and then the remaining amount shall be added to interest income. When calculating the amount of financial investment income in such cases, if the aggregate of income under 87-18 (1) 1 (a) and (c) of the Income Tax Act is less than 0, the amount shall be deducted from the total amount of financial investment income, notwithstanding Article 150-9 (2) and (3) of the Enforcement Decree of the Income Tax Act. <Amended on Feb. 15, 2022>

(10) “Necessary expenses prescribed by Presidential Decree” in Article 91-18 (5) of the Act means various remunerations or fees under the Financial Investment Services and Capital Markets Act (except those included in the amount of financial investment income). <Amended on Feb. 15, 2022>

(11) Deleted; <Feb. 15, 2022>

(12) Interest income, dividend income, financial investment income, and reinvested amounts (including the appraised value of certificates of preemptive right to new stocks) paid to an individual savings account shall not be included in the maximum total deposit and maximum annual deposit under Article 91-18 (3) 5 of the Act. <Amended on Feb. 17, 2021; Feb. 15, 2022>

(13) A withdrawal of a partial amount from an individual savings account shall be deemed a withdrawal from the principal of investments. <Amended on Feb. 17, 2021>

(14) “Unavoidable circumstances prescribed by Presidential Decree, such as the account holder's death or emigration to abroad” in the provisions, with the exception of the subparagraphs, of Article 91-18 (8) of the Act means the following events: <Amended on Feb. 17, 2021; Feb. 15, 2022>

1. Where the account holder is dead or emigrates to a foreign country;

2. Where the event referred to in any subparagraph of Article 81 (6) occurs to the account holder within six months prior to the date of termination;

(15) A person who intends to terminate a contract due to any of the events referred to in paragraph (14) shall submit a report on the special reason for termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the trust business entity, etc. <Amended on Feb. 17, 2021>

(16) A trust business entity, etc. shall explicitly state the maximum deposit, contract term, operation method, etc. in the terms and conditions of individual saving accounts. <Amended on Dec. 1, 2016; Feb. 7, 2017; Feb. 17, 2021>

(17) The scope of assets subject to investment for individual savings accounts, the method of calculating interest income, etc., and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Dec. 1, 2016; Feb. 17, 2021>

[This Article Newly Inserted on, Feb. 5, 2016]

Article 93-5(Non-Taxation on Installment Savings for Future-Preparation of Military Personnel) #

(1) "Person who meets the requirements prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 91-19 (1) of the Act means any of the following persons whose remaining service period is not less than one month as at the time he/she opens the installation savings: <Amended on Feb. 15, 2022; Feb. 29, 2024>

1. Active duty service personnel under Article 5 (1) 1 (a) of the Military Service Act;

2. Social work personnel under Article 5 (1) 3 (b) (i) of the Military Service Act;

3 Full-time reserve service personnel under Article 2 (1) 8 of the Military Service Act;

4. Personnel seconded under Article 25 of the Military Service Act.

5. Alternative service personnel under the Military Service Act.

(2) "Installment savings for future-preparation of military personnel prescribed by Presidential Decree" in the main clause, with the exception of the subparagraphs, of Article 91-19 (1) of the Act means the installment savings meeting all of the following requirements: <Amended on Feb. 29, 2024>

1. It shall be an installment savings that a financial company, etc. defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article, referred to as"financial company, etc.") deals with after concluding agreements with the Minister of National Defense, the Commissioner of the Military Manpower Administration, the Commissioner General of the Korean National Police Agency, the Administrator of the National Fire Agency, and the Commissioner of the Korea Coast Guard;

2. The words"passbook for installment savings for future-preparation of military personnel" shall be marked on the cover of each passbook.

(3) A person who wishes to be granted non-taxation on the interest income referred to in Article 91-19 (1) of the Act shall submit a certificate of eligibility for opening an account of the installment savings for future-preparation of military personnel in the form prescribed by Ordinance of the Ministry of Economy and Finance to a financial company, etc. that deals with the savings account at the time he/she opens an installment savings account for future-preparation of military personnel.

(4) If the account holder of an installment savings for the future-preparation of military personnel is discharged before the expiration date of the contract, the expiration date of the contract on the relevant installment savings shall be deemed the last day of his/her service period under the Military Service Act referred to in the main sentence of Article 91-19 (1) of the Act.

[This Article Newly Inserted on Feb. 12, 2019]

Article 93-6(Income Deductions for Long-Term Collective Investment Securities Savings for Youth) #

(1) "Youth defined by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-20 (1) of the Act means a person who is not younger than 19 years of age but not older than 34 years of age as at the date of opening a savings account under subparagraph 2 of that paragraph (hereafter in this Article referred to as "long-term collective investment securities savings for youth") (including persons whose age is 34 years or younger, as calculated by subtracting the period of military service (limited to six years) from the age as at the date of opening the account if such persons have completed military service falling under any item of Article 27 (1) 1).

(2) A resident who intends to open an account for long-term collective investment securities savings for youth shall submit the following documents to a financial company handing the long-term collective investment securities savings for youth (hereafter in this Article referred to as"savings institution").

1. An income verification certificate issued by the head of the competent tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance;

2. A military service certificate issued pursuant to Article 155-7 (2) of the Enforcement Decree of the Military Service Act (limited to cases where the resident is 35 years of age or older as at the date of opening the account).

(3) Upon receipt of a request from a savings institution pursuant to Article 91-20 (8) of the Act, the Commissioner of the National Tax Service shall verify whether the resident who opens an account for long-term collective investment securities savings for youth pursuant to paragraph (9) of that Article (hereafter in this Article referred to as"account holder") meets the requirements of each item of paragraph (1) 1 of that Article and shall notify the relevant savings institution of the results of verification by not later than the end of February of the year following the year in which the account holder opens the account for long-term collective investment securities savings for youth (or the year in which a determination or correction was made under Article 80 of the Income Tax Act with regard to the account holder if such determination or correction was made).

(4) If an account holder has any objection to the information notified to the savings institution by the Commissioner of the National Tax Service pursuant to paragraph (3), the account holder may present an opinion to the Commissioner of the National Tax Service as prescribed by Ordinance of the Ministry of Economy and Finance Ordinance; and the Commissioner of the National Tax Service shall notify the savings institution of whether he/she accepts the opinion, within 14 days from the date of receipt of the opinion.

(5) The long-term collective investment securities savings for youth shall meet the requirement for the investment ratio of total assets in stocks under Article 91-20 (1) 2 (a) of the Act (hereafter in this Article referred to as"minimum holding requirement") every day from the date of establishment or creation of the long-term collective investment securities savings.

(6) Notwithstanding paragraph (5), a person is deemed to have met the daily minimum holding requirement in any of the following cases: Provided, That, in cases of subparagraph 4 or 5, the daily minimum holding requirement shall be deemed to have been met only if the minimum holding requirement is met again within 15 days after the day on which the person fails to meet the minimum holding requirement:

1. For one month from the date of initial establishment or creation of the long-term collective investment securities savings for youth;

2. For one month from the end of the fiscal year of the long-term collective investment securities savings for youth (limited to where a fiscal period is at least three months);

3. For one month from the date of dissolution or cancellation of the long-term collective investment securities savings for youth (limited to cases where the period from the date of the first establishment or creation to the date of dissolution or cancellation is at least three months);

4. Where the amount of additional creation or requests for cancellation for three business days has respectively accumulated in excess of 10/100 of the total assets of the long-term collective investment securities savings for youth;

5. The long-term collective investment securities savings for youth ceases to meet the minimum holding requirement due to price fluctuation of invested assets.

(7) Where long-term collective investment securities savings for youth are established or created as a feeder fund under Article 233 of the Financial Investment Services and Capital Markets Act, indirect acquisition of stocks referred to in Article 91-20 (1) 2 (a) of the Act by investing in a master fund shall be deemed investment in stocks for the purpose of calculating the holding ratio.

(8) Where long-term collective investment securities savings for youth indirectly acquire stocks referred to in Article 91-20 (1) 2 (a) of the Act by investing in any other collective investment schem, the holding ratio shall be calculated according to the following formula, deeming that such indirect investment is also an investment in stocks:

Holding ratio = (A + B)/C

A: Value of stocks held by the long-term collective investment securities savings for youth

B: Value of equity shares or beneficiary certificates of other collective investment schemes, held by the long-term collective investment securities savings for youth × (Value of stocks referred to in Article 91-20 (1) 2 (a) of the Act and held by other collective investment schemes/Total assets of other collective investment assets)

C: Total assets of the long-term collective investment securities savings for youth

(9) Where long-term collective investment securities savings for youth have been established or created as an umbrella fund under Article 232 of the Financial Investment Services and Capital Markets Act and an account holder thereof switches them to other collective investment securities under the collective investment agreement, the account holder shall not be deemed to have terminated such savings under Article 91-20 (4) or (5) of the Act.

(10) "Cases where he/she subscribes to another long-term collective investment securities savings for youth, meeting the requirements prescribed by Presidential Decree" in Article 91-20 (2) 4 of the Act means cases where all of the following requirements are satisfied: <Newly Inserted on Feb. 29, 2024>

1. He/she shall subscribe to another long-term collective investment securities savings for youth by the last day of the month following the month in which the date of termination of the existing long-term collective investment securities savings for youth falls (limited to the case where the savings-handling institutions are the same);

2. The entire amount received by terminating the existing long-term collective investment securities savings for youth shall be deposited into another long-term collective investment securities savings for youth;

(11) "Cases prescribed by Presidential Decree" in Article 91-20 (5) 1 of the Act means cases where all of the following requirements are satisfied: <Newly Inserted on Feb. 29, 2024>

1. Requirements specified in each subparagraph of paragraph (10);

2.The sum of the subscription periods of the existing long-term collective investment securities savings for youth and other long-term collective investment securities savings for youth shall be at least 3 years.

(12) "Death or emigration to abroad, or any of unavoidable circumstances prescribed by Presidential Decree" in Article 91-20 (5) 2 of the Act means any of the following grounds: <Amended on Feb. 29, 2024>

1. The account holder’s death or emigration to abroad;

2. Any of the following events that occurred within 6 months prior to the termination of the contract:

(a) Natural disasters;

(b) The account holder’s retirement;

(d) The occurrence of an injury or disease requiring the account holder's inpatient treatment or medical care for at least three months;

(e) Suspension of business, revocation of authorization or permission for business, resolution of dissolution, or declaration of bankruptcy of the savings institution;

(f) Where the collective investment business operator terminates the relevant collective investment scheme because the principal of the collective investment scheme is less than 5 billion won on the first anniversary of the date of initial establishment or creation thereof or because the principal of the collective investment scheme is less than 5 billion won for one month continuously from the initial anniversary of the date of initial establishment or creation thereof.

(13) A person who intends to terminate a contract on long-term collective investment securities savings for youth due to any of the events specified in paragraph (12) shall submit a report on the special reason for termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the savings institution. <Amended on Feb. 29, 2024>

(14) The savings institution shall handle long-term collective investment securities savings for youth with an account dedicated to the long-term collective investment securities savings for youth only for deposit and withdrawal of the long-term collective investment securities savings for youth. <Amended on Feb. 29, 2024>

(15) The savings institution shall explicitly state the limit on the contract amount of long-term collective investment securities savings for youth, inquiry thereof, and other necessary matters in the terms and conditions of the long-term collective investment securities savings for youth. <Amended on Feb. 29, 2024>

(16) Except as provided for in paragraphs (1) through (15), the details necessary for the operation of the long-term collective investment securities savings for youth, including the operation and management of the long-term collective investment securities savings for youth shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2024>

[This Article Newly Inserted on Feb. 15, 2022]

Article 93-7(Non-Taxation on Youth Hope Installment Savings) #

(1) "Youth prescribed in Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-21 (1) of the Act means a person who is not younger than 19 years of age but not older than 34 years of age as at the date of opening an account for youth hope installment savings under the provisions, with the exception of the subparagraphs, of that paragraph (hereafter in this Article referred to as " youth hope installment savings") (including persons whose age is 34 years or younger, as calculated by subtracting the period of military service (limited to six years) from the age as at the date of opening the account if such persons have completed military service falling under any item of Article 27 (1) 1).

(2)"Youth Hope Installment Savings prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-21 (1) of the Act means installment savings that meet all of the following requirements that:

1. The savings shall be installment savings handled by a financial company, etc. defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article referred to as"financial company, etc.") under an agreement made with the Korea Inclusive Finance Agency under Article 3 of the Microfinance Support Act;

2. The contract period shall be two years;

(3) A person who intends to open an account for Youth Hope Installment Savings shall submit the following documents to a financial company, etc.:

1. An income verification certificate issued by the head of the competent tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance;

(4) A financial company, etc. may request the Commissioner of the National Tax Service to verify whether or not a resident who opens an account for Youth Hope Savings (hereafter in this Article referred to as"account holder") meets the requirements of Article 91-21 (1) of the Act at the time of opening the account.

(5) Upon receipt of a request under paragraph (4), the Commissioner of the National Tax Service shall verify whether the account holder meets the relevant requirements and notify the financial company, etc. of the results of verification by not later than the end of February of the year following the year in which the account holder opens the installment savings account (or the year in which a determination or correction was made with regard to the holder of the installment savings account if such determination or correction was made under Article 80 of the Income Tax Act).

(6) If an account holder has any objection to the information notified to the financial company, etc. by the Commissioner of the National Tax Service pursuant to paragraph (5), the account holder may present an opinion to the Commissioner of the National Tax Service as prescribed by Ordinance of the Ministry of Economy and Finance Ordinance; and the Commissioner of the National Tax Service shall notify the financial company, etc. of whether he/she accepts the opinion, within 14 days from the date of receipt of the opinion.

(7) A dedicated account under Article 91-21 (2) of the Act shall be opened under the name,"account dedicated to Youth Hope Installment Savings"; and a financial company, etc. shall handle Youth Hope Installment Savings with the dedicated account only for deposit or withdrawal of Youth Hope Installment Savings.

(8) Where an account holder terminates a contract during the contract period prescribed in paragraph (2) 2 due to any of the following events, the special taxation under Article 91-21 (1) of the Act shall apply to interest income received at the time of termination:

1. The account holder’s death or emigration to abroad;

2. Any of the following events that occurred within 6 months prior to the termination of the contract:

(a) Natural disasters;

(b) The account holder’s retirement;

(d) The occurrence of an injury or disease requiring the account holder's inpatient treatment or medical care for at least three months;

(e) Suspension of business, revocation of authorization for, or permission for business, resolution of dissolution, or declaration of bankruptcy of the financial company, etc.

(9) A resident who intends to terminate the contract due to any of the events referred to in paragraph (8) shall submit a report on the special reason for termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the financial company, etc. managing the dedicated account.

(10) A financial company, etc. shall explicitly state the limit on the contract amount of Youth Hope Installment Savings, inquiry thereof, and other necessary matters in the terms and conditions of the Youth Hope Installment Savings.

(11) Except as provided for in paragraphs (1) through (10), the details necessary for the operation of the Youth Hope Installment Savings, including the operation and management of dedicated accounts shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 15, 2022]

Article 93-8(Non-Taxation on Youth Take-Off Accounts) #

(1)"Youth prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-22 (1) of the Act means a person who is not younger than 19 years of age but not older than 34 years of age as at the date of opening an account under paragraph (2) of that Article (hereafter in this Article referred to as" Youth Take-Off Account") (including persons whose age is 34 years or younger (referring to an age calculated by subtracting the period of completed military service, within the limit of six years, from the current age if a person has completed military service falling under any item of Article 27 (1) 1).

(2)"Account prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-22 (2) of the Act means an account that meets all of the following requirements that:

1. It shall be an account handled by a financial company, etc. defined in the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article referred to as"financial company, etc.") under an agreement made with the Korea Inclusive Finance Agency under Article 3 of the Microfinance Support Act;

2. The contract period shall be five years;

(3)"Financial instruments prescribed by Presidential Decree’ in Article 91-22 (2) 2 (a) of the Act means bonds or securities traded under the condition that a person falling under any subparagraph of Article 111 (1) of the Corporate Tax Act shall repurchase or resell by applying the pre-agreed interest rate for the period of repurchase or resale.

(4)"Assets prescribed by Presidential Decree" in Article 91-22 (2) 2 (f of the Act means the following property:

1. Stocks of real estate investment companies under subparagraph 3 (a) of Article 2 of the Real Estate Investment Company Act;

2. Certificates of preemptive right to new stocks under Article 420-2 of the Commercial Act, acquired through assets subject to investment held in the Youth Take-Off Account;

3. Bonds or securities under Article 16 (1) 1 or 2 of the Income Tax Act.

(5) A resident who intends to open a Youth Take-Off Account shall submit the following documents to a financial company, etc. handing the Youth Take-Off Account (hereafter in this Article referred to as"savings institution").

1. An income verification certificate issued by the head of the competent tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance;

(6) "Death or emigration to abroad, or any of unavoidable circumstances prescribed by Presidential Decree" in the proviso of Article 91-22 (3) of the Act means any of the following: <Amended on Feb. 29, 2024>

1. The account holder’s death or emigration to abroad;

2. Any of the following events that occurred within 6 months prior to the termination of the contract:

(a) Natural disasters;

(b) The account holder’s retirement;

(d) The occurrence of an injury or disease requiring the account holder's inpatient treatment or medical care for at least three months;

(e) Suspension of business, revocation of authorization or permission for business, resolution of dissolution, or declaration of bankruptcy of the savings institution;

(f) Acquisition of a house by an account holder (limited to cases where an account holder who has not owned a house in the past acquires a house with a reference market value of 500 million won or less as at the date of acquisition according to Article 99 (1) of the Income Tax Act and with the standard national house size under subparagraph 6 of Article 2 of the Housing Act for the purpose of living in it).

(g) Marriage or birth of the subscriber (including the birth of a spouse).

(7) A person who intends to terminate a contract on the Youth Take-Off Account due to any of the events referred to in paragraph (6) shall submit a report on the special reason for termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the savings institution.

(8) Except as otherwise expressly prescribed in paragraphs (1) through (7), matters concerning operation and management of the Youth Take-Off Account and other necessary matters shall be prescribed by Presidential Decree.

[This Article Newly Inserted on Feb. 28, 2023]

Article 93-9(Special Taxation on State Bonds for Individual Investment) #

(1)"Where a resident…holds the state bonds for the period prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 91-23 (1) of the Act means a case where a resident holds state bonds for individual investment under Article 4 (1) 1 (b) of the State Bond Act (hereafter in this Article referred to as"state bonds for individual investment") with a period of ten years or more from the date of issuance to the date of repayment of the principal (hereafter in this Article referred to as"maturity date").

(2) If a state bond for individual investment is transferred to another person by inheritance, bequest or judicial execution in accordance with Article 9 (3) of the State Bond Act, the transferee of the state bond for individual investment shall be deemed to have held the state bond for individual investment for the period from the date of issuance of the state bond for individual investment to the date of transfer.

(3) The purchase amount under the provisions, with the exception of the subparagraphs, of Article 91-23 (1) of the Act shall be calculated by aggregating the par value of each state bond for individual investment purchased by the same person (including those transferred through judicial execution under Article 9 (3) of the State Bond Act; hereafter in this paragraph, the same shall apply) in the order of maturity dates that come earlier; and in cases of state bonds for individual investment with the same maturity date, the par value of each state bond for individual investment shall be aggregated in the order of bonds with a higher interest rate to calculate the purchase amount. In such cases, state bonds for individual investment, transferred by inheritance or bequest pursuant to Article 9 (3) of the State Bond Act, shall be separated from bonds for individual investment, purchased by the transferee, for the purpose of calculating the purchase amount of the transferred state bonds according to the provisions, with the exception of the subparagraphs, of Article 91-23 (1) of the Act.

(4) A dedicated account under Article 91-23 (1) of the Act shall be an account opened under the name,"account dedicated to state bonds for Individual investment", and shall be used exclusively for purposes related to the purchase of state bonds for individual investment, such as payment of the purchase price of state bonds for individual investment, issuance of state bonds, repayment of principal, and payment of interest.

[This Article Newly Inserted on Jun. 7, 2023]

Article 95(Tax Credits for Monthly Rents) #

(1)"Household prescribed by Presidential Decree" in the main clause of Article 95-2 (1) of the Act means a household that includes all of the following persons. In such cases, the resident and his/her spouse shall be deemed to constitute one household, even where they live apart from each another: <Amended on Feb. 17, 2021>

1. A resident and his/her spouse;

2. Persons living together with the resident in the same address or place of residence and falling under any of the following:

(a) Lineal ascendants and descendants (including their spouses) and siblings of the resident;

(b) Lineal ascendants and descendants (including their spouses) and siblings of the spouse of the resident.

(2)"Monthly rent prescribed by Presidential Decree" in the main clause of Article 95-2 (1) of the Act means a monthly rent (including a monthly rent prepaid; hereafter in this Article, referred to as"monthly rent") paid to rent a house that meets the following conditions (including officetels referred to in subparagraph 4 of Article 4 of the Enforcement Decree of the Housing Act and facilities for Gosiwon business referred to in subparagraph 4 (o) of attached Table 1 to the Enforcement Decree of the Building Act; hereafter in this Article, the same shall apply): <Amended on Aug. 11, 2016; Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021; Feb. 28, 2023>

1. The house shall be in the size of national housing unit defined in subparagraph 6 of Article 2 of the Housing Act or the assessed value of which does not exceed 400 million won. If the house is a multi-unit house, the size shall be based on the area for exclusive use by each unit;

2. The area of land appurtenant to the house shall not exceed any of the following multipliers:

(a) Five times in cases of land in an urban area specified in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act;

(b) Ten times in cases of land in other areas;

3. The address stated in the lease agreement referred to in Article 3-2 (2) of the Housing Lease Protection Act shall be same as the address recorded in the certified transcript of the relevant resident’s registration card (in cases of a foreigner under paragraph (4), referring to the place of stay in the Republic of Korea under subparagraph 4 of Article 32 of the Immigration Act or the place of residence in the Republic of Korea, as reported pursuant to Article 6 of the Act on the Immigration and Legal Status of Overseas Koreans);

4. The relevant resident or a person eligible for basic deductions for the relevant resident under Article 50 (1) 2 or 3 of the Income Tax Act shall have signed a lease agreement.

(3) For the purposes of Article 95-2 (1) of the Act, a monthly rent shall be calculated by dividing the total amount of monthly rents payable for the housing lease period under the relevant lease agreement by the number of days for the housing lease contract term and then multiplying the amount so divided by the number of leasing days for the relevant taxable period.

(4)"Foreigners prescribed by Presidential Decree" in the main clause of Article 95-2 (1) of the Act means residents who meet all of the following requirements that: <Newly Inserted on Feb. 17, 2021>

1. A person falls under any of the following:

(a) A foreigner registered pursuant to Article 31 of the Immigration Act;

(b) A Korean who has a foreign nationality and has a place of residence in the Republic of Korea reported pursuant to Article 6 of the Act on the Immigration and Legal Status of Overseas Koreans;

2. A person falling under any of the following has not been granted a tax credit under Articles 87 (2) and 95-2 (1) of the Act and Article 52 (4) or (5) of the Income Tax Act:

(a) The spouse of the person falling under subparagraph 1 (hereafter in this subparagraph referred to as"resident");

(b) A person living together with the resident in the same address or place of residence and falling under any of the following:

(i) Lineal ascendants and descendants (including their spouses) and siblings of the resident;

(ii) Lineal ascendants and descendants (including their spouses) and siblings of the spouse of the resident.

[This Article Newly Inserted on Feb. 3, 2015]

Article 96(Tax Reduction or Exemption for Small-Housing Rental Business Operators) #

(1)"National prescribed by Presidential Decree" in Article 96 (1) of the Act means a national who meets each of the following conditions: <Amended on Dec. 28, 2015>

1. The national shall have completed business registration under Article 168 of the Income Tax Act or Article 111 of the Corporate Tax Act;

2. The national shall be a rental business operator registered under Article 5 of the Special Act on Private Rental Housing or a public housing business operator designated under Article 4 of the Special Act on Public Housing.

(2)"Rental housing prescribed by Presidential Decree" in Article 96 (1) of the Act means rental housing that meets all of the requirements (hereafter in this Article referred to as"rental housing") that: <Amended on Feb. 3, 2015; Dec. 28, 2015; Feb. 5, 2016; Aug. 11, 2016; Jul. 16, 2018; Feb. 12, 2019; Feb. 11, 2020; Oct. 7, 2020>

1. Housing registered by a national under paragraph (1) as rental housing and falling under any of the following:

(a) Public-supported rental housing under subparagraph 4 of Article 2 of the Special Act on Private Rental Housing: Provided, That the housing concerning which as report has been filed for the change from short-term private rental housing under subparagraph 6 of Article 2 of the Special Act on Private Rental Housing (referring to the former Special Act on Private Rental Housing before partially amended by Act No. 17482; hereafter in this Article, the same shall apply) to public-supported rental housing under Article 5 (3) of that Act on or after July 11, 2020 shall be excluded herefrom;

(b) Long-term general private rental housing under subparagraph 5 of Article 2 of the Special Act on Private Rental Housing (including private-purchased rental housing for leasing an apartment deemed long-term general private rental housing under Article 5 (1) of the Addenda to Act No. 17482 partially amending the Special Act on Private Rental Housing): Provided, That the housing falling under any of the following shall be excluded herefrom:

(i) Private-purchased rental housing for leasing an apartment, among long-term general private rental housing concerning which an application for registration has been filed pursuant to Article 5 (1) of the former Special Act on Private Rental Housing on or after July 11, 2020 (including cases where a report on a change in the registration has been filed to add houses for rental under paragraph (3) of that Article; hereafter in this subparagraph, the same shall apply);

(ii) The housing for which a report has been filed on the change from short-term private rental housing under subparagraph 6 of Article 2 of the former Special Act on Private Rental Housing to long-term general private rental housing under Article 5 (3) of that Act on or after July 11, 2020;

(c) Private rental housing under subparagraph 6 of Article 2 of the former Special Act on Private Rental Housing: Provided, That short-term private rental housing concerning which an application for registration has been filed pursuant to Article 5 (1) of that Act on or after July 11, 2020 shall be excluded herefrom;

(d) Public housing unit built for rental or public housing unit purchased for rental under subparagraph 1-2 or 1-3 of Article 2 of the Special Act on Public Housing;

2. It shall be in the size of national housing unit defined in subparagraph 6 of Article 2 of the Housing Act (if it is a multi-unit house, the size shall be based on the area for exclusive use by each unit) (including an officetel used as residence and the land appurtenant to a house and an officetel. However, if the area of such appurtenant land exceeds the area calculated by multiplying the area on which the relevant building stands by either of the following applicable multipliers, whichever is applicable to the relevant region, such house and officetel shall be excluded herefrom):

(a) Five times in cases of land in an urban area specified in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act;

(b) Ten times in cases of land in other areas;

3. The total amount of reference value of the relevant house and the land appurtenant thereto shall not exceed 600 million won as at the commencement date of leasing the house (if the requirements of paragraph (1) 1 and 2 are met after the commencement of leasing, referring to the date on which all of the requirements are met; hereafter in this Article, the same shall apply);

4. The annual increase rate of rental deposits or rents (hereafter in this subparagraph referred to as"rents, etc.") shall not exceed 5/100. In such cases, no request for an increase in rent shall be made within one year after an increase in rents under the lease contract or agreement; and in the event that a rental business operator switches a rental deposit to monthly rent while requesting an increase in rent, the standards prescribed in Article 44 (4) of the Special Act on Private Rental Housing and Article 44 (3) of the Enforcement Decree of theSpecial Act on Public Housing shall apply.

(3) Whether a national leases at least one unit of rental housing defined in Article 96 (1) or (2) of the Act for at least four years (or ten years, in cases of public-supported private rental housing defined in subparagraph 4 of Article 2 of the Special Act on Private Rental Housing or long-term general private rental housing defined in subparagraph 5 of Article 2 of that Act (hereafter in this Article, referred to as"long-term general private rental housing, etc.")), shall be determined as follows: <Amended on Feb. 3, 2015; Dec. 28, 2015; Feb. 5, 2016; Feb. 9, 2018; Feb. 13, 2018; Jul. 16, 2018; Feb. 17, 2021>

1. Where the number of months during which the national has actually leased at least one unit of rental housing as at the end of each month in the relevant taxable year is at least 9/12 of the number of months in the relevant taxable year (in cases of a taxable year in which the commencement date of leasing at least one unit of rental housing falls, the number of months from the month in which the commencement date of leasing at least one unit of rental housing falls to the month in which the end of the taxable year falls), such resident shall be deemed to have leased at least one unit of rental housing: Provided, That, In cases of the proviso of Article 96 (2) of the Act, a person shall be deemed to be leasing out one or more rental houses in the taxable year in which the registration is canceled;

2. Where the number of months during which the national has actually leased at least one unit of rental housing as at the end of each month during the period from the commencement date of leasing at least one unit of rental housing to the end of the month within which the fourth anniversary falls (or the tenth anniversary, in cases of long-term general private rental housing, etc.) is at least 43 months (or 108 months, in cases of long-term general private rental housing, etc.), such national shall be deemed to have leased at least one unit of rental housing for at least four years (or ten years, in cases of long-term general private rental housing, etc.);

3. For the purposes of subparagraph 1 or 2, where the period from the date a former lessee moves out, until the date a new lessee moves in, does not exceed three months, such period shall be deemed the lease period;

4. For the purposes of subparagraph 1 or 2, where an heir, a merging corporation, a corporation newly established following split-off, or a corporation in which an investment is made (hereafter in this subparagraph, referred to as"heir, etc."), acquires and leases rental housing leased by the decedent, a merged corporation, a split-off corporation, or an investing corporation (hereafter in this subparagraph, referred to as"decedent, etc.") due to inheritance, merger, split-off, spin-off, or investment in kind, the lease period of the decedent, etc. shall be deemed the lease period of the heir, etc.;

5. For the purposes of subparagraph 1 or 2, where rental housing is disposed of, or cannot be leased due to expropriation (including purchase through negotiations) under the Act on Acquisition of and Compensation for Land for Public Works Projects or other statutes, such rental housing shall be deemed leased continuously;

6. For the purposes of subparagraph 1 or 2, where rental housing is disposed of, or cannot be leased due to implementing a redevelopment project or a reconstruction project under the Act on the Improvement of Urban Areas and Residential Environments, a small-scale housing improvement project under the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement, or a remodeling project under the Housing Act, the period from six months before the authorization date of a management and disposal plan (in cases of a small-scale housing improvement project, referring to date of authorization of the project implementation plan; and in cases of a remodeling project, referring to the date of permission or the date of approval of the project plan) of the relevant housing until six months after the completion date of the project shall be deemed the actual period of lease. In such cases, Article 3 (7) 7 and 7-2 of the Enforcement Decree of the Comprehensive Real Estate Holding Tax Act shall apply mutatis mutandis to the calculation of the period of lease.

(4) In calculating the number of rental housing units leased by a rental business operator in each subparagraph of Article 96 (1) of the Act, the number of rental housing units shall be based on the number of rental housing units as at the end of the relevant taxable year. <Newly Inserted on Feb. 11, 2020; Feb. 17, 2021>

(5)"Cases prescribed by Presidential Decree, such as cases where a national falls under Article 6 (1) 11 of the Special Act on Private Rental Housing and is deregistered" in the proviso of Article 96 (2) of the Act means the following cases: <Newly Inserted on Feb. 17, 2021>

1. Where the registration of a rental business operator has been canceled under Article 6 (1) 11 or (5) of the Special Act on Private Rental Housing;

2. The newly acquired housing is an apartment (or any housing if the original rental housing was short-term private rental housing) due to the destruction of the original rental housing as a result of a redevelopment project or reconstruction project under the Act on the Improvement of Urban Areas and Residential Environments or a small-scale housing improvement project under the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement or a remodeling project under the Housing Act: Provided, That the cases where the day six months after the completion of the newly acquired housing is not earlier than July 10, 2020, such housing shall be excluded herefrom.

(6) If a national granted a reduction of income tax or corporate tax under Article 96 (2) of the Act, fails to lease at least one unit of rental housing for at least four years (or ten years, in cases of long-term general private rental housing, etc.), the national shall pay the full amount of income tax or corporate tax reduced (or the equivalent to 60/100 of the amount of tax reduced, if long-term general private rental housing, etc. has been leased for at least four years, but less than ten years), and an additional amount equivalent to interest calculated under Article 96 (3) of the Act, as income tax or corporate tax, at the time of filing his/her tax return for the taxable year in which the relevant ground arises. <Newly Inserted on Feb. 3, 2015; Feb. 5, 2016; Feb. 13, 2018; Jul. 16, 2018; Feb. 11, 2020; Feb. 17, 2021>

(7)"Extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 96 (3) of the Act means the following circumstances: <Amended on Feb. 3, 2015; Feb. 11, 2020>

1. Where a national disposes of, or cannot lease rental housing due to bankruptcy or judicial execution;

2. Where a national disposes of, or cannot lease rental housing, in order to perform legal obligations;

3. Where a national disposes of the relevant rental housing upon obtaining approval from the court according to the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act.

(8) A person who intends to apply for a tax reduction or exemption pursuant to Article 96 (4) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the following documents, at the time of filing his/her tax return for the relevant taxable year: <Amended on Feb. 3, 2015; Dec. 28, 2015; Feb. 5, 2016; Feb. 12, 2019; Feb. 11, 2020; Sep. 26, 2023>

1. A certificate of registration of a rental business operator referred to in Article 4 (6) of the Enforcement Decree of the Special Act on Private Rental Housing, or a document certifying that the person has been designated as a public housing business operator under Article 4 of the Special Act on Public Housing;

2. A certificate of reporting on terms and conditions of leasing under Article 36 (4) of the Enforcement Decree of the Special Act on Private Rental Housing;

3. A copy of a standard lease agreement under Article 47 of the Special Act on Private Rental Housing or Article 49-2 of the Special Act on Public Housing;

4. Other documents prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 21, 2014]

Article 96-2(Tax Reductions or Exemptions for Long-Term Commercial Building Rental Business Operators) #

(1) Lease for use for commercial purposes under Article 96-2 (1) 1 of the Act shall be the lease of a commercial building referred to in Article 2 (1) of the Commercial Building Lease Protection Act to a sole proprietor who has registered his/her business pursuant to Article 168 of the Income Tax Act or Article 8 of the Value-Added Tax Act for his/her activities performed continuously and repeatedly under his/her own consideration and responsibility.

(2) Whether the period of continuous lease to the same lessee as at the first day of the relevant taxable year exceeds five years as prescribed in Article 96-2 (1) 2 of the Act shall be calculated on the basis of calenda months, and if the number of days in a month is less than one full month, it shall be deemed one month.

(3)"Rate prescribed by Presidential Decree" in Article 96-2 (1) 3 of the Act means three percent.

(4)"Average annual increase rate of the rent" in Article 96-2 (1) 3 of the Act shall be rate calculated by the following formula:

Average annual increase rate of rent = [(Aggregate of rents for immediately preceding two years as at the end of each month from the end date of the relevant taxable year) x 1/2 ÷ (Rent as at the end of the month in which immediately preceding two years pass from the end date of the relevant taxable year) x 12]

(5) A person who intends to file an application for a tax reduction or exemption pursuant to Article 96-2 (2) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the relevant taxable year and the following documents:

1. A copy of a lease agreement;

2. Other documents prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 12, 2019]

Article 96-3(Tax Credits for Rental Business Operators Reducing Rent for Commercial Buildings) #

(1)"Person who engages in a real estate rental business prescribed by Presidential Decree" in Article 96-3 (1) of the Act means a person registered as a real estate leasing business operator for a commercial building pursuant to Article 168 of the Income Tax Act, Article 111 of the Corporate Tax Act, or Article 8 of the Value-Added Tax Act (hereafter in this Article referred to as"lessor of a commercial building").

(2)"Commercial building prescribed by Presidential Decree" in Article 96-3 (1) of the Act means a commercial building under the main clause of Article 2 (1) of the Commercial Building Lease Protection Act (hereafter in this Article referred to as"commercial building for lease").

(3)"Micro enterprises prescribed by Presidential Decree" in Article 96-3 (1) of the Act means any of the following persons (hereafter in this Article referred to as"lesee micro enterprises"): <Amended on Feb. 2, 2021; Nov. 9, 2021>

1. A person who meets all of the following requirements:

(a) A micro enterprise under Article 2 of the Framework Act on Micro Enterprises;

(b) A person who has continuously leased and used the commercial building leased for business purposes since before June 30, 2021;

(d) A person who is not a related party to the lessor of the commercial building under subparagraph 20 of Article 2 of the Framework Act on National Taxes;

(e) A person registered as a business operator under Article 168 of the Income Tax Act, Article 111 of the Corporate Tax Act, or Article 8 of the Value-Added Tax Act;

2. A person who closes his/her business prior to the termination of the lease agreement for the leased commercial building and meets all of the following requirements that:

(a) The person would have fallen under item 1 before closing his/her business;

(b) There is a remaining term of the lease agreement on or after January 1, 2021.

(4) "Amount of reduction in rent prescribed by Presidential Decree" in Article 96-3 (1) of the Act means the amount of subparagraph 1 minus the amount of subparagraph 2 (hereafter in this Article referred to as "rent reduction amount"). In such cases, the amount of the security deposit converted into rent shall be excluded: <Amended on Feb. 17, 2021; May 4, 2021; Feb. 15, 2022; Feb. 28, 2023; Feb. 29, 2024>

1. The rent for the relevant taxable year (limited to the period corresponding to the deduction period under Article 96-3 (1) of the Act in the relevant taxable year (hereafter in this Article referred to as the "deduction period") calculated on the basis of the rent under the lease agreement on the leased commercial building immediately before the rent reduction; hereafter in subparagraph 2, the same shall apply): Provided, That, if during the deduction period, the lease agreement on the leased commercial building is renewed or re-contracted (hereafter in this Article referred to as "renewal, etc.") with the same lesee micro enterprise, and the rent under the renewal, etc. is reduced, the rent shall be calculated based on the rent under the renewal, etc. from the date the renewal agreement on the renewal, etc. become effective to December 31, 2024;

2. The rent paid or agreed to be paid for the leased commercial building and accrued as the revenue of the lessor of the commercial building for the relevant taxable year.

(5) The amount of standard income for a taxable year under Article 96-3 (1) of the Act shall be the amount of global income added to the global income tax base for the taxable period, plus the amount of rent reduction. <Newly Inserted on May 4, 2021>

(6)"If the requirements prescribed by Presidential Decree are met" in Article 96-3 (2) of the Act means a case where the rent or deposit is increased from the rent or deposit under the lease agreement immediately before the rent or deposit is reduced (if a lease agreement was renewed or re-contracted, referring to the rent or deposit increased after the renewal, etc. in excess of 5/100 of the amount under the lease agreement immediately before the rent is reduced). <Amended on Feb. 17, 2021; May 4, 2021>

(7) The deduction under Article 96-3 (1) of the Act shall not apply if the requirements under paragraph (6) are met during the relevant taxable year, and if the requirements under paragraph (6) are met within six months after the end of the relevant taxable year, the tax already deducted shall be additionally collected. <Newly Inserted on Feb. 17, 2021; May 4, 2021>

(8) A person who wishes to be granted a tax credit for income tax or corporate tax pursuant to Article 96-3 (1) of the Act shall submit an application for the tax credit, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the taxable year pursuant to paragraph (3) of that Article and the following documents attached thereto: <Amended on Dec. 17, 2021; May. 4, 2021; Nov. 9, 2021>

1. A copy of the lease agreement signed immediately prior to the rent reduction and a copy of the lease agreement for renewal, etc. if the lease agreement was renewed on or after January 1, 2020;

2. Documents evidencing an agreement to reduce rent during the deduction period, such as a letter of commitment, agreement, or amended contract;

3. Documents that confirm the payment of rent, such as tax invoices, statements of financial transactions, etc.;

4. A document issued by the Small Enterprise and Market Service established pursuant to Article 17 of the Act on the Protection of and Support for Micro Enterprises to confirm that the lessee micro enterprise meets the requirements of paragraph (3) 1 (a) and (c).

[This Article Newly Inserted on Apr. 14, 2020]

Article 97(Reduction or Exemption of Capital Gains Tax for Long-Term Rental Housing Units) #

(1)"Resident prescribed by Presidential Decree" in the main sentence of Article 97 (1) of the Act, with the exception of its subparagraphs, means a resident who leases at least five units of rental housing. In such cases, where rental housing units are jointly owned by persons, the number of the rental housing units shall be calculated by multiplying the number of rental housing units by the equity ratio. <Amended on Dec. 31, 2001; Feb. 4, 2009; Feb. 12, 2019>

(2) Where the buildings for different purposes, such as some of build-to-rent housing units or the business section, etc. at the same lot number under the proviso to Article 97 (1) of the Act are established, Article 122 (4) and (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the scope of such buildings deemed houses and the methods for calculating expenses incurred. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 21, 2014>

(3) A resident who intends to report on housing lease pursuant to Article 97 (3) of the Act shall submit a written report on housing lease, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the location of rental houses, within three months from the date he/she commences leasing the relevant house. <Amended on Dec. 31, 2001; Feb. 29, 2008>

(4) A person who intends to apply for a tax reduction or exemption pursuant to Article 97 (3) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the following documents, at the time of filing a tax return for the taxable year in which the relevant rental house is transferred: <Amended on Dec. 31, 2001; Feb. 19, 2005; Feb. 29, 2008; Dec. 28, 2015; Feb. 11, 2020; Sep. 26, 2023>

1. A certificate of registration of a rental business operator under Article 4 (5) of the Enforcement Decree of the Special Act on Private Rental Housing, or a document certifying that the person has been designated as a public housing business operator under Article 4 of the Special Act on Public Housing;

2. A copy of a lease agreement;

3. A certified copy of a tenant's resident registration card, or a copy of a tenant’s resident registration certificate. In such cases, such copy may be replaced by a statement of inspection of the resident registration of the registered household under Article 29 (1) of the Resident Registration Act;

4. Deleted. <Jun. 12, 2006>

5. Other documents specified by Ordinance of the Ministry of Economy and Finance.

(5) The rental period of a rental house under Article 97 (4) of the Act (hereafter in this Article, referred to as"house rental period") shall be calculated as follows: <Amended on Jan. 10, 2000; Dec. 31, 2001; Feb. 29, 2008>

1. The initial date in reckoning the house rental period shall be the date the house lease is commenced;

2. Deleted. <Dec. 31, 2001>

3. Where the heir acquires a rental housing from his/her decedent by inheritance and leases it, the housing rental period of the decedent shall be added to the housing rental period of the heir;

3-2. Deleted. <Dec. 31, 2001>

4. The rental period of less than five houses shall not be deemed the house rental period;

5. For the purposes of subparagraph 1 or 3, the period prescribed by Ordinance of the Ministry of Economy and Finance shall be included in the house rental period.

(6) Upon receipt of an application for tax reduction or exemption filed under Article 97 (3) of the Act, the head of the tax office having jurisdiction over the place of tax payment shall verify the certificate of registered matters of the rental house or the certified copies of the land cadastre and the building register by matching them against administrative information available for sharing under Article 36 (1) of the Electronic Government Act. <Newly Inserted on Jun. 12, 2006; Jun. 28, 2007; May 4, 2010; Nov. 2, 2010; Feb. 13, 2018>

[Title Amended on Dec. 31, 2001]

Article 97-3(Special Taxation for Capital Gains Tax on Long-Term General Private Rental Housing) #

(1)"Resident prescribed by Presidential Decree" in Article 97-3 (1) of the Act, with the exception of its subparagraphs, means a resident defined in Article 1-2 (1) 1 of the Income Tax Act.

(2)"Leasing it for at least ten consecutive years" in Article 97-3 (1) 1 of the Act means where a public-supported private rental housing unit or a long-term general private rental housing unit defined in subparagraph 4 or 5 of Article 2 of the Special Act on Private Rental Housing (hereafter in this Article referred to as"long-term general private rental housing unit, etc.") has been registered for at least ten consecutive years and has been leased for at least ten years in total during the period of registration. In such cases, where it is impracticable to lease the relevant housing unit due to a redevelopment project or a reconstruction project under the Act on the Improvement of Urban Areas and Residential Environments, a small-scale housing rearrangement project under the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement, or a remodeling project under the Housing Act, it shall be deemed to be leased continuously for a period of six months from six months before the date of authorization of the management and disposal plan (referring to the date of approval of the project implementation plan in cases of a small-scale housing rearrangement project or the date of permission or the date of approval of the project plan in cases of a remodeling project) to six months after the completion date of the project, but only the actual period of lease shall be included in calculating the period of lease. <Amended on Feb. 28, 2023>

(3)"Requirements, etc. for restrictions on the increase of rental deposits or rents prescribed by Presidential Decree" in Article 97-3 (1) 2 of the Act means the following requirements: <Amended on Dec. 28, 2015; Feb. 5, 2016; Aug. 11, 2016; Oct. 23, 2018; Feb. 11, 2020; Feb. 28, 2023>

1. The annual increase rate of rental deposits or rents (hereafter in this subparagraph referred to as"rents, etc.") shall not exceed 5/100. In such cases, no request for an increase in rent shall be made within one year after an increase in rents under the lease contract or agreement; and in the event that a rental business operator switches a rental deposit to monthly rent while requesting an increase in rent, the standards prescribed in Article 44 (4) of the Special Act on Private Rental Housing shall apply mutatis mutandis;

2. The house shall not exceed the size of national housing unit defined in subparagraph 6 of Article 2 of the Housing Act (the size shall be based on the area for exclusive use by each unit, if the house is a multi-unit house);

3. The long-term general private rental housing unit, etc. shall be leased for at least ten years from the commencement date of leasing;

4. The total assessed value of the long-term general private rental housing unit, etc. and land appurtenant thereto shall not exceed 600 million won (or 300 million won in cases of an area outside the Seoul Metropolitan area) as at commencement date of leasing of the relevant housing unit.

(4) Article 97 (5) 1, 3, and 5 shall apply mutatis mutandis to calculating the lease period of long-term general private rental housing, etc. In such cases, the lease of such housing shall be deemed to commence on the date of lease after completing business registration under Article 168 of the Income Tax Act, registration of a rental business operator under Article 5 of the Special Act on Private Rental Housing, and registration of long-term general private rental housing, etc.; and where a short-term private rental housing defined in subparagraph 6 of Article 2 of the Special Act on Private Rental Housing is changed to, and reported as, a long-term general private rental housing, etc. pursuant to Article 5 (3) of that Act, the lease shall be deemed to have commenced from the time prescribed in Article 34 (1) 3 of the Enforcement Decree of that Act. <Amended on Feb. 3, 2015; Dec. 28, 2015; Feb. 5, 2016; Jul. 16, 2018; Feb. 12, 2019>

(5) When calculating a special deduction for long-term holding pursuant to Article 95 (1) of the Income Tax Act, the deduction rate of 70/100 under Article 97-3 (1) of the Act shall be applied only to the capital gains generated during the lease period, and the capital gains during the lease period shall be calculated based on the reference market price. <Newly Inserted on Feb. 17, 2021; Feb. 28, 2023>

(6) A person who intends to apply for special tax treatment pursuant to Article 97-3 (2) of the Act shall file an application for special tax treatment, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her preliminary or final tax return on capital gains from the relevant long-term general private rental housing, etc. In such cases, Article 97 (3), (4), and (6) shall apply mutatis mutandis to the procedures for filing applications and other matters. <Amended on Feb. 5, 2016; Jul. 16, 2018; Feb. 17, 2021>

[This Article Newly Inserted on Feb. 21, 2014]

[Title Amended on Feb. 5, 2016; Jul. 16, 2018]

Article 97-5(Reduction or Exemption of Capital Gains Tax for Long-Term General Rental Housing Units) #

(1) Where a public-supported rental housing unit or a long-term general private rental housing unit defined in subparagraph 4 or 5 of Article 2 of the Special Act on Private Rental Housing (hereafter in this Article, referred to as"long-term general private rental housing unit, etc."), is leased for at least 10 consecutive years under Article 97-5 (1) 2 of the Act means where a long-term general private rental housing unit, etc. has been registered for at least 10 consecutive years and has been leased for at least 10 consecutive years during the period in which such housing unit has been registered. In such cases, such housing unit shall be deemed leased consecutively during the relevant period: <Amended on Dec. 28, 2015; Feb. 5, 2016; Feb. 9, 2018; Jul. 16, 2018; Feb. 11, 2020>

1. The period not exceeding six months from the date the former tenant moves out, until the date the new tenant transfers his/her resident registration;

2. The period during which it is impossible to lease the housing unit due to purchase through negotiations or expropriation under any Act specified in Article 72 (2);

3. The period from six months before the date of authorization of the management and disposal plan (referring to the date of approval of the project implementation plan in cases of a small-scale housing rearrangement project or the date of permission or the date of approval of the project plan in cases of a remodeling project) of the housing unit until six months after the completion date of work, where it is impracticable to lease such housing unit due to implementing a development project or a reconstruction project under the Act on the Improvement of Urban Areas and Residential Environments, a small-scale housing rearrangement project under the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement, or a remodeling project under the Housing Act.

(2) For the purposes of Article 97-5 (1) of the Act, capital gains accruing during the lease period shall be calculated by the following formula. If a person acquires or transfers a housing unit or the last day of the lease period under paragraph (1) arrives, before a new assessed value is publicly notified, the assessed value for the immediately preceding period shall apply to the calculation of such capital gains:

Capital gains under Article 95 (1) of the Income Tax Act × {(assessed value on the end of the lease period under paragraph (1) ? assessed value at the time of acquisition) ÷ (assessed value at the time of transfer ? assessed value at the time of acquisition)}

(3) Article 97 (5) 1 and 3 shall apply mutatis mutandis to calculating the lease period of long-term general private rental housing, etc. In such cases, the lease shall be deemed to commence on the date of lease after completing business registration under Article 168 of the Income Tax Act and the registration of a rental housing business operator under Article 5 of the Special Act on Private Rental Housing and the registration of long-term general private rental housing, etc. <Amended on Dec. 28, 2015; Feb. 5, 2016; Jul. 16, 2018>

(4) A person who intends to apply for special tax treatment under Article 97-5 (3) of the Act shall file an application for special taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with a preliminary or final tax return on capital gains from the relevant long-term general private rental housing, etc. In such cases, Article 97 (3), (4), and (6) shall apply mutatis mutandis to the procedures for filing application and other matters. <Amended on Feb. 5, 2016; Jul. 16, 2018>

[This Article Newly Inserted on Feb. 3, 2015]

[Title Amended on Feb. 5, 2016; Jul. 16, 2018]

Article 97-6(Special Taxation, etc. on In-Kind Investors in Real Estate Investment Companies for Rental Housing) #

(1)"Real estate investment company for rental housing prescribed by Presidential Decree" in Article 97-6 (1) and (2) 3 of the Act, with the exception of its subparagraphs, means a real estate investment trust which invests in housing rental business under Article 14-8 (3) 2 of the Real Estate Investment Company Act, which is prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"real estate investment company for rental housing").

(2)"Portion used for rental housing, as prescribed by Presidential Decree" in Article 97-6 (1) of the Act, with the exception of its subparagraphs, means any of the following: <Amended on Dec. 28, 2015>

1. Private rental housing defined in Article 2 of the Special Act on Private Rental Housing, or public rental housing defined in subparagraph 1 (a) of Article 2 of the Special Act on Public Housing (including officetels used as residence);

2. Land appurtenant to the housing referred to in subparagraph 1 (if the area of land exceeds the area calculated by multiplying the area on which a building stands, by either of the following multipliers, whichever is applicable to the relevant region, the excess land shall be disregarded):

(a) Five times in cases of land in an urban area specified in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act;

(b) Ten times in cases of land in other areas;

(3) The amount by which a national may defer the payment of capital gains tax or the imposition of corporate tax pursuant to Article 97-6 (1) of the Act shall be calculated as follows:

1. If the national is a resident: Amount of capital gains tax assessed under subparagraph 2 of Article 93 of the Income Tax Act × Ratio of the portion used for rental housing under paragraph (2) in the land or building referred to in Article 94 (1) 1 of the Income Tax Act, which has been invested in kind by the resident (hereafter in this Article, referred to as"asset");

2. If the national is a domestic corporation: (Consideration for investment in kind under Article 97-6 (1) 2 of the Act ? Book value of the asset invested in kind) × Ratio of the portion used for rental housing under paragraph (2) in the asset invested in kind by the domestic corporation.

(4) Where a domestic corporation is granted deferred taxation of corporate tax under Article 97-6 (1) of the Act, it shall include the amount calculated under paragraph (3) 2 in deductible expenses for the purposes of calculating the amount of income for the business year in which an investment in kind is made. The amount to be included in deductible expenses shall be calculated for each piece of asset invested in kind, and the total amount included in deductible expenses shall be recognized as the advanced depreciation provision for stocks of a real estate investment company, which have been acquired by making an investment in kind.

(5) Where investments in kind are made at least twice, each investment shall be deemed an independent investment in kind for the purposes of Article 97-6 (1) of the Act.

(6) For the purposes of paragraph (3), the amount of capital gains tax assessed under subparagraph 2 of Article 93 of the Income Tax Act shall be calculated based on the actual transaction price under Article 96 (1) of that Act; and the consideration for an investment in kind under Article 97-6 (1) 2 of the Act shall be calculated based on the market price under Article 52 (2) of the Corporate Tax Act of an asset invested in kind.

(7) A person shall pay capital gains tax deferred under Article 97-6 (2) of the Act or include the capital gains tax-deferred income in gross income, as follows: <Amended on Feb. 7, 2017>

1. Where the person is a resident: To pay the amount calculated as follows as capital gains tax:

(a) Where the cumulative ratio calculated by dividing the number of stocks disposed of, out of the stocks acquired as consideration for an in-kind investment, by the number of stocks acquired as consideration for the in-kind investment (if stocks acquired by any manner other than an in-kind investment are disposed of, the stocks acquired as consideration for the in-kind investment shall be deemed first disposed of; hereafter in this subparagraph, referred to as"stock disposal ratio") in cases falling under Article 97-6 (2) 1 or 4 of the Act, is less than 50/100: Amount of capital gains tax, the payment of which has been deferred under paragraph (3) × Stock disposal ratio;

(b) Where the cumulative stock disposal ratio is at least 50/100 in cases falling under Article 97-6 (2) 1 or 4 of the Act: The full amount of capital gains tax, the payment of which has been deferred under paragraph (3) (the amount of tax already paid under item (a) shall be excluded);

(c) In cases falling under Article 97-6 (2) 2 or 3 of the Act: The full amount of capital gains tax, the payment of which has been deferred under paragraph (3) (the amount of tax already paid under item (a) shall be excluded);

2. Where the person is a domestic corporation: To include the amount calculated as follows in gross income:

(a) Where the cumulative ratio determined by dividing the number of stocks disposed of during the relevant business year, out of the stocks acquired as consideration for an in-kind investment, by the number of stocks acquired as consideration for the in-kind investment (if stocks acquired by any manner other than an in-kind investment are disposed of, the stocks acquired as consideration for the in-kind investment shall be deemed first disposed of; hereafter in this subparagraph, referred to as"ratio of stocks disposed of during the relevant year") in cases falling under Article 97-6 (2) 1 of the Act, is less than 50/100: The advanced depreciation provision recognized for each investment in kind × Ratio of stocks disposed of during the relevant year;

(b) Where the cumulative disposal ratio of stocks acquired as consideration for each investment in kind for the relevant year in cases falling under Article 97-6 (2) 1 of the Act, is at least 50/100: The full amount of the advanced depreciation provision recognized under paragraph (4) (the amount already included in gross income under item (a) shall be excluded);

(c) In cases falling under Article 97-6 (2) 2 or 3 of the Act: The full amount of the advanced depreciation provision recognized under paragraph (4) (the amount already included in gross income under item (a) shall be excluded). The full amount of the advanced depreciation provision recognized under paragraph (4) (the amount already included in gross income under item (a) shall be excluded);

(8) An amount equivalent to the interest payable under Article 97-6 (3) of the Act shall be calculated as follows: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. In cases of a resident: An amount calculated by multiplying the amount of capital gains tax, the payment of which has been deferred but shall be paid under paragraph (7) 1 (c) by the period of item (a) and the ratio of item (b):

(a) The period from the day immediately following the deadline for filing the provisional return and payment of capital gains tax on the land, etc. invested in kind, until the date of payment of the relevant tax under Article 97-6 (2) 2 or 3 of the Act;

(b) The rate specified in Article 11-2 (9) 2;

2. In cases of a domestic corporation: An amount calculated by multiplying the amount included in gross income under paragraph (7) 2 (c) by the difference between the amount of the corporate tax accrued due to the inclusion in deductible expenses under paragraph (4) and the period of item (a) and the ratio of item (b):

(a) The period from the day following the end of the business year in which an investment in kind is made, until the end of the business year in which the amount under paragraph (7) 2 (c) is included in gross income;

(b) The rate specified in Article 11-2 (9) 2;

(9) A national who wishes to be eligible under Article 97-6 (1) of the Act shall file a statement of investments in kind and an application for special taxation for investments in kind, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, at the time of filing his/her tax return. In such cases, the relevant real estate investment company for rental housing shall also file an application for special taxation for investments in kind.

(10) Where a national is accorded special taxation under Article 97-6 (1) of the Act, the relevant real estate investment company for rental housing shall file a list of stockholders and a report on investment performance, with the head of the tax office having jurisdiction over the place of tax payment, by the end of each quarter.

[This Article Newly Inserted on Feb. 3, 2015]

Article 97-7(Special Taxation on Land Transferred to Rental Business Operators) #

(1) Where a person who intends to be accorded special taxation under Article 97-7 (1) of the Act transfers land and a building, etc. concurrently, and it is impracticable to separate the transfer value or acquisition value of the land from that of the building, etc., such value shall be calculated on a pro rata basis by applying mutatis mutandisArticle 166 (6) of the Enforcement Decree of the Income Tax Act.

(2) A person who wishes to be granted a tax reduction or exemption pursuant to Article 97-7 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by a document certifying that the transferee of the land is a person who has acquired or intends to acquire at least 300 units or 300 households of public-supported private rental housing defined in subparagraph 4 of Article 2 of the Special Act on Private Rental Housing or long-term private rental housing units defined in subparagraph 5 of that Article, as a rental business operator defined in subparagraph 7 of Article 2 of that Act, with the head of the tax office having jurisdiction over the place of tax payment, along with the preliminary or final tax return on capital gains from the relevant land. <Amended on Jul. 16, 2018>

(3)"Period prescribed by Presidential Decree from the date of transfer of the land" in Article 97-7 (3) 1 and 2 of the Act means three years from the date of transfer of the land.

(4)"Period prescribed by Presidential Decree from the date of designation as the supply promotion district" in Article 97-7 (3) 1 of the Act means six years from the date of designation as the supply promotion district.

(5)"Period prescribed by Presidential Decree from the date of approval of the project plan" in Article 97-7 (3) 2 of the Act means six years from the date of approval of the project plan.

[This Article Newly Inserted on, Feb. 5, 2016]

[Title Amended on Jul. 16, 2018]

Article 97-8(Special Taxation on In-Kind Investors in Publicly-Offering Real Estate Investment Companies) #

(1) A domestic company that wishes to be granted deferred taxation on the equivalent to capital gains accruing from an in-kind investment as provided for in Article 97-8 (1) of the Act shall include the amount calculated by the following formula in deductible expenses at the time of calculating the amount of income for the business year in which the in-kind investment is made. In such cases, the amount included in deductible expenses shall be calculated for each piece of asset invested in kind; and the total amount included in deductible expenses shall be recognized as the advanced depreciation provision for stocks of a publicly-offering real estate investment company under Article 49-3 (1) of the Real Estate Investment Company Act (hereafter in this Article, referred to as"publicly-offering real estate investment company"):

Value of stocks acquired by the in-kind investment under Article 97-8 (1) of the Act - Book value of assets invested in kind

(2) Where investments in kind are made at least twice, each investment shall be deemed an independent investment in kind for the purposes of Article 97-8 (1) of the Act.

(3) For the purposes of paragraph (1), the value of stocks acquired by an in-kind investment shall be the market price under Article 52 (2) of the Corporate Tax Act of an asset invested in kind.

(4) Where an amount of tax-deferred income shall be included in gross income in accordance with Article 97-8 (2) of the Act, the following relevant amount shall be included in gross income:

1. Where the cumulative ratio calculated by dividing the number of stocks disposed of during the relevant business year, out of stocks acquired as the price for an in-kind investment, by the number of stocks acquired as the price for the in-kind investment (stocks acquired first shall be deemed first disposed of, and stocks acquired as the price for an in-kind investment shall be deemed first disposed of, if stocks acquired by any manner other than an in-kind investment are disposed of; hereafter in this Article, referred to as"ratio of stocks disposed of during the relevant year") in cases falling under Article 97-8 (2) 1 of the Act, is less than 50/100: The advance depreciation provision recognized for each in-kind investment × Ratio of stocks disposed of during the relevant year;

2. Where the cumulative ratio of stocks disposed of during the relevant year out of stocks acquired in return for in-kind investment in cases falling under Article 97-8 (2) 1 of the Act is at least 50/100: The full amount of the advanced depreciation provision recognized under paragraph (1) (an amount already included in gross income in accordance with subparagraph 1 shall be excluded);

3. In cases falling under Article 97-8 (2) 2 of the Act: The full amount of the advanced depreciation provision recognized in accordance with paragraph (1) (an amount already included in gross income in accordance with subparagraph 1 shall be excluded).

(5)"Amount equivalent to interest calculated as prescribed by Presidential Decree" in Article 97-8 (3) of the Act means the amount calculated by multiplying the difference incurred in corporate income tax by excluding the amount that shall be included in gross income in the business year in which an in-kind investment is made from gross income, by the period of subparagraph 1 and the ratio of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the end of the business year in which the in-kind investment is made, until the end of the business year in which the amount that shall be included in gross income under paragraph (4) 3 is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(6) A domestic corporation that wishes to be eligible under Article 97-8 (1) of the Act shall file a statement of investment in kind and an application for special taxation on investment in kind, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.

(7) Where a domestic corporation is accorded special taxation under Article 97-8 (1) of the Act, the relevant publicly-offering real estate investment company shall file a list of stockholders with the head of the tax office having jurisdiction over the place of tax payment, by the end of each quarter.

[This Article Newly Inserted on Feb. 7, 2017]

Article 98(Special Taxation for Unsold Housing Units) #

(1)"Unsold national housing unit prescribed by Presidential Decree" in the main sentence of Article 98 (1) of the Act means a housing unit not exceeding the size of national housing, which is located in an area outside of the Seoul Metropolitan City and meets each of the following requirements: <Amended on Nov. 29, 2003; Feb. 19, 2005; Feb. 18, 2010; Dec. 28, 2015; Feb. 18, 2020>

1. A housing unit built according to a project plan approved under the Housing Act (excluding private rental housing defined in Article 2 of the Special Act on Private Rental Housing and public rental housing defined in subparagraph 1 (a) of Article 2 of the Special Act on Public Housing; hereafter in this Article, the same shall apply) and identified as an unsold unit as at October 31, 1995 by the head of the Si/Gun/Gu having jurisdiction over the location of such housing unit;

2. A housing unit first sold by a housing construction business entity, in which no one has ever resided after the completion of its construction.

(2) Where a resident transfers any of his/her houses, other than an unsold housing unit specified under paragraph (1), that he/she acquired during the period between November 1, 1995 and December 31, 1997 (including where he/she concluded a sale and purchase agreement and paid the down payment by no later than December 31, 1997), Article 89 (1) 3 of the Income Tax Act shall apply only on the basis of such houses, other than the unsold housing unit. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 21, 2014>

(3) Article 95 (4) of the Income Tax Act shall apply mutatis mutandis to calculating the holding period under Article 98 (1) of the Act. <Amended on Feb. 19, 2005>

(4) Any person who intends to apply for special taxation pursuant to Article 98 (1) of the Act shall file an application of special taxation for unsold housing unit, in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the following documents, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her final tax return for the taxable year in which the relevant housing unit is transferred (including a provisional return, if he/she chooses the method provided for in Article 98 (1) 1 of the Act): <Amended on Jan. 10, 2000; Feb. 29, 2008>

1. A copy of a note verifying that the relevant housing is an unsold housing unit, which is issued by the head of the relevant Si/Gun/Gu;

2. A copy of a sale and purchase agreement (limited to an unsold housing unit, the acquisition of which was registered on or after January 1, 1998), if he/she acquires an unsold housing unit.

(5)"Unsold national housing unit prescribed by Presidential Decree" in Article 98 (3) of the Act means a housing unit not exceeding the size of national housing, that is located in an area outside of the Seoul Metropolitan City, and meets each of the following requirements: <Amended on Nov. 29, 2003; Feb. 19, 2005; Feb. 18, 2010; Feb. 18, 2020>

1. A housing unit built according to the project plan approved under the Housing Act and identified as an unsold unit as at February 28, 1998 by the head of the Si/Gun/Gu having jurisdiction over the location of such housing unit;

2. A housing unit first sold by a housing construction business entity, in which no one has ever resided after the completion of its construction.

(6) Where a resident transfers any of his/her houses, other than an unsold housing unit specified under paragraph (5), that he/she acquired during the period between March 1, 1998 and December 31, 1998 (including where he/she concluded a sale and purchase agreement and paid the down payment by no later than December 31, 1998), Article 89 (1) 3 of the Income Tax Act shall apply only on the basis of such houses, other than the unsold housing unit. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 21, 2014>

(7) Paragraphs (3) and (4) shall apply mutatis mutandis to filing an application for special taxation, and calculating the holding period of an unsold housing unit under Article 98 (3) of the Act.

Article 98-2(Special Taxation on Capital Gains Tax for Acquisition of Unsold Local Housing Units) #

(1)"Unsold housing unit prescribed by Presidential Decree" in Article 98-2 (1) of the Act, with the exception of its subparagraphs, means any of the following houses (hereafter in this Article, referred to as"unsold housing unit"): <Amended on Aug. 11, 2016>

1. A house supplied by a project operator under Article 54 of the Housing Act (hereafter in this Article, referred to as"project operator") pursuant to that Article on a first-come, first-served basis, on or after November 3, 2008 because no sale and purchase agreement was concluded by November 2, 2008 in a housing complex for which the prearranged contract date specified in the announcement for inviting purchasers elapsed;

2. A house (limited to a house for which the prearranged contract date specified in the announcement for inviting purchasers has not elapsed as of November 3, 2008) supplied by a project operator, which obtained approval of its project plan (including a building permit required under Article 11 of the Building Act; hereafter in this Article, the same shall apply) or applied for approval of its project plan under Article 15 of the Housing Act by November 3, 2008, in accordance with the approved project plan and Article 54 of the Housing Act, and acquired by a resident upon first signing a sale and purchase agreement with the project operator.

(2) A person who intends to be accorded special taxation as prescribed in Article 98-2 of the Act shall submit a copy of the sale and purchase agreement bearing a seal of the head of a Si/Gun/Gu (the head of a Gu means the head of an autonomous Gu; hereafter in this Article, the same shall apply), which certifies that the relevant house is an unsold housing unit in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her final tax return (including corporate tax return) or preliminary tax return for the taxable year in which the relevant house is transferred: Provided, That this shall not apply where the person submits the following documents:

1. A house provided for in paragraph (1) 1: A statement certified by the head of a Si/Gun/Gu that the house is an unsold housing unit and a copy of a sale and purchase agreement;

2. A house provided for in paragraph (1) 2: A document certified by the head of a Si/Gun/Gu confirming the fact that the business plan has been approved or an application for approval of the relevant project plan has been filed, and a copy of a sale and purchase agreement.

(3) Where the head of the tax office having jurisdiction over the location of the house can confirm that the relevant house is an unsold housing unit as prescribed in paragraph (6), the evidentiary documents specified in paragraph (2) need not be submitted.

(4) Immediately upon signing a sale and purchase agreement of an unsold housing unit provided for in paragraph (1), a project operator shall have the sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of a Si/Gun/Gu certifying that the house is an unsold housing unit, and shall deliver one copy thereof to the other party to the sale and purchase agreement.

(5) Upon receipt of a request to place a seal certifying an unsold housing unit on a sale and purchase agreement pursuant to paragraph (6), the head of a Si/Gun/Gu shall verify whether the relevant house remains unsold based on the statement certifying that the house is an unsold housing unit and an application for approval of the relevant project plan, etc.; place his/her seal certifying the fact on the sale and purchase agreement; and enter and keep the relevant records in the Unsold Housing Units Register in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(6) The head of a Si/Gun/Gu and a project operator shall submit the Unsold Housing Units Register, in the form prescribed by Ordinance of the Ministry of Economy and Finance, respectively, to the head of tax office having jurisdiction over the location of the housing units, by the end of February of the year following the year in which the sale and purchase agreements are signed, in an electronic form using a data processing system, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media"): Provided, That there is no change in the reported content from the year following the year in which the Register is first submitted, it need not be submitted.

(7) Upon receipt of data stored on the electronic media under paragraph (6), the head of the tax office having jurisdiction over the locations of unsold housing units shall keep and maintain the data.

(8) Procedures for verifying unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 4, 2009]

Article 98-3(Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units) #

(1)"Unsold housing unit prescribed by Presidential Decree" in the former part of Article 98-3 (1) of the Act means any of the following houses (hereafter in this Article, referred to as"unsold housing unit"): Provided, That, in cases of an area within the over-concentration control region of the Seoul Metropolitan area, such unsold housing unit means a house built on a site not exceeding 660 square meters and with a total floor area not exceeding 149 square meters (or with an area for exclusive use not exceeding 149 square meters in cases of multi-family housing): <Amended on Sep. 29, 2009; Jun. 30, 2015; Aug. 11, 2016>

1. A house supplied by a project operator under Article 54 of the Housing Act (hereafter in this paragraph, referred to as"project operator") pursuant to that Article on a first-come, first-served basis, on or after February 12, 2009, because no sale and purchase agreement was concluded by February 11, 2009 in a housing complex for which the prearranged contract date specified in the announcement for inviting purchasers elapsed;

2. A house (limited to a house for which the prearranged contract date specified in the announcement for inviting purchasers falls on or after February 12, 2009) supplied by a project operator in accordance with the relevant project plan approved under Article 15 of the Housing Act (including a building permit required under Article 11 of the Building Act; hereafter in this Article, the same shall apply) and Article 54 of the Housing Act;

3. A house (including a house, the sale and purchase agreement of which, was not concluded by February 11, 2009) supplied by a housing builder (referring to a person who supplies housing that consists of less than 20 units, but excluding the project operators referred to in subparagraphs 1 and 2);

4. A house the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act (hereafter in this Article, referred to as the"Korea Housing and Urban Guarantee Corporation") supplies after having purchased as prescribed in Article 22 (1) 1 (a) of the Enforcement Decree of that Act;

5. A house supplied by its constructor after having received it as a payment for construction work;

6. A house supplied by a corporate restructuring real estate investment trust, etc. after having acquired it as prescribed in Article 92-2 (2) 1-5 of the Enforcement Decree of the Corporate Tax Act;

7. A house (limited to a house, the sale and purchase agreement of which, was not concluded by February 11, 2009) constructed by an owner of a building who constructs and supplies facilities other than a house and a house as the same building with a building permit granted under Article 11 of the Building Act before March 30, 2004, which is supplied by such owner;

8. A house supplied by a trust business entity under the Financial Investment Services and Capital Markets Act after having acquired as prescribed in Article 92-2 (2) 1-7 of the Enforcement Decree of the Corporate Tax Act.

(2) The following houses shall be disregarded for the purposes of paragraph (1): <Amended on Sep. 29, 2009; Jun. 30, 2015>

1. A house that has ever been occupied as at the date a sale and purchase agreement is signed;

2. A house acquired by a party to a sale and purchase agreement or his/her spouse (including lineal ascendants, descendants, and siblings of the party to a sale and purchase agreement or his/her spouse) by re-concluding a sale and purchase agreement of such house for which such party to a sale and purchase agreement had concluded a sale and purchase agreement with a project operator (including a housing builder referred to in paragraph (1) 3, the Korea Housing and Urban Guarantee Corporation referred to in paragraph (1) 4, a constructor referred to in paragraph (1) 5, a corporate restructuring real estate investment trust, etc. referred to in paragraph (1) 6, an owner of a building referred to in paragraph (1) 7, and a trust business entity referred to in paragraph (1) 8; hereafter in subparagraph 3 and paragraphs (6), (8), and (10), the same shall apply), and cancelled such agreement during the period between February 12, 2009 and February 11, 2010 (hereafter in this Article, referred to as"acquisition period of an unsold housing unit");

3. A house acquired by concluding a sale and purchase agreement for another house with a project operator in lieu of a house of which original sale and purchase agreement was concluded with the project operator during the acquisition period of an unsold housing unit.

(3) For the purposes of Article 98-3 (1) of the Act, the amount of capital gains accrued for five years from the date of purchase of an unsold housing unit, shall be calculated by applying mutatis mutandisArticle 40 (1). <Amended on Feb. 18, 2010>

(4) Whether an unsold housing unit is located within the over-concentration control region of the Seoul Metropolitan area for the purposes of Article 98-3 (1) of the Act shall be determined as at the date a sale and purchase agreement is signed.

(5) A person who intends to be accorded special taxation as prescribed in Article 98-3 of the Act shall submit a copy of the sale and purchase agreement bearing a seal of the head of a Si/Gun/Gu (the head of a Gu means the head of an autonomous Gu; hereafter in this Article, the same shall apply), which certifies that the relevant house is an unsold housing unit in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her preliminary or final tax return on the capital gains from the relevant house: Provided, That, in cases of a housing unit referred to in Article 98-3 (2) of the Act, a person shall submit a copy of the commencement report of construction submitted to the head of a Si/Gun/Gu, and documents confirming that the housing unit has passed pre-use inspections or has approved for use (including approval for temporary use).

(6) A project operator shall submit a report on the status of unsold housing units prescribed by Ordinance of the Ministry of Economy and Finance (limited to housing units, the sale agreements of which were not concluded by February 11, 2009) to the head of a Si/Gun/Gu by April 30, 2009: Provided, That the project operator shall submit a report on the status of unsold housing units provided for in paragraph (1) 2, 3 (limited to housing units supplied as of February 12, 2009), 4, 5 (limited to housing units received as payments in substitutes as of February 12, 2009), 6, and 8, within one month from the end of the month in which a purchaser first concluded a sale and purchase agreement with the project operator (based on the first-concluded sale and purchase agreement where multiple sale and purchase agreements exist). <Amended on Sep. 29, 2009>

(7) The head of a Si/Gun/Gu shall keep the reports on the status of unsold housing units submitted under paragraph (6), and submit such reports to the head of the tax office having jurisdiction over the location of the unsold housing units within one month from the end of the quarter in which the date of submission falls.

(8) Immediately upon signing a sale and purchase agreement of an unsold housing unit provided for in paragraph (1), a project operator shall have the sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of a Si/Gun/Gu certifying that the house is an unsold housing unit; deliver one copy thereof to the other party to the sale and purchase agreement; and enter and keep relevant records in the Unsold Housing Units Register in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(9) Upon receipt of a request to place a seal certifying an unsold housing unit on the sale and purchase agreement pursuant to paragraph (8), the head of a Si/Gun/Gu shall verify whether the relevant house remains unsold based on the report on the status of unsold housing units submitted under paragraph (7), an application for approval of the relevant project plan, etc.; place his/her seal in the form prescribed by Ordinance of the Ministry of Economy and Finance on the sale and purchase agreement certifying the relevant house is an unsold housing unit; and enter and keep relevant records in the Unsold Housing Units Register in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(10) The head of a Si/Gun/Gu and a project operator shall submit the Unsold Housing Units Register, in the form prescribed by Ordinance of the Ministry of Economy and Finance, respectively, to the head of the tax office having jurisdiction over the location of the unsold housing units, by April 30, 2010 in an electronic form using a data processing device, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media").

(11) Upon receipt of data stored on the electronic media under paragraph (10), the head of the tax office having jurisdiction over the locations of unsold housing units shall keep and maintain the data.

(12) Procedures for verifying unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Apr. 21, 2009]

Article 98-4(Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units Located outside Seoul Metropolitan Area) #

(1)"Unsold housing unit prescribed by Presidential Decree" in the former part of Article 98-5 (1) of the Act, with the exception of its subparagraphs, means any of the following houses (hereafter in this Article, referred to as"unsold housing unit"): <Amended on Jun. 30, 2015; Aug. 11, 2016>

1. A house supplied by a project operator under Article 54 of the Housing Act pursuant to that Article on a first-come, first-served basis, because no sale and purchase agreement was concluded by February 11, 2010 in a housing complex for which the prearranged contract date specified in the announcement for inviting purchasers elapsed;

2. A house supplied by the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act (hereafter in this Article, referred to as the"Korea Housing and Urban Guarantee Corporation") after having acquired as prescribed in Article 22 (1) 1 (a) of the Enforcement Decree of that Act;

3. A house supplied by its constructor after having received it as a payment for construction work;

4. A house supplied by a corporate restructuring real estate investment trust, etc. after having acquired as prescribed in Article 92-2 (2) 1-5 or 1-8 of the Enforcement Decree of the Corporate Tax Act;

5. A house supplied by a trust business entity under the Financial Investment Services and Capital Markets Act after having acquired it as prescribed in Article 92-2 (2) 1-7 or 1-9 of the Enforcement Decree of the Corporate Tax Act.

(2) The following houses shall be disregarded for the purposes of paragraph (1): <Amended on Jun. 30, 2015>

1. A house that has ever been occupied as at the date a sale and purchase agreement is signed;

2. A house acquired by a party to a sale and purchase agreement or his/her spouse (including lineal ascendants, descendants, and siblings of the party to a sale and purchase agreement or his/her spouse) by re-concluding a sale and purchase agreement of such house for which such party to a sale and purchase agreement had concluded a sale and purchase agreement with a project operator, etc. (including a project operator referred to in paragraph (1) 1, the Korea Housing and Urban Guarantee Corporation referred to in paragraph (1) 2, a constructor referred to in paragraph (1) 3, a corporate restructuring real estate investment trust, etc. referred to in paragraph (1) 4, and a trust business entity referred to in paragraph (1) 5; hereafter in subparagraph 3 and paragraphs (6), (8), and (10), the same shall apply), and cancelled such contract during the period between May 14, 2010 and April 30, 2011 (hereafter in this paragraph, referred to as"acquisition period of an unsold housing unit");

3. A house acquired by concluding a sale and purchase agreement for another house with a project operator, etc. in lieu of a house of which original sale and purchase agreement was concluded with such project operator, etc. during the acquisition period of an unsold housing unit.

(3) For the purposes of Article 98-5 (1) of the Act, the amount of capital gains accruing for five years from the date of purchase of an unsold housing unit, shall be calculated by applying mutatis mutandisArticle 40 (1).

(4) The discount rate of the selling price referred to in Article 98-5 (1) of the Act shall be calculated by the following formula:

Discount rate of the selling price = {(Selling price stated in the announcement to invite purchasers selling price stated in the sale and purchase agreement) ÷ Selling price stated in the announcement to invite purchasers} ×100

(5) A person who intends to be accorded special taxation under Article 98-5 of the Act shall submit a copy of the sale and purchase agreement bearing a seal of the head of the relevant Si (including the head of an administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to the head of an autonomous Gu; hereafter in this Article, the same shall apply), which certifies that the relevant house is an unsold housing unit in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her preliminary or final tax return on capital gains from the relevant unsold housing unit. <Amended on Jan. 22, 2016>

(6) A project operator, etc. shall submit a report on the status of unsold housing units prescribed by Ordinance of the Ministry of Economy and Finance (limited to housing units, the sale agreements of which were not concluded by February 11, 2010) to the head of a Si/Gun/Gu by June 30, 2010.

(8) Immediately upon signing a sale and purchase agreement for an unsold housing unit provided for in paragraph (1), a project operator, etc. shall have the sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of the relevant Si/Gun/Gu to certify that the house is an unsold housing unit; deliver one copy thereof to the other party to the sale and purchase agreement; and enter and keep relevant records in the Unsold Housing Units Register in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(9) Upon receipt of a request to place a seal certifying an unsold housing unit on a sale and purchase agreement pursuant to paragraph (8), the head of a Si/Gun/Gu shall verify whether such housing unit remains unsold based on the report on the status of unsold housing units under paragraph (7) and an application for approval of the relevant project plan, etc. filed under Article 15 of the Housing Act; place his/her seal in the form prescribed by Ordinance of the Ministry of Economy and Finance on the sale and purchase agreement certifying that it is an unsold housing unit; and enter and keep relevant records in the Unsold Housing Units Register in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Aug. 11, 2016>

(10) The head of a Si/Gun/Gu, a project operator, etc. shall submit the Unsold Housing Units Register, in the form prescribed by Ordinance of the Ministry of Economy and Finance, respectively, to the head of the tax office having jurisdiction over the location of the unsold housing units, by June 30, 2011, in an electronic form using a data processing device, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media").

(11) Upon receipt of data stored on the electronic media under paragraph (10), the head of the tax office having jurisdiction over the locations of unsold housing units, shall keep and maintain the data.

(12) Procedures for verifying unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Jun. 8, 2010]

Article 98-5(Special Taxation for Capital Gains Tax on Purchasers of Completed but Unsold Housing Units) #

(1)"Project operator prescribed by Presidential Decree" in Article 98-6 (1) 1 of the Act means any of the following: <Amended on Jun. 30, 2015>

1. The Korea Housing and Urban Guarantee Corporation that has purchased houses as prescribed in Article 22 (1) 1 (a) of the Enforcement Decree of the Housing and Urban Fund Act;

2. A housing constructor who has received the relevant house as a payment for construction work;

3. A corporate restructuring real estate investment trust, etc. that has acquired houses as prescribed in Article 92-2 (2) 1-5, 1-8, or 1-10 of the Enforcement Decree of the Corporate Tax Act;

4. A trust business entity under the Financial Investment Services and Capital Markets Act that has acquired houses as prescribed in Article 92-2 (2) 1-7, 1-9, or 1-11 of the Enforcement Decree of the Corporate Tax Act.

(2)"Completed but unsold housing unit prescribed by Presidential Decree" in Article 98-6 (1) 1 of the Act means a housing unit (hereafter in this Article, referred to as"completed but unsold housing unit") supplied under Article 54 of the Housing Act on a first-come, first-served basis, because no sale and purchase agreement was concluded by March 29, 2011 after it had passed the pre-use inspections under Article 49 of that Act (including approval for temporary use) or had been approved for use under Article 22 of the Building Act (including where the use of a building is permitted pursuant to any subparagraph of Article 22 (3)): Provided, That this shall not apply to a house, if the total assessed value of the house and the land appurtenant thereto, exceeds 600 million won as at the time of its acquisition (as at the time of the first lease in cases of a house referred to in Article 98-6 (1) 1 of the Act), and its total floor area (or an area for exclusive use in cases of multi-family housing), exceeds 149 square meters. <Amended on Aug. 11, 2016>

(3) The following houses shall be disregarded for the purposes of the main sentence of paragraph (2): <Amended on Aug. 11, 2016>

1. A house that has ever been occupied by any tenant after completion;

2. A house that has been acquired during the period between March 29, 2011 and December 31, 2011, by a party to a sale and purchase agreement or his/her spouse (including lineal ascendants, descendants, and siblings of the party to a sale and purchase agreement or his/her spouse) by re-concluding a sale and purchase agreement of the house for which such party had concluded an original sale and purchase agreement with a project operator, etc. (referring to any project operator that supplies houses under Article 54 of the Housing Act and any of the business operators specified under paragraph (1); hereafter in this Article, the same shall apply) and rescinded the original sale and purchase agreement;

3. A house that has been acquired by concluding a sale and purchase agreement with the relevant project operator, etc. during the period between March 29, 2011 and December 31, 2011 in lieu of a house for which a sale and purchase agreement had been concluded.

(4) For the purposes of Article 98-6 (1) of the Act, the amount of capital gains accruing for five years from the date of purchase of a completed but unsold housing unit, shall be calculated by applying mutatis mutandisArticle 40 (1).

(5) For the purposes of Article 98-6 (1) of the Act, the lease period of a completed but unsold housing unit (hereafter in this Article, referred to as"lease period"), shall be calculated as follows: <Amended on Dec. 28, 2015>

1. The lease period shall be counted from the date the lessor commences the lease after he/she has completed the business registration under Article 168 of the Income Tax Act and the registration as a rental business operator under Article 5 of the Special Act on Private Rental Housing, or after the lessor has been designated as a public housing business operator under Article 4 of the Special Act on Public Housing;

2. If the heir leases a rental house after having acquired it from the decedent through inheritance, the lease period during which the decedent leased such house shall be added to the lease period by the heir.

(6) A person who intends to be accorded special taxation pursuant to Article 98-6 of the Act shall file a preliminary or final tax return on capital gains from the relevant completed but unsold housing unit, with the head of the tax office having jurisdiction over the place of tax payment, along with the following documents: <Amended on Dec. 28, 2015; Jan. 22, 2016; Sep. 26, 2023>

1. A copy of the sale and purchase agreement bearing the seal of the head of the relevant Si (including the head of an administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to the head of an autonomous Gu; hereafter in this Article, the same shall apply), certifying that the relevant house is a completed but unsold housing unit, in the form prescribed by Ordinance of the Ministry of Economy and Finance;

2. A copy of the certificate of registration as a rental business operator under Article 4 (5) of the Enforcement Decree of the Special Act on Private Rental Housing, or a document certifying that the person has been designated as a public housing business operator under Article 4 of the Special Act on Public Housing;

3. A copy of the lease agreement;

4. Other documents prescribed by Ordinance of the Ministry of Economy and Finance.

(7) A project operator, etc. shall submit a report on the status of completed but unsold housing units (limited to completed but unsold housing units for which no sale and purchase agreement was concluded by March 29, 2011), in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a Si/Gun/Gu, by September 30, 2011.

(8) The head of a Si/Gun/Gu shall keep the reports on the status of completed but unsold housing units submitted under paragraph (7), and submit such reports to the head of the tax office having jurisdiction over the locations of such housing units, by October 31, 2011.

(9) Immediately upon signing a sale and purchase agreement for a completed but unsold housing unit provided for in paragraph (2), a project operator, etc. shall have the sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of a Si/Gun/Gu certifying that the house is a completed but unsold housing unit; deliver one copy thereof to the other party to the sale and purchase agreement; and enter and keep relevant records in the Register of Completed but Unsold Housing Units in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"Housing Confirmation Register").

(10) Upon receipt of a request to place a seal certifying a completed but unsold housing unit on a sale and purchase agreement under paragraph (9), the head of a Si/Gun/Gu shall verify whether such housing unit remains unsold based on the report on the status of completed but unsold housing units submitted under paragraph (7) and an application for approval of the relevant project plan, etc. filed under Article 15 of the Housing Act; place his/her seal in the form prescribed by Ordinance of the Ministry of Economy and Finance on the sale and purchase agreement certifying that the house is a completed but unsold housing unit; and enter and keep relevant records in the Housing Confirmation Register. <Amended on Aug. 11, 2016>

(11) Immediately upon signing a sale and purchase agreement of a completed but unsold housing unit provided for in Article 98-6 (1) 1 of the Act, a project operator, etc. shall promptly provide the other party to the sale and purchase agreement with the documents necessary for proving the lease period, including a copy of the registration certificate of a rental business operator, a copy of a lease contract, a certified copy of a lessee's resident registration card, or copy of his/her resident registration certificate, as well as the sale and purchase agreement under paragraph (9); and enter and keep relevant records in the Housing Confirmation Register.

(12) The head of a Si/Gun/Gu, a project operator, etc. shall submit the Housing Confirmation Register, respectively, to the head of the tax office having jurisdiction over the locations of completed but unsold housing units by June 30, 2012, in an electronic form using a data processing device, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media").

(13) Upon receipt of data stored on the electronic media under paragraph (12), the head of the tax office having jurisdiction over the locations of completed but unsold housing units, shall keep and maintain the data.

(14) Procedures for verifying completed but unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Jun. 3, 2011]

Article 98-6(Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units) #

(1)"Unsold housing unit prescribed by Presidential Decree" in the former part of Article 98-7 (1) of the Act means any housing unit supplied by a project operator under Article 54 of the Housing Act pursuant to that Article, on a first-come, first-served basis, because no sale and purchase agreement was concluded by September 23, 2012 in a housing complex for which the prearranged contract date specified in the announcement for inviting purchasers elapsed. <Amended on Aug. 11, 2016>

(2) The following houses shall be disregarded for the purposes of paragraph (1): <Amended on Aug. 11, 2016>

1. A house, the actual value traded between the project operator, etc. (referring to any project operator that supplies houses under Article 54 of the Housing Act or any of the business operators specified under paragraph (3); hereafter in this Article, the same shall apply) and the purchaser of which exceeds 900 million won. In such cases, the acquisition tax and other incidental expenses to be borne by the transferee shall be disregarded;

2. A house that has ever been occupied as at the date a sale and purchase agreement is signed;

3. A house, the sale and purchase agreement of which concluded with the project operator, etc. as at September 23, 2012 was terminated during the period between September 24, 2012 and December 31, 2012 (hereafter in this paragraph, referred to as"acquisition period of an unsold housing unit");

4. An unsold housing unit acquired by any person who has terminated a sale and purchase agreement as referred to in subparagraph 3 by entering into a contract with the project operator, etc. during the acquisition period of an unsold housing unit, or an unsold housing unit acquired by the spouse of such person [including lineal ascendants and descendants (including their spouses), and siblings of the person who entered into a sale and purchase agreement or his/her spouse] by entering into a contract with the project operator, etc. with whom the original sale and purchase agreement was concluded during the acquisition period of an unsold housing unit.

(3)"Project operator prescribed by Presidential Decree" in the former part of Article 98-7 (1) of the Act means any of the following: <Amended on Jun. 30, 2015>

1. The Korea Housing and Urban Guarantee Corporation that has purchased houses as prescribed in Article 22 (1) 1 (a) of the Enforcement Decree of the Housing and Urban Fund Act;

2. A housing constructor who has received the relevant house as a payment for construction work;

3. A corporate restructuring real estate investment trust, etc. that has acquired houses as prescribed in Article 92-2 (2) 1-5, 1-8, or 1-10 of the Enforcement Decree of the Corporate Tax Act;

(4) For the purposes of the former part of Article 98-7 (1) of the Act, the amount of capital gains accruing for five years from the date of purchase of an unsold housing unit, shall be calculated by applying mutatis mutandisArticle 40 (1).

(5) A person who intends to be accorded special taxation under Article 98-7 of the Act shall file a preliminary or final tax return on capital gains from the relevant unsold housing unit, with the head of the tax office having jurisdiction over the place of tax payment, along with a copy of the sale and purchase agreement delivered by the project operator, etc. pursuant to paragraph (8).

(6) A project operator, etc. shall submit a report on the status of unsold housing units, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the relevant Si (including the Special Self-Governing City Mayor and the head of an administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) by November 30, 2012. <Amended on Jan. 22, 2016>

(10) The head of a Si/Gun/Gu, a project operator, etc. shall submit the Unsold Housing Units Register, in the form prescribed by Ordinance of the Ministry of Economy and Finance, respectively, to the head of the tax office having jurisdiction of the locations of such unsold housing units, by March 31, 2013, in an electronic form using a data-processing system, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media").

(12) Procedures for verifying unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Oct. 15, 2012]

Article 98-7(Special Taxation for Capital Gains Tax on Purchasers of Completed But Unsold Housing Units) #

(1)"Completed but unsold housing unit prescribed by Presidential Decree" in the former part of Article 98-8 (1) of the Act means any house that meets each of the following conditions (hereafter in this Article, referred to as"completed but unsold housing unit"): <Amended on Aug. 11, 2016>

1. The house shall be supplied under Article 54 of the Housing Act, but no sale and purchase agreement of which was concluded by December 31, 2014 after it had passed pre-use inspections under Article 49 of that Act (including approval for temporary use) or has been approved for use under Article 22 of the Building Act (including where the building may be used under any subparagraph of Article 22 (3) of that Act);

2. It shall be supplied on a first-come, first-served basis as of January 1, 2015.

(2) The following houses shall be disregarded for the purposes of paragraph (1): <Amended on Aug. 11, 2016>

1. A house, the actual value traded between the project operator, etc. (referring to any project operator that supplies houses under Article 54 of the Housing Act or any of the business operators specified under paragraph (3); hereafter in this Article, the same shall apply) and the purchaser of which exceeds 600 million won, or a house whose total floor area (referring to an area for exclusive use, in cases of multi-family housing) exceeds 135 square meters. In such cases, acquisition tax and other incidental expenses to be borne by the transferee shall be disregarded;

2. A house, the sale and purchase agreement of which concluded with the project operator, etc. on or before December 31, 2014 was terminated on or after January 1, 2015;

3. A completed but unsold housing unit acquired by a person who cancelled a sale and purchase agreement under subparagraph 2 under a new agreement made during the period between January 1, 2015 and December 31, 2015, or a completed but unsold housing unit acquired by the spouse of the person who made an initial sale and purchase agreement (including lineal ascendants and descendants (including their spouses) and siblings of such person who made such agreement, or of his/her spouse) under another agreement made with the project operator, etc. with whom the initial agreement was made during the period between January 1, 2015 and December 31, 2015.

(3)"Person prescribed by Presidential Decree" in the former part of Article 98-8 (1) of the Act means any of the following: <Amended on Jun. 30, 2015>

1. The Korea Housing and Urban Guarantee Corporation that has purchased houses as prescribed in Article 22 (1) 1 (a) of the Enforcement Decree of the Housing and Urban Fund Act;

2. A housing constructor who has received the relevant house as a payment for construction work;

3. A corporate restructuring real estate investment trust, etc. that has acquired houses as prescribed in Article 92-2 (2) 1-5, 1-8, or 1-10 of the Enforcement Decree of the Corporate Tax Act;

(4) For the purposes of Article 98-8 (1) of the Act, the amount of capital gains accruing for five years from the date of purchase of a completed but unsold housing unit, shall be calculated by applying mutatis mutandisArticle 40 (1).

(5) For the purposes of Article 98-8 (1) of the Act, the period of leasing (hereafter in this Article, referred to as"lease period") a completed but unsold housing unit, shall be calculated by applying mutatis mutandisArticle 98-5 (5).

(6) A project operator, etc. shall submit a report on the status of completed but unsold housing units (limited to unsold housing units for which no sale and purchase agreement was made by December 31, 2014), in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the relevant Si (including the head of an administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (the head of a Gu means the head of an autonomous Gu; hereafter in this Article, the same shall apply), by April 30, 2015. <Amended on Jan. 22, 2016>

(7) The head of each Si/Gun/Gu shall keep the reports on completed but unsold housing units submitted under paragraph (6), and shall submit such reports to the head of the tax office having jurisdiction over the location of such completed but unsold housing units, by December 31, 2015.

(8) A person who intends to be accorded special taxation pursuant to Article 98-8 of the Act shall file a preliminary or final tax return on capital gains from the relevant completed but unsold housing unit, with the head of the tax office having jurisdiction over the place of tax payment, along with the following documents: <Amended on Dec. 28, 2015; Sep. 26, 2023>

1. A copy of the sale and purchase agreement bearing the seal of the head of the Si/Gun/Gu having jurisdiction over the location of the completed but unsold housing unit, certifying that the relevant house is a completed but unsold housing unit under paragraph (9), in the form prescribed by Ordinance of the Ministry of Economy and Finance;

3. A copy of the lease agreement;

4. Other documents prescribed by Ordinance of the Ministry of Economy and Finance.

(9) Immediately upon signing a sale and purchase agreement of a completed but unsold housing unit, the project operator, etc. shall the purchase and sale agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of the relevant Si/Gun/Gu certifying that the house is a completed but unsold housing unit; deliver one copy thereof to the other party to the sale and purchase agreement; and enter and keep relevant records in the Register of Completed but Unsold Housing Units (hereafter in this Article, referred to as"Housing Confirmation Register") in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(10) Upon receipt of a request to place a seal on a sale and purchase agreement to certify a completed but unsold housing unit under paragraph (9), the head of a Si/Gun/Gun shall verify whether such housing unit remains unsold, based on the report on the status of completed but unsold housing units submitted under paragraph (6) and an application for approval of the relevant project plan, etc. filed under Article 15 of the Housing Act; place his/her seal on the relevant sale and purchase agreement to certify that the house is a completed but unsold housing unit, in the form prescribed by Ordinance of the Ministry of Economy and Finance; and enter and keep relevant records in the Housing Confirmation Register. <Amended on Aug. 11, 2016>

(11) Immediately upon signing a sale and purchase agreement of a completed but unsold housing unit under Article 98-8 (1) of the Act, the relevant project operator, etc. shall deliver a copy of the certificate of registration of a rental business operator, a copy of the lease agreement, a certified transcript of the tenant's resident registration card, or a copy of the tenant's resident registration certificate, and other documents necessary for evidencing the lease period to the purchaser, as well as the sale and purchase agreement under paragraph (9), and enter and keep relevant records in the Housing Confirmation Register.

(12) The head of a Si/Gun/Gu, a project operator, etc. shall submit the Housing Confirmation Register, respectively, to the head of the tax office having jurisdiction over the locations of completed but unsold housing units, by February 28, 2016, in an electronic form using a data processing device, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media").

(14) Procedures and methods for verifying completed but unsold housing units, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 3, 2015]

Article 99(Reduction or Exemption of Capital Gains Tax for Purchasers of Newly-Built Houses) #

(1) Capital gains deductible from capital gains taxable income under Article 99 (1) of the Act (hereafter in this Article, referred to as"capital gains eligible for reduction or exemption"), shall be calculated as follows. In such cases, the assessed value publicly notified for the immediately preceding period shall apply, if a new assessed value has not been publicly notified: <Amended on Feb. 5, 2016; May 10, 2016; May 8, 2017>

1. Where a house is transferred within five years from the date of acquisition, the capital gains eligible for reduction or exemption shall be calculated pursuant to Article 95 (1) of the Income Tax Act: Provided, That the capital gains eligible for reduction or exemption shall be calculated by the following formula in cases of a newly-built house specified under Article 98-3 (2) of the Act, acquired by redeveloping or rebuilding a house prior to redevelopment or reconstruction (hereafter in this Article, referred to as"existing house"):

Capital gains calculated pursuant to Article 95 (1) of the Income Tax Act × {(assessed value at the time of transfer - assessed value at the time of acquisition of the newly-built house) ÷ (assessed value at the time of transfer - assessed value at the time of acquisition of the existing house)}

2. Where a house is sold five years after the date of acquisition, the capital gains eligible for reduction or exemption shall be calculated by the following formula:

Capital gains calculated pursuant to Article 95 (1) of the Income Tax Act × {(assessed value on the fifth anniversary from the date of acquisition of the newly-built house - assessed value at the time of acquisition of the newly-built house) ÷ (assessed value at the time of transfer - (assessed value at the time of acquisition of the newly-built house (or assessed value at the time of acquisition of the existing house, in cases of a newly-built house specified under Article 98-3 (2) of the Act, acquired by redeveloping or rebuilding the existing house))}

(2)"House eligible under circumstances prescribed by Presidential Decree" in the proviso to Article 99 (1) 2 of the Act means any house acquired by a party to a contract for purchase of a housing unit or his/her spouse (including the lineal ascendants, descendants, and siblings of the party to the contract for purchase of a housing unit or his/her spouse) by renewing a sale and purchase agreement initially concluded, after the party to such contract who has concluded it with the housing construction business entity, on or before May 21, 1998, has terminated the relevant contract, or any house acquired upon concluding a contract for purchase of a housing unit, in lieu of a housing unit contracted for purchase with the relevant housing construction business entity: Provided, That any houses eligible under circumstances prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom. <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 18, 2020>

(3)"House prescribed by Presidential Decree" in Article 99 (1) 2 of the Act means any of the following houses: <Newly Inserted on Oct. 30, 1999; Dec. 29, 2000; Jun. 30, 2003; Nov. 29, 2003; Feb. 19, 2005; Feb. 18, 2010>

1. A house that is remaining (hereafter in this Article, referred to as"remaining house") after a housing association established under the Housing Act or a rearrangement project association established under the Act on the Improvement of Urban Areas and Residential Environments (hereafter in this Article, referred to as"housing association, etc.") has supplied to its members, and is acquired by a person who has concluded a sale and purchase agreement directly with the housing association, etc. upon making a down payment within the acquisition period of a newly-built house under Article 99 (1) 1 of the Act (hereafter in this Article, referred to as"acquisition period of a newly-built house");

2. A house that has been approved for use or has passed pre-use inspection after the expiry of the acquisition period of a newly-built house and is acquired by a member of the housing association, etc.: Provided, That the foregoing shall only apply where the housing association, etc. has ever concluded a sale and purchase agreement (based on the first-concluded sale and purchase agreement, if multiple sale and purchase agreements exist) of a remaining house directly with any person other than its members, and received a down payment within the acquisition period of a newly-built house.

(4) Any person who intends to apply for a reduction or exemption of capital gains tax pursuant to Article 99 (3) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, and the following documents, with the head of the tax office having jurisdiction over his/her place of tax payment, along with his/her final tax return for the taxable year in which the relevant real estate is transferred. In such cases, the head of a tax office having jurisdiction over the place of tax payment shall verify the building register of the relevant house by matching it against administrative information available for sharing under Article 36 (1) of the Electronic Government Act (excluding subparagraph 3). <Amended on Oct. 30, 1999; Feb. 29, 2008; Nov. 2, 2010>

1. In cases of a house referred to in Article 99 (1) 1 of the Act: A document attesting the date of approval for use or date of pre-use inspections (including the date of approval for temporary use);

2. In cases of a house referred to in paragraph (3) 2:

(a) A document attesting that the housing association, etc. has received a down payment after concluding a sale and purchase agreement of a remaining house directly with any person other than its members within the acquisition period of a newly-built house;

(b) The documents referred to in subparagraph 1;

3. In cases of other houses:

(a) A sale and purchase agreement of a house at the time of acquisition;

(b) A document attesting that a down payment has been made.

Article 99-2(Special Taxation for Capital Gains Tax on Purchasers of Newly-Built Houses, etc.) #

(1)"Newly-built house or an unsold housing unit prescribed by Presidential Decree" in the former part of Article 99-2 (1) of the Act means any of the following houses (hereafter in this Article, referred to as"newly-built house, etc."): <Amended on Feb. 21, 2014; Jun. 30, 2015; Aug. 11, 2016; Feb. 9, 2018>

1. A house supplied by a project operator under Article 54 of the Housing Act (hereafter in this paragraph, referred to as"project operator") pursuant to that Article, on a first-come, first-served basis, on or after April 1, 2013 because no sale and purchase agreement was concluded by March 31, 2013 in a housing complex for which the prearranged contract date specified in the announcement for inviting purchasers elapsed;

2. A house (limited to a house for which the prearranged contract date specified in the announcement for inviting purchasers falls on or after April 1, 2013) supplied by a project operator pursuant to the relevant project plan approved under Article 15 of the Housing Act (including a building permit required under Article 11 of the Housing Act; hereafter in this Article, the same shall apply) and Article 54 of the Housing Act;

3. A house (referring to housing built pursuant to the Housing Act; hereafter in subparagraphs 4 through 8, the same shall apply) supplied by a housing builder (referring to a person who supplies housing that consists of less than 30 units, and excluding the project operators referred to in subparagraphs 1 and 2);

5. A house supplied by its constructor after having received it as a payment for construction work;

6. A house supplied by a corporate restructuring real estate investment trust, etc. after having acquired it as prescribed in Article 92-2 (2) 1-5, 1-8, or 1-10 of the Enforcement Decree of the Corporate Tax Act;

7. A house supplied by a trust business entity under the Financial Investment Services and Capital Markets Act after having acquired it as prescribed in Article 92-2 (2) 1-7, 1-9, or 1-11 of the Enforcement Decree of the Corporate Tax Act;

8. A house built by a person himself/herself, which was approved for use or passed pre-use inspections (including approval for temporary use) during the period between April 1, 2013 and December 31, 2013 (hereafter in this Article, referred to as"acquisition period for special taxation"): Provided, That the following houses shall be excluded herefrom:

(a) A house acquired by a member of an improvement project association performing a housing redevelopment project or housing reconstruction project under the Act on the Improvement of Urban Areas and Residential Environments or a small-scale housing improvement project under the Act on Special Cases concerning Unoccupied House or Small-Scale Housing Improvement pursuant to the relevant management and disposal plan (in cases of a small-scale housing improvement project, referring to a project implementation plan);

(b) A house demolished and then rebuilt after being lost by fire, collapsing, being wear-out, etc. while occupied or owned;

9. An officetel supplied (including where an officetel is supplied under a private contract because no sale and purchase agreement was concluded by March 31, 2013 for which the prearranged contract date specified in the announcement for inviting purchases elapsed) by a seller of buildings in units under Article 6 of the Act on Sale of Building Units with a building permit granted under Article 11 of the Building Act or an officetel supplied after having been approved for use under Article 22 of the Building Act (including officetels supplied by any of the methods prescribed in subparagraphs 4 through 8), among officetels defined in subparagraph 4 of Article 4 of the Enforcement Decree of the Housing Act (hereafter in this Article, referred to as"officetel").

(2) The following newly-built houses, etc. shall be disregard for the purposes of paragraph (1): <Amended on Feb. 21, 2014; Dec. 28, 2015>

1. A newly-built house, etc., the actual value traded between any project operator, etc. referred to in paragraph (6) 1 (hereafter in this Article, referred to as"project operator, etc.") and the purchaser of which exceeds 600 million won, and the total floor area (referring to an area for exclusive use in cases of multi-family housing or an officetel) of which exceeds 85 square meters. In such cases, the acquisition tax and other incidental expenses to be borne by the purchaser, shall be disregarded;

2. A newly-built house, etc., a sale and purchase agreement of which was concluded with a project operator, etc. by March 31, 2013 and was cancelled during the acquisition period for special taxation;

3. A newly-built house, etc. acquired by a party who has cancelled a sale and purchase agreement referred to in subparagraph 2 during the acquisition period for special taxation or a newly-built house, etc. acquired by his/her spouse (including his/her or his/her spouse’s lineal ascendants and descendants (including their spouses) and siblings) after concluding a sale and purchase agreement with the project operator, etc. with whom he/she has concluded the original sale and purchase agreement during the acquisition period for special taxation;

4. An officetel described in paragraph (1) 9, if the person who has purchased the officetel no longer falls under each of the following cases:

(a) Where the domicile of the purchaser or lessee is registered under the Resident Registration Act at the address of that officetel for a period from the date 60 days elapse from the date of acquisition, until the date of transfer. In such cases, a former lessee shall be deemed registered at such address for a period not exceeding six months from the move-out date of the former lessee to the date the purchaser or a new lessee registers his/her domicile at the address of the relevant officetel;

(b) Where the officetel has been purchased by a public housing business operator under Article 4 of the Special Act on Public Housing or a rental business operator under Article 5 of the Special Act on Private Rental Housing (including where a person is registered as a rental business operator under Article 5 of the Special Act on Private Rental Housing after having purchased an officetel) and is registered as a rental house within 60 days from the date of acquisition.

(3)"One house for one household" in the former part of Article 99-2 (1) of the Act means any of the following houses (including land appurtenant to the house, which does not exceed the area calculated by multiplying the area the building stands by the multiplying factor determined by area; hereafter in this Article, referred to as"existing house eligible for tax reduction or exemption"). In such cases, for the purpose of determining whether a house falls under any of the following, the house shall be deemed owned severally by the relevant individuals, if it is jointly owned by several persons, but the same shall not apply where the house is jointly owned by members of one household: <Amended on Feb. 21. 2014>

1. Where a household (a husband and a wife that constitute separate households shall be deemed one household; hereafter in this paragraph, referred to as"one household") registered under the Resident Registration Act as at April 1, 2013, owns one house (referring to any house built pursuant to the Housing Act; and where an officetel is owned by one household as at April 1, 2013 having domicile registered thereat, such officetel shall be deemed one house; hereafter in this paragraph, referred to as"one house") in the Republic of Korea as at the date of the sale and purchase agreement, and the period from the registration of acquisition of which to the date of the sale and purchase agreement is at least two years;

2. Where one household that owns one house happens to own two houses temporarily (including where a person who owns an officetel deemed one house under subparagraph 1 purchases another house) by purchasing another house before transferring the already owned house (hereafter in this paragraph, referred to as"existing house"), the existing house contracted for sale and transferred within three years from the date of acquisition (referring to the date of registration of acquisition) of another house after acquiring such another house after the lapse of at least one year from the registration date of acquisition of the existing house: Provided, That the foregoing shall be limited to any existing house, the period from the registration of acquisition of which, to the date of the sale and purchase agreement is at least two years.

(4)"Multiplying factor determined by area" in paragraph (3), with the exception of its subparagraphs, means the following multiplying factors:

1. Five times in cases of land within an urban area;

2. Ten times in cases of land outside an urban area.

(5) The following existing houses eligible for tax reduction or exemption shall be disregarded for the purposes of paragraph (3):

1. An existing house eligible for tax reduction or exemption, the actual value traded between the transferor and the transferee of which exceeds 600 million won, and the total floor area (referring to an area for exclusive use in cases of multi-family housing or an officetel) of which exceeds 85 square meters. In such cases, the acquisition tax and other incidental expenses to be borne by the purchaser, shall be disregarded;

2. An existing house eligible for tax reduction or exemption acquired by a person or his/her spouse (including his/her or his/her spouse’s lineal ascendants and descendants (including their spouses) and siblings) who has cancelled the sale and purchase agreement for the same house concluded on or before March 31, 2013 during the acquisition period for special taxation, by re-concluding a contract during the acquisition period for special taxation;

3. An officetel in cases of which a person who has purchased it no longer falls under any item of paragraph (2) 4 after the acquisition thereof, among the existing houses eligible for tax reduction or exemption.

(6)"Person prescribed by Presidential Decree" in the former part of Article 99-2 (1) of the Act means any of the following persons: <Amended on Jun. 30, 2015>

1. In cases of a house provided for in paragraph (1): The project operator referred to in paragraph (1) 1 or 2, the housing builder referred to in paragraph (1) 3, the Korea Housing and Urban Guarantee Corporation referred to in paragraph (1) 4, the constructor referred to in paragraph (1) 5, the corporate restructuring real estate investment trust, etc. referred to in paragraph (1) 6, the trust business entity under paragraph (1) 7, the constructor referred to in paragraph (1) 8, or the seller of buildings in units or the building owner referred to in paragraph (1) 9;

2. In cases of a house provided for in paragraph (3): The transferor of an existing house eligible for tax reduction or exemption.

(7) For the purposes of Article 99-2 (1) of the Act, the amount of capital gains accruing for five years from the date of acquisition of the relevant house, shall be calculated by applying mutatis mutandisArticle 40 (1).

(8) A person who intends to apply for special taxation under Article 99-2 of the Act shall submit a copy of the sale and purchase agreement bearing a seal of confirmation referred to in paragraph (11) or (12), along with his/her preliminary or final tax return on the capital gains from the relevant house, to the head of the tax office having jurisdiction over the place of tax payment.

(9) A project operator, etc. shall submit a report on the status of newly-built houses, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance (limited to those for which no sale and purchase agreement was concluded by March 31, 2013), to the head of the relevant Si (including the Special Self-Governing City Mayor and the head of an administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to the head of an autonomous Gu; hereafter in this Article, the same shall apply) by June 30, 2013: Provided, That a report on the status of newly-built houses, etc. referred to in paragraph (1) 2, 3 (limited to those supplied on or after April 1, 2013), 4, 5 (limited to those received as payments in substitutes on or after April 1, 2013), 6, 7, and 9 (limited to those supplied on or after April 1, 2013), shall be submitted within one month from the end of the month in which a sale and purchase agreement is first concluded with the project operator, etc. (such date shall be based on the first sale and purchase agreement concluded, if multiple sale and purchase agreements exist). <Amended on Jan. 22, 2016>

(10) The head of a Si/Gun/Gu shall manage the reports on the status of newly-built houses, etc. submitted under paragraph (9), and forward such reports to the head of a tax office having jurisdiction over the locations of such houses, within one month from the end of the quarter in which such reports are submitted.

(11) Immediately upon signing a sale and purchase agreement of a newly-built house, etc., a project operator, etc. shall have the sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of the relevant Si/Gun/Gu certifying that the house is a newly-built house, etc.; deliver one copy thereof to the other party to the sale and purchase agreement; and enter and keep relevant records in the Register for Confirmation of Newly-Built Houses, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(12) The transferor of an existing house eligible for tax reduction or exemption shall have a sale and purchase agreement made in duplicate sealed, in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the head of the relevant Si/Gun/Gu certifying that the house is an existing house eligible for tax reduction or exemption by March 31, 2014; and deliver one copy thereof to the other party to the sale and purchase agreement. <Amended on Feb. 21. 2014>

(13) The Minister of Land, Infrastructure and Transport shall provide the heads of Sis/Guns/Gus with data for verifying whether a house is an existing house eligible for tax reduction or exemption through a computer network, etc.

(14) The head of a Si/Gun/Gu, in receipt of a request to place his/her seal certifying a newly-built house, etc. on a sale and purchase agreement pursuant to paragraph (11), shall verify whether the house is a newly-built house, etc. based on the reports on the status of newly-built houses submitted under paragraph (10) and an application for approval of the relevant project plan, etc. filed under Article 15 of the Housing Act; place his/her seal, prescribed by Ordinance of the Ministry of Economy and Finance, on the sale and purchase agreement certifying that the house is a newly-built house, etc.; and enter and keep relevant records in the Register for Confirmation of Newly-Built Houses, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Aug. 11, 2016>

(15) The head of a Si/Gun/Gu, in receipt of a request to place his/her seal certifying an existing house eligible for tax reduction or exemption on a sale and purchase agreement pursuant to paragraph (12), shall verify whether the house is an existing house eligible for tax reduction or exemption based on the data provided by the Minister of Land, Infrastructure and Transport under paragraph (13) (referring to the data for determining whether it falls under one house for one household as prescribed in paragraph (3)), the sale and purchase agreement, and the resident registration card (including electronic data from resident registration) under the Resident Registration Act; place his/her seal, in the form prescribed by Ordinance of the Ministry of Economy and Finance, on the sale and purchase agreement certifying that the house is an existing house eligible for tax reduction or exemption; and enter and keep relevant records in the Register for Confirmation of Existing Houses Eligible for Tax Reduction or Exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(16) The head of a Si/Gun/Gu, a project operator, etc. shall submit the Register for Confirmation of Newly-Built Houses, etc. and the Register for Confirmation of Existing Houses Eligible for Tax Reduction or Exemption, in the forms prescribed by Ordinance of the Minister of Economy and Finance, respectively, to the head of a tax office having jurisdiction over the locations of the houses, by April 30, 2014, in an electronic form using a data processing device, an electronic tape, a diskette, or a disk (hereafter in this Article, referred to as"electronic media"). <Amended on Feb. 21. 2014>

(17) Upon receipt of data stored on electronic media under paragraph (16), the head of a tax office having jurisdiction over the locations of the houses, shall keep and maintain the data.

(18) Procedures for verifying newly-built houses, etc. and existing houses eligible for tax reduction or exemption, and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on May 10, 2013]

Article 99-3(Special Taxation for Capital Gains Tax on Purchasers of Newly-Built Houses) #

(1)"Areas prescribed by Presidential Decree" in the main sentence of Article 99-3 (1) of the Act, with the exception of its subparagraphs, means the Seoul Special Metropolitan City, Gwacheon-si, and Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong new town areas, designated and publicly notified as housing site development zones under Article 3 of the Housing Site Development Promotion Act. <Newly Inserted on Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Aug. 30, 2011>

(2) Capital gains deductible from capital gains taxable income under Article 99-3 (1) of the Act (hereafter in this Article, referred to as"capital gains eligible for reduction or exemption") shall be calculated as follows. In such cases, the assessed value publicly notified for the immediately preceding period shall apply, if a new assessed value has not been publicly notified: <Amended on Feb. 5, 2016; May 10, 2016; Feb. 7, 2017>

2. Where a house is sold five years after the date of acquisition, the capital gains eligible for reduction or exemption shall be calculated by the following formula:

(3)"House prescribed by Presidential Decree" in Article 99-3 (1) 1 of the Act means any of the following houses: <Amended on Dec. 31, 2001; Jun. 30, 2003; Nov. 29, 2003; Feb. 19, 2005; Feb. 18, 2010; Aug. 11, 2016>

1. A house that is remaining (hereafter in this Article, referred to as"remaining houses") after a housing association established under the Housing Act or a rearrangement project association established under the Act on the Improvement of Urban Areas and Residential Environments (hereafter in this Article, referred to as"housing association, etc.") has supplied to its members and is acquired by a person who has concluded a sale and purchase agreement directly with the housing association, etc. upon making a down payment within the acquisition period of a newly-built house specified in Article 99-3 (1) 1 of the Act (hereafter in this Article, referred to as"acquisition period of a newly-built house");

2. A house that has been approved for use or has passed pre-use inspections after the expiry of the acquisition period of a newly-built house and is acquired by a member of the housing association, etc. from the housing association, etc. (referring to a member of an association as at the date its management and disposal plan is approved under Article 48 of the Act on the Improvement of Urban Areas and Residential Environments (or as at the date it is approved to implement a project under Article 28 in cases of a housing reconstruction project; hereafter in this Article, the same shall apply), or the date its project plan is approved under Article 15 of the Housing Act; hereafter in this subparagraph, the same shall apply): Provided, That the foregoing shall only apply where the housing association, etc. has ever concluded a sale and purchase agreement (based on the first-concluded sale and purchase agreement, if multiple sale and purchase agreements exist) of a remaining house directly with any person other than its members, and received a down payment within the acquisition period of a newly-built house.

(4)"House eligible under circumstances prescribed by Presidential Decree" in Article 99-3 (1) 1 of the Act means any house acquired by a party to a contract for purchase of a housing unit or his/her spouse (including the lineal ascendants, descendants, and siblings of such party or his/her spouse) by renewing a sale and purchase agreement initially concluded, after the party to such contract who has concluded it with the housing construction business entity, on or before May 23, 2001 has terminated the relevant contract, or any house acquired upon concluding a contract for purchase of a housing unit, in lieu of a housing unit contracted for purchase with the relevant housing construction business entity: Provided, That any houses eligible under circumstances prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom. <Amended on Aug. 14, 2001; Feb. 29, 2008; Feb. 18, 2010; Feb. 18, 2020>

(5)"Member prescribed by Presidential Decree" in Article 99-3 (1) 2 of the Act means any member of an association as at the date the association’s management and disposal plan is approved under Article 48 of Act on the Improvement of Urban Areas and Residential Environments or the association’s project plan is approved under Article 15 of the Housing Act. <Newly Inserted on Dec. 31, 2001; Jun. 30, 2003; Nov. 29, 2003; Feb. 19, 2005; Feb. 18, 2010; Aug. 11, 2016>

(6) Article 99 (4) shall apply mutatis mutandis to filing applications for reduction or exemption of capital gains tax under Article 99-3 (3) of the Act.

[This Article Newly Inserted on Dec. 29, 2000]

[Title Amended on Aug. 14, 2001]

Article 99-4(Special Taxation for Capital Gains Tax on Purchasers of Houses in Agricultural or Fishing Villages) #

(1)"One household prescribed by Presidential Decree" in Article 99-4 (1) of the Act, with the exception of its subparagraphs, means one household defined in subparagraph 6 of Article 88 of the Income Tax Act. <Amended on Feb. 4, 2009; Dec. 30, 2010; Feb. 7, 2017>

(2)"Dong prescribed by Presidential Decree" in Article 99-4 (1) 1 (a) of the Act, with the exception of the items (i) through (iv), means a Dong in any Si area listed in attached Table 12, which is neither same as nor adjacent to the Dong in which the ordinary house owned by the relevant household is located. <Newly Inserted on Feb. 5, 2016>

(3)"Areas prescribed by Presidential Decree" in the proviso of Article 99-4 (1) 1 (a) (i) of the Act means areas that meet all of the following criteria and designated by Ordinance of the Ministry of Economy and Finance in consideration of the trends of real estate price, etc.: <Amended on Feb. 28, 2023; Jul. 7, 2023>

1. The border areas defined in subparagraph of Article 2 of the Special Act on Support for Border Area;

2. Depopulated areas defined in subparagraph 12 of Article 2 of the Special Act on Local Autonomy, Decentralization, and Balanced Regional Development.

(4)"Areas prescribed by Presidential Decree" in the proviso of Article 99-4 (1) 1 (a) (ii) of the Act means areas that meet all of the following criteria and designated by Ordinance of the Ministry of Economy and Finance in consideration of the trends of real estate price, etc.: <Newly Inserted on Feb. 28, 2023; Jul. 7, 2023>

1. Depopulated areas defined in subparagraph 12 of Article 2 of the Special Act on Local Autonomy, Decentralization, and Balanced Regional Development;

2. Enterprise city development zones defined in subparagraph 2 of Article 2 of the Special Act on the Development of Enterprise Cities.

(5)"Areas prescribed by Presidential Decree" in Article 99-4 (1) 1 (a) (v) and 2 (b) (iii) of the Act means tourist complexes defined in Article 2 of the Tourism Promotion Act. <Amended on Feb. 19, 2005; Feb. 4, 2009; Feb. 7, 2017; Feb. 28, 2023>

(6)"Hometown prescribed by Presidential Decree" in Article 99-4 (1) 2 (a) of the Act means a Si area (including a Si area that borders thereon, and also a Si area that borders on the Gun area satisfying each of the following conditions) that satisfies each of the following conditions. In such cases, even when the place of registration, etc. or the Si/Gun where one has actually resided does not fall thereunder due to the reorganization of an administrative district, it shall be deemed the same Si/Gun: <Newly Inserted on Feb. 4, 2009; Feb. 5, 2016>

1. It shall be a place of registration (including the place of family origin or place of original domicile under the Family Register Act prior to repeal under Article 2 of Addenda to the Act on Registration of Family Relationships (Act No. 8435); hereafter in this Article, referred to as"place of registration, etc.") in the Family Relation Register under the Act on Registration of Family Relationships (including the Register of Removal from Family Registration under Article 4 of Addenda to the Act on Registration of Family Relationships (Act No. 8435); hereafter in this Article, referred to as"Family Relation Register, etc."), in which one has been registered for at least ten years;

2. A person shall have actually resided at the area for at least 10 years.

(7)"Si area prescribed by Presidential Decree in consideration of population, etc. as at the time of purchase" in Article 99-4 (1) 2 (b) of the Act, with the exception of subitems (i) through (iii), means any Si area listed in attached Table 12. <Newly Inserted on Feb. 4, 2009; Feb. 5, 2016; Jan. 5, 2021>

(8)"Amount of tax calculated by the formula prescribed by Presidential Decree" in the main sentence of Article 99-4 (6) of the Act means the amount of tax on an ordinary house as at the time of transfer of the ordinary house, which is calculated pursuant to Article 104 of the Income Tax Act. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 5, 2016; Feb. 12, 2019>

(9)"Extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 99-4 (6) of the Act means the relevant cause where one fails to hold a house in an agricultural or fishing village or in the hometown (hereafter in this Article, referred to as"house, etc. in an agricultural or fishing village") for at least three years due to expropriation under the Act on Acquisition of and Compensation for Land for Public Works Projects and other statutes (including purchase through negotiations), inheritance upon death, or destruction. <Amended on Feb. 19, 2005; Feb. 4, 2009; Feb. 18, 2010; Feb. 5, 2016; Feb. 12, 2019>

(10) Any person who intends to apply for special taxation under Article 99-4 of the Act shall submit a report on special taxation, in the form prescribed by Ordinance of the Ministry of Economy and Finance, within the deadline for filing his/her tax return on capital gains under Article 105 or 110 of the Income Tax Act. In such cases, the head of a tax office having jurisdiction over the place of tax payment shall verify the following documents by matching them against administrative information available for sharing under Article 36 (1) of the Electronic Government Act: <Amended on Feb. 19, 2005; Jun. 12, 2006; Jun. 28, 2007; Feb. 29, 2008; Feb. 4, 2009; May 4, 2010; Nov. 2, 2010; Feb. 5, 2016>

1. The land cadastre and the building register of the relevant ordinary house;

2. The land cadastre and the building register of the relevant house, etc. in an agricultural or fishing village.

(11) For the purpose of calculating the plottage and price of a house, etc. in an agricultural or fishing village under Article 99-4 (1) 1 (b) and (c) and 2 (c) and (d) of the Act, where the house, etc. in an agricultural or fishing village is extended or land appurtenant to such house is additionally acquired by the date of transfer of an ordinary house, the plottage and price of the house, etc. extended or land additionally acquired shall be included. <Amended on Feb. 4, 2009; Feb. 5, 2016>

(12) For the purpose of calculating the holding period of a house, etc. in an agricultural or fishing village under Article 99-4 (1) and (4) of the Act, where the house, etc. in an agricultural or fishing village is extended or land appurtenant to such house is additionally acquired, the holding period shall be counted from the date of acquisition of the original house, etc. in an agricultural or fishing village. <Amended on Feb. 4, 2009; Feb. 5, 2016>

(13) The holding period of a house, etc. in an agricultural or fishing village and the period of residence therein shall be calculated as follows: <Amended on Feb. 12, 2019>

1. Where a house, etc. in an agricultural or fishing village is extended or land appurtenant to the house is additionally acquired, whether the house, etc. or the land is acquired within the period for acquisition of a house, etc. in an agricultural or fishing village specified in Article 99-4 (1) of the Act, with the exception of its subparagraphs, or whether the house or land is located within the area provided for in Article 99-4 (1) 1 (a) and 2 (a) and (b) of the Act shall be determined on the basis of the date of acquisition of the original house, etc. in an agricultural or fishing village;

2. The period during which a person has resided in a house, etc. in an agricultural or fishing village shall be the period from the move-in date until the move-out date on the resident registration card;

3. If a house has been demolished and then rebuilt after being lost by fire, collapsing, being wear-out, etc. while occupied or owned, etc. in an agricultural or fishing village, the periods of residence in, and the periods of holding, the demolished and rebuilt house shall be summed up.

(14)"Traditional Korean-style house prescribed by Presidential Decree" in Article 99-4 (1) 1 (b) and 2 (c) of the Act means a traditional Korean-style house defined in subparagraph 16 of Article 2 of the Enforcement Decree of the Building Act, which is registered with the head of a local government as eligible for subsidies for building expenses, repairing expenses, and under mandatory preservation, etc. under its ordinance. <Newly Inserted on Feb. 21, 2014; Feb. 5, 2016; Feb. 17, 2021>

[This Article Newly Inserted on Dec. 30, 2003]

[Title Amended on Feb. 4, 2009]

Article 99-5(Special Cases concerning Extinction of Small Private Enterprises’ Liability to Pay Amounts of Delinquency) #

(1)"Amount prescribed by Presidential Decree" in Article 99-5 (1) 1 of the Act means an amount classified in subparagraphs of Article 133 (1) of the Enforcement Decree of the Income Tax Act. <Amended on Feb. 13, 2018>

(2)"Amount of delinquency prescribed by Presidential Decree" in Article 99-5 (2) 6 of the Act means the amount of delinquency remaining after excluding the equivalent to 140 percent of the amount assessed pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act from the resident's property which is the object of a disposition on default as at June 30, 2017. <Newly Inserted on Feb. 13, 2018>

(3) A resident who wishes to have his/her obligation to pay an amount of delinquency eligible for extinction extinguished pursuant to Article 99-5 (3) of the Act shall submit an application for extinction of obligation to pay the amount of delinquency in the form prescribed by Ordinance of the Ministry of Economy and Finance together with business registration or documents, etc. verifying the fact of being employed to the heads of tax offices having jurisdiction over the amount of delinquency eligible for extinction. <Amended on Feb. 13, 2018>

(4) Where defects or errors exist in the documents under paragraph (3), the heads of competent tax offices may request them to correct such defects or errors specifying a period within 10 days. In such cases, the correction period shall not be included in the period of approval notification under Article 99-5 (4) of the Act. <Amended on Feb. 13, 2018>

(5) For the purposes of Article 99-5 (2) of the Act, the period for assessing the value of a resident's property shall not be included in the notification period prescribed in Article 99-5 (4) of the Act. <Newly Inserted on Feb. 13, 2018>

(6) Where the heads of competent tax offices extinguish the resident's obligation to pay the amount of delinquency eligible for extinction as prescribed in Article 99-5 (4) of the Act, they shall extinguish tax obligation on a case-by-case basis in order of application filed by residents; where residents have failed to indicate the order of priority to extinguish tax obligation or order of priority is unknown, the one with longer extinctive prescription of national tax collection right shall be the first to be extinguished. <Amended on Feb. 13, 2018>

(7) Matters necessary for the extinction of obligation to pay the amount of delinquency eligible for extinction under Article 99-5 of the Act in addition to matters prescribed in paragraphs (1) through (6) shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on Feb. 18, 2010]

[Title Amended on Feb. 13, 2018]

Article 99-6(Special Taxation for Delinquent Taxes of Resurgent Small or Medium Entrepreneurs) #

(1) "National prescribed by Presidential Decree" in Articles 99-6 (1) and 99-8 (1) of the Act, with the exception of their subparagraphs, means any of the following persons: <Amended on Feb. 5, 2016; May 31, 2016; Sep. 22, 2016; Feb. 13, 2018; Apr. 2, 2019; Feb. 28, 2023; Feb. 29, 2024>

1. A person who has borrowed re-incorporation funds from the Small and Medium Business Corporation incorporated under the Small and Medium Enterprises Promotion Act (hereafter in this Article, referred to as the"Small and Medium Business Corporation");

2. A person who has borrowed re-incorporation funds from the Korea Credit Guarantee Fund incorporated under the Korea Credit Guarantee Fund Act (hereafter in this Article, referred to as the"Credit Guarantee Fund") or the Korea Technology Finance Corporation incorporated under the Korea Technology Finance Corporation Act (hereafter in this Article, referred to as the"Korea Technology Finance Corporation");

3. A person whose debts have been adjusted by the Credit Counseling and Recovery Service established under Article 56 of the Microfinance Support Act (hereafter in this Article, referred to as the"Committee");

4. A person determined by the Minister of SMEs and Startups as a failure of good faith management under Article 43 (4) of the Support for Small and Medium Enterprise Establishment Act;

5. A person who has received a loan for funds determined and publicly notified by the Minister of Economy and Finance as funds to support the re-starting of small business owners, etc. pursuant to Article 21 (1) 1 of the Act on the Protection of and Support for Micro Enterprises.

(2)"Period prescribed by Presidential Decree" in Articles 99-6 (1) and 99-8 (1) of the Act, with the exception of their subparagraphs, means three years, respectively. <Amended on Feb. 5, 2016>

(3) The plan to pay delinquent taxes referred to in Article 99-6 (1) of the Act, with the exception of its subparagraphs, shall be prepared in written form stating:

1. Details about the property or income to be provided to pay delinquent taxes;

2. The payment schedule of delinquent taxes.

(4)"Person falling short of the guidelines prescribed by Presidential Decree" in Articles 99-6 (1) 1 and 99-8 (1) 1 of the Act means a person who meets each of the following criteria, respectively: <Amended on Feb. 5, 2016; Feb. 13, 2018>

1. Annual average number of tax delinquency within five years immediately preceding the filing date of the application: Less than three times;

2. Delinquent taxes as at the filing date of the application: Less than 50 million won.

(5) "Amount prescribed by Presidential Decree" in Articles 99-6 (1) 2 and 99-8 (1) 2 of the Act means the following relevant amount, respectively: <Amended on Feb. 5, 2016; Feb. 13, 2018; Feb. 15, 2022; Feb. 29, 2024>

1. In cases falling under paragraph (1) 1: 1.5 billion won;

2. In cases falling under paragraph (1) 2: 1.5 billion won;

3. In case falling under paragraph (1) 3: No limit on the amount;

4. In cases falling under paragraph (1) 4: 1.5 billion won;

5. In cases falling under paragraph (1) 5: 1.5 billion won.

(6) "Person prescribed by Presidential Decree" in Article 99-6 (1) 2 of the Act means any of the persons specified in paragraph (1) 1 through 5. <Amended on Feb. 13, 2018; Feb. 29, 2024>

(7)"Person who is fulfilling his/her legal liability under tax laws prescribed by Presidential Decree" in Articles 99-6 (1) 5 and 99-8 (1) 5 of the Act means a person who performs the following obligations, respectively: <Amended on Feb. 5, 2016>

1. The person shall maintain and keep a record of account books according to double-entry bookkeeping, if he/she is a person subject to double-entry bookkeeping under Article 160 (3) of the Income Tax Act or Article 112 of the Corporate Tax Act;

2. The person shall have reported on a business account and use the business account, if he/she is a business operator obligated to report and use a business account under Article 160-5 of the Income Tax Act;

3. The person shall be a credit card merchant defined in subparagraph 5 of Article 2 of the Specialized Credit Finance Business Act, if he/she is a business operator obligated to become a credit card merchant under Article 162-2 (1) of the Income Tax Act or Article 117 (1) of the Corporate Tax Act;

4. The person shall have been registered as a cash receipt merchant under Article 126-3 (1) of the Act on Restriction on Special Cases concerning Taxation, if he/she is a business operator obligated to be registered as a cash receipt merchant under Article 162-3 (1) of the Income Tax Act or Article 117-2 (1) of the Corporate Tax Act.

(8) If a resurgent small or medium entrepreneur provided for in Article 99-6 (1) of the Act wishes to be granted a deferral of the seizure of property or of the sale of the seized property under Article 99-6 (2) of the Act, or if a resurgent small or medium entrepreneur provided for in Article 99-8 (1) of the Act wishes to be granted a deferral of payment notice or the extension of the designated deadline for payment under that paragraph, the resurgent small or medium entrepreneur shall file an application (or an electronic application), stating the following, with the head of the competent tax office: <Amended on Feb. 5, 2016; Feb. 17, 2021>

1. His/her address or place of residence and name;

2. The taxable period, tax item, amount of, and deadline for payment of, the national tax to be paid;

3. Grounds for deferring the seizure of property, the sale of the seized property, or payment notice or for extending the designated deadline for payment and the period of deferment;

4. The amount of an installment and the number of payment installments, if the entrepreneur wishes to be granted a deferral of the seizure, of the sale of the seized property, or of payment notice or the extension of the designated deadline for payment by paying taxes in installments.

(9) Article 15 of the Enforcement Decree of the National Tax Collection Act shall apply mutatis mutandis to giving notice to resurgent small or medium entrepreneurs under Article 99-6 (3) of the Act and giving notice of deferral of payment notice or the extension of the designated deadline for payment, etc. under Article 99-8 (1) of the Act. <Amended on Feb. 5, 2016; Feb. 17, 2021>

(10) "Event prescribed by Presidential Decree" in Articles 99-6 (4) 3 and 99-8 (2) 2 of the Act means any of the following cases, respectively: <Amended on Feb. 5, 2016; May 31, 2016; Apr. 2, 2019; Feb. 29, 2024>

1. Where the Korea SMEs and Startups Agency, the Credit Guarantee Fund, or the Korea Technology Finance Corporation, collects the re-incorporation funds it has loaned;

2. Where the Credit Counselling and Recovery Service revokes a debt adjustment plan;

3. Where the funds under paragraph (1) 5 are withdrawn.

(11) Upon revoking the deferral of a seizure or sale under Article 99-6 (4) of the Act or the deferment of payment notice or the extension of the designated deadline for payment, etc. under Article 99-8 (2) of the Act, the head of the competent tax office shall give notice of such revocation to the relevant resurgent small or medium entrepreneur. <Newly Inserted on Feb. 5, 2016; Feb. 17, 2021>

(12) Article 5 (26) shall apply mutatis mutandis to applications filed by resurgent small or medium entrepreneurs for tax reduction or exemption under Article 99-6 (6) of the Act. <Amended on Feb. 5, 2016; Aug. 28, 2018; Feb. 11, 2020>

[This Article Newly Inserted on Sep. 2, 2013]

[Title Amended on Feb. 5, 2016]

Article 99-8(Reduction or Exemption of Corporate Tax for Start-Up Enterprises Incorporated in Crisis Areas) #

(1)"Income accrued from the business eligible for tax reduction or exemption" in Article 99-9 (2) of the Act means income generated from a place of business established in a crisis area defined in Article 30-3 (5) of the Act with investments made to operate a business eligible for tax reduction or exemption under Article 99-9 (1) of the Act. <Newly Inserted on Feb. 17, 2021>

(2)"Cumulative investments prescribed by Presidential Decree" in Article 99-9 (3) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years for which a reduction or exemption of corporate tax or income tax is granted under Article 99 (2) of the Act. <Amended on Feb. 17, 2021>

(3)"Service business prescribed by Presidential Decree" in Article 99-9 (3) 2 of the Act means the service business referred to in Article 23 (4). <Amended on Feb. 17, 2021>

(4) The amount of the income tax or corporate tax to be paid under Article 99-9 (5) of the Act shall be calculated by the following formula (where the amount is a negative figure, it shall be deemed nil; if the number of full-time employees has decreased for the two consecutive years after the taxable year in which a tax reduction or exemption is granted ends, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return for the taxable year in which the number of full-time employees has decreased: <Amended on Feb. 17, 2021; Feb. 28, 2023>

The aggregate of amounts of tax reduced or exempted under Article 99-9 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [Number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and service business referred to Article 99-9 (3) 2 of the Act)]

(5) For the purposes of Article 99-9 (3) and (5), Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and full-time youth employees and the methods for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 17, 2021; Feb. 28, 2023>

(6)"Amount of tax calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 99-9 (8) of the Act means a tax amount in either of the following cases: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 99-9 (8) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 99-9 (8) 2 of the Act: A tax amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

(7) A person who wishes to be granted a reduction or exemption in income tax or corporate tax pursuant to Article 99-9 (9) of the Act shall submit an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return. <Amended on Feb. 17, 2021; Feb. 15, 2022>

[This Article Newly Inserted on Feb. 12, 2019]

Article 99-9(Special Taxation concerning Collection of Delinquent Taxes from Small Private Enterprises) #

(1)"Requirements prescribed by Presidential Decree" in Article 99-10 (1) 2 of the Act means that there shall be no change in the withholding agent who pays earned income (hereafter in this Article referred to as"withholding agent") in any of the following cases: Provided, That, if the withholding agent is changed due to any unavoidable cause without a change in a resident's place of work, it shall be deemed that there is no change in the withholding agent:

1. The resident has worked for the withholding agent at least 15 days per month during three or more consecutive months since the resident was employed by the withholding agent;

2. The resident has been paid a salary of at least one million won per month by the withholding agent for three or more consecutive months

(2)"Amount of delinquent taxes prescribed by Presidential Decree" in Article 99-10 (9) 4 of the Act means an amount of arrears minus the amount in subparagraph 1 and plus the amount in subparagraph 2. <Amended on Feb. 17, 2021; Feb. 28, 2023>

1. 140 percent of the amount appraised for the property with which delinquent taxes can be collected from the resident according to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as at the reference date under Article 99-10 (6) of the Act;

2. The amount of claims secured by the leasehold interest on a deposit basis, which was recorded or registered before the statutory deadline for delinquent national taxes under Article 35 (1) 3 of the Framework Act on National Taxes, or the deposit stated in the lease deed or lease contract with a fixed date stamped thereon.

(3) Article 99-5 (3) through (5) shall apply mutatis mutandis to the procedure for applying form special treatment in the collection of delinquent taxes pursuant to Article 99-10 (3) of the Act. In such cases, "application for extinction of obligation to pay the amount of delinquency in the " in Article 99-5 (3) shall be construed as "application for special treatment in the collection of delinquent taxes in the form prescribed by Ordinance of the Ministry of Economy and Finance".

(4) Except as provided for in paragraphs (1) through (3), matters necessary for special treatment in the collection of delinquent taxes of small private enterprises under Article 99-10 of the Act shall be prescribed by the Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 11, 2020]

Article 99-10(Reduction or Exemption of Corporate Tax for Small and Medium Enterprises in Special Disaster Areas Affected by Infectious Disease) #

(1) “Business prescribed by Presidential Decree, such as real estate rental and supply business” in the provisions, with the exception of the subparagraphs, of Article 99-11 (1) of the Act means any of the following businesses: <Amended on Feb. 17, 2021>

1. Real estate rental and supply business;

2. Real estate appraisal business;

3. Business of management and operation of a gambling facility;

4. Legal services;

5. Accounting and tax-related services;

6. Customs agency and related services;

7. Pilotage business under the Pilotage Act;

8. Business operating a certified architect’s office reported under Article 23 of the Certified Architects Act;

9. Business of operating a clinic-class medical institution under Article 3 (2) 1 of the Medical Service Act: Provided, That the business of operating a medical clinic, a dental clinic, or a Korean medicine clinic that meets all of the following requirements shall be excluded herefrom:

(a) The ratio of the cost of medical care benefits granted under Article 47 of the National Health Insurance Act to the amount of revenue (referring to the revenue calculated according to the Korea Financial Accounting Standards for the relevant taxable year) shall be at least 80/100;

(b) The global income for the relevant taxable year shall be not more than 100 million won;

10. Veterinary services;

11. Trading and brokerage business for blockchain-based cryptographic assets under the"Public Notice on Industrial Classification of Blockchain Technologies", as publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act;

12. Finance and insurance business (excluding cases falling under Article 137 (1) 1 of the Enforcement Decree of the Income Tax Act).

(2) “Small enterprise prescribed by Presidential Decree” in Article 99-11 (1) 1 (a) of the Act means an enterprise whose turnover does not exceed the amount calculated by applying attached Table 3 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises for each line of business, among small and medium enterprises. In such cases, “average turnover, etc.” shall be construed as “turnover.”

(4) For the purposes of Article 99-11 (1) of the Act, Article 23 (11) through (13) shall apply mutatis mutandis to the number of full-time employees and the method for calculating the number of full-time employees.

(5) A small and medium enterprise that wishes to be granted a reduction or exemption in income tax or corporate tax pursuant to Article 99-11 (1) of the Act shall submit an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return.

(5) A person who wishes to be granted a reduction or exemption of corporate tax or income tax pursuant to Article 99-11 (1) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.

[This Article Newly Inserted on Apr. 14, 2020]

Article 99-11(Tax Credits for Prepayment) #

(1)"Types of business prescribed by Presidential Decree" in Article 99-12 (1) 1 of the Act means the following types of business:

1. Businesses referred to in Article 99-10 (1) 1 through 8;

2. Business of operating a taxable entertainment place under Article 1 (4) of the Individual Consumption Tax Act;

3. Financial or insurance business.

(2)"Cash or by a payment means prescribed by Presidential Decree, such as a credit card defined in Article 2 of the Specialized Credit Finance Business Act" in Article 99-12 (1) 3 of the Act means any of the following payment means:

1. Cash;

2. Credit cards, debit cards, and prepaid cards under Article 2 of the Specialized Credit Finance Business Act;

3. Electronic payment means under Article 2 of the Electronic Financial Transactions Act.

(3)"Event prescribed by Presidential Decree, such as the closure of the micro enterprise" in the formula in Article 99-12 (2) 2 of the Act means a case where a micro enterprise suspends its business operations or closes its business.

(4) A national who wishes to be granted a tax credit for income tax or corporate tax pursuant to Article 99-12 (1) of the Act shall submit an application for the tax credit, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the taxable year pursuant to paragraph (3) of that Article and the following documents attached thereto: <Amended on Feb. 2, 2021>

1. Any of the following documents with which the fact of prepayment can be verified:

(a) A cash receipt under Article 126-3 of the Act;

(b) Credit card sales slips under the Specialized Credit Finance Business Act;

(d) A tax invoice under Article 32 of the Value-Added Tax Act or a statement under Article 163 of the Income Tax Act or Article 121 of the Corporate Tax Act;

2. A written confirmation on the details of prepayments in the form prescribed by Ordinance of the Ministry of Economy and Finance, such as the date of supply of goods or services, and amount of such goods or services;

3. A document issued by the Small Enterprise and Market Service pursuant to Article 17 of the Act on the Protection of and Support for Micro Enterprises to confirm that the micro enterprise is a small business under Article 2 of the Framework Act on Micro Enterprises.

[This Article Newly Inserted on Jun, 2, 2020]

Article 100-2(Scope of Dependent Children and Persons Eligible for Applying for Labor Encouragement Subsidies) #

(1)"Adopted children prescribed by Presidential Decree living together" in the main clause of Article 100-4 (1) 1 of the Act means children adopted under the Civil Act or the Act on Special Cases concerning Adoption and persons who are adopted in fact, who are cohabiting family members on the resident registration card (hereafter in this Section referred to as"adopted children living together"). <Amended on Feb. 18, 2010; Feb. 2, 2012; Aug. 3, 2012; Feb. 11, 2020>

(2)"Circumstances prescribed by Presidential Decree in which such children do not have parents or their parents are unable to support such children" in the proviso to Article 100-4 (1) 1 of the Act means the following circumstances in which a relevant child is not a resident's child but a cohabiting family member on the resident registration card: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 11, 2020>

1. Where the resident supports a grandchild or a sibling without both parents;

2. Where the resident supports a grandchild or a sibling who has both parents (including cases where the grandchild or sibling has only one parent: hereafter in this subparagraph, the same shall apply) in cases that meet all of the following criteria that:

(a) The aggregate amount of income of each of the parents for the relevant taxable period for income tax is not more than one million won;

(b) Either parent is a person with severe disabilities defined in subparagraph 2 of Article 2 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities or is a person designated as one with disabilities assessed as not lower than Grade III under Article 5 (5) of the Act on the Compensation to Persons Associated with May 18 Democratization Movement;

3. The resident supports a grandchild who has only one parent, and the parent meets all of the following criteria:

(a) The parent is under the age of 18 as at the end of the relevant taxable period for income tax: Provided, That a parent is deemed to be under the age of 18 if there is a day on which the parent is under the aged of 18 during the relevant taxable period for income tax;

(b) The aggregate amount of income for the relevant taxable period for income tax is not more than one million won.

(3)"Persons with disabilities prescribed by Presidential Decree" in the proviso of Article 100-4 (1) 2 of the Act means persons falling under any of the following, among persons with severe disabilities defined in subparagraph 2 of Article 2 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities and persons with disabilities assessed as not lower than Grade III under Article 5 (5) of the Act on Compensation to Persons Associated with the May 18 Democratization Movement: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020>

1. A person who lives at the same address or place of residence as the resident (including his or her spouse; hereafter in this paragraph, the same shall apply);

2. A person temporarily removed from the resident's address or place of residence for medical treatment, medical care, etc.

(4)"Person prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 100-3 (1) of the Act means any person (including his/her) other than the persons falling under any of the following: <Newly Inserted on Feb. 2, 2012; Feb. 15, 2013; Jun. 28, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 11, 2020; Feb. 15, 2022>

1. A person engaged in a business falling under Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act during the relevant taxable period for income tax;

2. A regular employee (referring to an employee who is not a daily employed worker under Article 14, (3) 2 of the Income Tax Act) who works continuously as at the end of the relevant taxable period for income tax and whose average monthly earned income, as prescribed by Ordinance of the Ministry of Economy and Finance, is five million won or more.

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 15, 2013]

Article 100-3(Scope of Annual Gross Income) #

(1)"Total annual income prescribed by Presidential Decree" in Article 100-3 (1) 2 of the Act means the aggregate of all of the following incomes for the relevant taxable year for income tax (if the amount of such incomes is a negative figure, it shall be deemed nil) Provided, That non-taxable income shall be excluded from such incomes: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Jun. 28, 2013; Feb. 13, 2018; Feb. 11, 2020; Feb. 15, 2022>

1. Aggregate of interest incomes referred to in the subparagraphs of Article 16 (1) of the Income Tax Act;

2. Aggregate of dividend incomes referred to in the subparagraphs of Article 17 (1) of the Income Tax Act;

3. Deleted. <Feb. 18, 2010>

4. Amount computed by multiplying the business income referred to in the subparagraphs of Article 19 (1) of the Income Tax Act (hereafter in this Section referred to as"business income") by the following applicable rate (hereafter referred to as"adjustment rate" in this Section): Provided, That where the income is generated from at least two businesses, each amount computed by multiplying each business income by the applicable adjustment rate shall be aggregated:

(a) Wholesale business: 20/100;

(b) Agriculture, forestry, fisheries, and d retail business: 25/100;

(c) Mining business, Business of distribution of motor vehicles and parts, and businesses not referred to in other items: 30/100;

(d) Manufacturing, restaurant business (excluding pub business under Article 29 (3) 2), real estate trading business under Article 122 (1) of the Enforcement Decree of the Income Tax Act: 40/100;

(e) Electricity, gas, steam and water supply business, construction business (excluding business constructing non-residential buildings, but including business developing or supplying residential buildings): 45/100;

(f) Bar business under Article 29 (3) 2, lodging business; sewage, waste disposal, raw material recycling and environment restoration business; transportation business; publication business; visual image, broadcasting, telecommunications business: 55/100;

(g) Commodities brokerage business; computer and information service business; insurance and pension business; business related to financial and insurance service: 60/100;

(h) Banking business; service business related to art, sports or leisure; repair and other personal services business (referring to those referred to in Article 26 (1) 15 of the Value-Added Tax Act and in Article 42 of the Enforcement Decree of that Act; hereafter in this Section, the same shall apply): 70/100;

(i) Service business related to real estate; specialty, science and technology service business; business facility management business and business providing business support service; educational service business; health care business and social welfare service business; 75/100;

(j) Real estate leasing business under Article 45 (2) of the Income Tax Act, leasing business (excluding real estate), personal services, family-employed activity: 90/100;

5. Aggregate of earned incomes referred to in the subparagraphs of Article 20 (1) of the Income Tax Act (hereafter in this Section referred to as"earned income");

6. Aggregate of annuity incomes referred to in the subparagraphs of Article 20-3 (1) of the Income Tax Act. In such cases, the income excluded from annuity incomes under Article 20-3 (2) of the Income Tax Act shall be included herein;

7. Other income referred to in Article 21 (1) (excluding religious person's income under subparagraph 26 of that paragraph) through (3) of the Income Tax Act;

8. The total amount of religious person's income under Article 21 (1) 26 of the Income Tax Act.

(2) Deleted. <Feb. 15, 2013>

(3) Deleted. <Feb. 3, 2015>

[This Article Newly Inserted on Feb. 28, 2007]

Article 100-4(Scope of One Household and Guidelines for Determining Property) #

(1)"One household prescribed by Presidential Decree" in Article 100-3 (1) 2 of the Act means a household comprised of a resident and persons falling under any of the following subparagraphs as at the end of the relevant taxable period for income tax: <Amended on Feb. 5, 2016; Feb. 12, 2019; Feb. 11, 2020>

1. Spouse;

2. Lineal ascendants (including lineal ascendants of deceased former spouses and including spouses of remarried lineal ascendants, if there are remarried lineal ascendants; hereafter in this paragraph, the same shall apply) and descendants (including their spouses and adoptees living together and their spouses; hereafter in this paragraph, the same shall apply), who are living at the same address or place of residence as the resident or his/her spouse;

3. Dependent children defined in Article 100-4 (1) of the Act (hereafter in this Section and Section 10-4 referred to as"dependent children").

4. Deleted. <Feb. 15, 2022>

(2) If two or more residents living at the same address or place of resident as siblings are members of a single-income household with lineal ascendants defined in Article 100-3 (5) 2 of the Act (hereafter in this paragraph referred to as "single-income household"), only the households of the residents with priority order according to the following subparagraphs shall be deemed single-income households: Provided, That if there is a person designated by agreement among the residents, only that person's household shall be deemed a single-income household. <Newly Inserted on Feb. 11, 2020; Feb. 29, 2024>

1. Deleted; <Feb. 29, 2024>

2. A person the amount of whose gross salary, etc. under Article 100-3 (5) 3 of the Act (hereafter in this Section and Article 10-4 referred to as"gross salary, etc.") for the relevant taxable period for income tax is larger than those of others;

3. A person the amount of whose labor encouragement subsidies for the relevant taxable period for income tax as a single-income household is larger than those of others;

4. A person the amount of whose labor encouragement subsidies for the taxable period immediately preceding the relevant taxable period for income tax as a single-income household is larger than those of others.

(3)"Total amount of property prescribed by Presidential Decree" in Article 100-3 (1) 4 of the Act means the aggregate of values of the following assets: <Amended on Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Sep. 20, 2010; Dec. 30, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020>

1. Land, buildings, and residential houses defined in subparagraphs 1 through 3 of Article 104 of the Local Tax Act: Provided, That the assets referred to in Article 109 (3) of the Local Tax Act and Articles 22, 41, 43, 50, 72 (1) and (2), 89, and 90 of the Restriction of Special Local Taxation Act shall be excluded herefrom;

2. Passenger cars referred to in subparagraphs 1 and 2 of Article 123 of the Enforcement Decree of the Local Tax Act: Provided, That passenger cars for business purposes and passenger cars specified in Article 121 (2) of the Enforcement Decree of the Local Tax Act shall be excluded herefrom;

3. Key money for lease on a deposit basis (including a security deposit for lease: hereinafter the same shall apply);

4. Cash, bank deposits, installment savings, installment deposits, deposits in trust, insurance for savings, etc., which generate interest income referred to in Article 16 (1) 3, 4, and 9 of the Income Tax Act, financial assets of collective investment schemes which generate dividend income referred to in Article 17 (1) 5 of the Income Tax Act, and derivatives-combined securities or derivatives-combined bonds which generate dividend income referred to in Article 17 (1) 5-2 of the Income Tax Act;

5. Memberships referred to in Article 7 (1) of the Local Tax Act;

6. Securities prescribed by Ordinance of the Ministry of Economy and Finance;

7. Rights to acquire real estate, as prescribed by Ordinance of the Ministry of Economy and Finance.

(4) The base date for ownership of any asset specified in subparagraphs of paragraph (3), shall be June 1 of the year in which the taxable period for the pertinent income tax ends: Provided, That, in any of the following cases, it shall be June 1 of the year immediately preceding the taxable year in which the taxable period for the pertinent income tax ends: <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020>

1. Where the resident is dead or leaves Korea and the taxable period for the income tax ends on or before May 31;

2. Where an application is filed under Article 100-6 (7) of the Act (including cases where an application is deemed to have been filed under paragraph (9) of that Article; hereafter in this Section referred to as"application for a half year").

(5) Article 107 of the Local Tax Act shall apply mutatis mutandis to determination as to who owns an asset specified in paragraph (3) 1. In such cases,"taxpayer" shall be construed as"owner." <Amended on Sep. 20, 2010; Feb. 7, 2017>

(6) Deleted. <Feb. 7, 2017>

(7) Article 125 of the Local Tax Act shall apply mutatis mutandis to determination as to who owns a passenger car specified in paragraph (3) 2. In such cases,"taxpayer" shall be construed as"owner." <Amended on No. 22395, Sep. 20, 2010>

(8) Assets specified in paragraph (3) shall be appraised with the following applicable value as at the base date of ownership specified in paragraph (4): <Amended on Feb. 29, 2008; Feb. 18, 2010; Sep. 20, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 3, 2015; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022>

1. Assets specified in paragraph (3) 1: Assessed value provided for in Article 4 (1) or (2) of the Local Tax Act;

2. Passenger cars specified in paragraph (3) 2: Assessed value provided for in Article 4 (2) of the Local Tax Act and Article 4 (1) 3 of the Enforcement Decree of the Local Tax Act;

2-2. Key money for lease on a deposit basis specified in paragraph (3) 3 for a residential house or an officetel (referring to an officetel under subparagraph 4 of Article 4 of the Enforcement Decree of the Housing Act): Any of the following amounts:

(a) In cases of a residential house leased from a lineal ascendant or descendant (including the spouse of either of them) of the resident or his/her spouse: An amount appraised by applying the standard market price under Article 99 (1) 1 (c) and (d) of the Income Tax Act (or the amount of subparagraph 1 if no standard market price is available);

(b) In cases other than those of item (a): An amount determined and publicly notified by the Commissioner of the National Tax Service within 60/100 of the amount appraised by applying the standard market price referred to in Article 99 (1) 1 (c) and (d) of the Income Tax Act (or the amount determined and publicly notified by the Commissioner of the National Tax Service within 60/100 of the amount of subparagraph 1 if no standard market price is available): Provided, That if a resident who has applied for a labor encouragement subsidy submits a copy of a lease contract under Article 100-7 (2) 2 and the key money for lease on a deposit basis is less than the amount appraised according to the main clause, the key money for lease on a deposit basis stated in the copy of the lease contract shall apply;

3. Financial assets under paragraph (3) 4, such as bank deposits, installment savings, installment deposits, deposits in trust, insurance for savings, and collective investment schemes: Balance of the financial assets: Provided, That In cases of demand deposits such as ordinary deposits, savings deposits, and flexible savings deposits, the average daily balance for the period from March 2 to June 1 of the year in which the relevant taxable period for income tax ends shall apply;

4. Memberships specified in paragraph (3) 5: Value appraised under Article 165 (8) 3 of the Enforcement Decree of the Income Tax Act;

5. Assets specified in paragraph (3) 6 and 7: Value appraised by the method prescribed by Ordinance of the Ministry of Economy and Finance, based upon the value of such assets.

(9)"Persons with disabilities prescribed by Presidential Decree" in the proviso of Article 100-3 (5) 2 (b) (iii) of the Act means persons falling under any of the following, among persons with severe disabilities under subparagraph 2 of Article 2 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities and persons with disabilities assessed as not lower than Grade III under the Act on Compensation to Persons Associated with the May 18 Democratization Movement: <Newly Inserted on Feb. 17, 2021>

1. A person who lives at the same address or residence as the resident or his or her spouse;

2. A person temporarily removed from the resident's address or place of residence for medical treatment, medical care, etc.

[This Article Newly Inserted on Feb. 28, 2007]

Article 100-6(Calculation of Labor Encouragement Subsidies) #

(1)"Amounts of income prescribed by Presidential Decree" in Article 100-3 (5) 3 (a) of the Act means the aggregate of the amounts computed by multiplying the business income of a person specified in Article 100-2 (4) by the applicable adjustment rate specified in the items of Article 100-3 (1) 4. <Newly Inserted on Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015>

(2)"Business income, earned income, and religious person's income prescribed by Presidential Decree" in the provisions, with the exception of the items, of Article 100-3 (5) 3 of the Act means income falling under any of the following: <Amended on Feb. 29, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Jun. 28, 2013; Feb. 21, 2014; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022>

1. Business income and earned income subject to withholding tax under Article 127 (1) 3 of the Income Tax Act, which have been received from lineal ascendants or descendants (including their spouses) of the resident and his/her spouse;

2. Earned income received from any person, other than business entities prescribed by Ordinance of the Ministry of Economy and Finance;

3. Earned income referred to in Article 20 (1) 3 of the Income Tax Act;

4. Business income of a person who fails to file an application for business registration under Article 168 (3) of the Income Tax Act or Article 8 (3) of the Value-Added Tax Act during the taxable period of the relevant income tax: Provided, That the income generated from personal services, which is received from a business entity prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom.

5. Income generated from a real estate leasing business under Article 45 (2) of the Income Tax Act.

(3)"Number of working months prescribed by Presidential Decree" in Article 100-5 (2) 1 of the Act shall be calculated by deeming each month during which an employee has worked at least 15 days as one month, and shall apply to a regular employee (referring to an employee who is not a daily employed employee defined in Article 14 (3) 2 of the Income Tax Act; hereafter in this Section, the same shall apply) who continuously works as at June 30 of the year in which an application is filed: Provided, That for the purposes of daily earned income or regular earned income (referring to the earned income paid to a regular employee) of a person who retires midway, the number of working months shall be deemed six months, regardless of the number of actual working months. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020>

(4) Deleted. <Feb. 17, 2021>

(5) The labor encouragement subsidy calculation schedule referred to in Article 100-5 (5) of the Act shall be as specified in attached Table 11. <Amended on Feb. 2, 2012; Feb. 3, 2015; Feb. 12, 2019>

[This Article Newly Inserted on Feb. 28, 2007]

Article 100-7(Documents Required for Filing Applications) #

(1) An application for labor encouragement subsidies under Article 100-6 (1) and (7) of the Act (hereafter in this Section referred to as"application for labor encouragement subsidies") shall contain the following descriptions: <Amended on Feb. 29, 2008; Feb. 2, 2012; Feb. 12, 2019; Feb. 11, 2020>

1. Matters concerning the applicant’s eligibility for application;

2. Gross wage and salary income, etc.;

3. Computed amount of labor encouragement subsidies;

4. Other matters necessary in relation to eligibility for applying for labor encouragement subsidies, and computation thereof, which are prescribed by Ordinance of the Ministry of Economy and Finance.

(2)"Evidentiary documents prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 100-6 (1) of the Act means the following materials (hereafter in this Section referred to as"evidentiary documents"): <Amended on Feb. 22, 2008; Feb. 15, 2013; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

1. Any of the following materials proving that the applicant has an earned income, business income or religious person's income: Provided, That the applicant need not submit the relevant materials, if the amount paid as earned income or business income inspected under paragraph (3) is stated in his/her application for labor encouragement subsidies:

(a) A receipt of withholding tax from earned income or business income;

(b) A copy of a passbook for receiving salaries or business income;

(c) Other materials that can objectively show that the applicant has an earned income, business income or religious person's income which is determined by the Commissioner of the National Tax Service;

2. Where a resident wishes to have key money for lease on a deposit basis appraised under the proviso of Article 100-4 (8) 2-2 (b): A copy of the lease contract;

3. Where the applicant has a right to acquire a real estate under Article 100-4 (3) 7: A copy of the lease contract, receipt of payment, such as amount of parceling-out, settlement amount, etc. and a copy of land redemption bonds or copy of housing redemption bonds.

(3) For providing convenience in filing an application for labor encouragement subsidies, the Commissioner of the National Tax Service shall make the amount paid as earned income or business income stated in the detail of payment and simplified statement of payment, which are submitted under Articles 164 and 164-3 of the Income Tax Act, available to the resident for inspection, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 22, 2008; Feb. 29, 2008; Feb. 15, 2013; Feb. 12, 2019; May 4, 2021>

(4) "One resident prescribed by Presidential Decree" in Article 100-6 (4) of the Act means a person with priority determined in the following order: Provided, That if there is a person determined by agreement between the residents concerned, it refers to such person. <Newly Inserted on Feb. 15, 2013; Feb. 11, 2020; Feb. 15, 2022; Feb. 29, 2024>

1. Deleted; <Feb. 29, 2024>

2. A person the amount of whose gross salary is larger than those of others;

3. A person the amount of whose labor encouragement subsidies for the relevant taxable period for income tax is larger than those of others;

4. A person who received a labor encouragement subsidy for the taxable period immediately preceding the relevant taxable period for income tax.

(5) Notwithstanding paragraph (4), if two or more residents in one household have filed an application under Article 100-6 (1) and (8) of the Act respectively, the resident who has filed an application under paragraph (1) of that Article shall be deemed to have filed an application for a labor encouragement subsidy; and if they have filed an application under paragraphs (7) and (8) of that Article respectively, the resident who has filed an application under paragraph (7) of that Article shall be deemed to have filed an application for a labor encouragement subsidy. <Newly Inserted on Feb. 29, 2024>

(6) When the head of the tax office having jurisdiction over the place of tax payment requests materials prescribed by Ordinance of the Ministry of Economy and Finance to verify the details of the application for a labor encouragement subsidy and the applicant's eligibility for the subsidy pursuant to Article 100-6 (12) of the Act, the relevant applicant for a labor encouragement subsidy shall submit such materials. <Amended on Feb. 22, 2008; Feb. 29, 2008; Feb. 15, 2013; Feb. 21, 2014; Feb. 29, 2024>

(7) Where a resident is deemed to have filed a final return on the tax base of global income under Article 100-6 (6) of the Act, he/she shall be deemed to have stated and returned a labor encouragement subsidy as a tax amount already paid in the final return. <Amended on Feb. 15, 2013; Feb. 3, 2015; Feb. 11, 2020; Feb. 29, 2024>

(8) "Person prescribed by Presidential, based on the amount of global income, etc." in Article 100-6 (6) 2 of the Act means a person whose global income is not more than the basic deduction amount for him/her under Article 50 of the Income Tax Act and who falls under any of the following: <Newly Inserted on Feb. 3, 2015; Feb. 11, 2020; Feb. 29, 2024>

1. A business operator who falls under any subparagraph of Article 143 (4) of the Enforcement Decree of the Income Tax Act;

2. A regular employee whose income received from two or more persons falls under any subparagraph of Article 73 (2) of the Income Tax Act.

(9) "Resident who has only the earned income prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 100-6 (7) of the Act means a person in whose case the person and his/her spouse have only earned income during a half term of the year in which the relevant taxable period for income tax falls (excluding earned income under Article 100-6 (2) 1 through 3). <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 29, 2024>

(10) "Data prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 100-6 (7) of the Act means the data referred to in subparagraphs of paragraph (2). <Newly Inserted on Feb. 12, 2019; Feb. 29, 2024>

(11) Where the head of the tax office having jurisdiction over the place of tax payment finds any omission or error in an application for labor encouragement subsidy or any other document, he/she may request the relevant applicant to correct it within a given period not exceeding 20 days: Provided, That he/she may, ex officio, correct a minor omission or error. <Amended on Feb. 15, 2013; Feb. 3, 2015; Feb. 12, 2019; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 28, 2007]

Article 100-8(Determination of Labor Encouragement Subsidies) #

(1) The head of the tax office having jurisdiction over the place of tax payment shall verify the following matters and determine the labor encouragement subsidy that shall be refunded to the person who filed an application for the labor encouragement subsidy pursuant to Article 100-6. In such cases, if the amount of income stated in the application for the labor encouragement subsidy or any evidentiary document differs from the amount specified in subparagraph 3, the labor encouragement subsidy shall be determined on the basis of the amount of income verified and determined by the estimation method set forth in Article 144 (1) of the Enforcement Decree of the Income Tax Act or Article 104 (1) of the Enforcement Decree of the Value-Added Tax Act, or any other method deemed reasonable by the Commissioner of the National Tax Service, based upon the current situation of property, expenditure for consumption, etc.: <Amended on Feb. 22, 2008; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 11, 2020; Feb. 17, 2021; May 4, 2021>

1. Applicant’s eligibility to file an application for a labor encouragement subsidy under Article 100-3 of the Act;

2. The gross wage and salary income, etc. objectively recognized, such as where the gross wage and salary income, etc. (including the spouse's gross wage and salary income, etc.) stated in the application for the labor encouragement subsidy or evidentiary documents are proved by statements of payment and simplified statements of payment under Articles 164 and 164-3 of the Income Tax Act, submitted by the person who has paid such gross wage and salary income, etc., by the end of the period for filing an application under Article 100-6 (1) of the Act (or the date of filing the application if an application is filed pursuant to paragraph (8) of that Article) or the end of the period for filing an application for a half year under paragraph (7) of that Article;

3. The amount of income stated in the application for the labor encourage subsidy or evidentiary documents and proved by a statement, tax invoice, credit card sales slip, or cash receipt under the Income Tax Act or the Value-Added Tax Act, or objectively recognized otherwise.

(2) Deleted. <Feb. 7, 2017>

(3) Deleted. <Feb. 17, 2021>

(4) If an applicant for the labor encouragement subsidy fails to correct any matter necessary for determining his/her eligibility for the labor encouragement subsidy and whether to grant the labor encouragement subsidy, even after receiving a request for correction under Article 100-7 (11), the head of the tax office having jurisdiction over the place of tax payment may decide not to grant the labor encouragement subsidy to such applicant. <Amended on Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 12, 2019; Feb. 29, 2024>

(5) "Cause prescribed by Presidential Decree" in the proviso of Article 100-7 (1) of the Act means any of the following: <Amended on Feb. 22, 2008; Feb. 18, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 12, 2019; Feb. 11, 2020; Feb. 29, 2024>

1. Where it is necessary to verify the fact, request materials, or conduct an investigation as it is impracticable to verify an applicant’s eligibility to file an application for labor encouragement subsidy with the application, evidentiary documents, etc.;

2. Where it is necessary to verify the fact, request materials, or conduct an investigation as it is impracticable to verify the gross wage and salary income, etc. with evidentiary documents, etc. submitted by the applicant for labor encouragement subsidy and the person who has paid the gross wage and salary income, etc. about the gross wage and salary income, etc.;

3. Where the head of the tax office having jurisdiction over the tax payment place requests the applicant to submit evidentiary documents or make a correction under Article 100-7 (6) or (11): Provided, That this shall only apply to cases where the request is made with less than one month remaining before the deadline for the determination under Article 100-7 (1) of the Act.

4. Deleted. <Feb. 3, 2015>

[This Article Newly Inserted on Feb. 28, 2007]

Article 100-9(Refund of Labor Encouragement Subsidies) #

(1) If an applicant opens an account in a financial bank, a post office, etc. and submits a report on the opening (change/withdrawal) of an account in the form prescribed by Ordinance of the Ministry of Economy and Finance, the head of the tax office having jurisdiction over the place of tax payment, who has determined a labor encouragement subsidy, may pay the labor encouragement subsidy by transferring it to the applicant’s account. <Newly Inserted on Feb. 7, 2017>

(2) Upon determining the labor encouragement subsidy, the head of the tax office having jurisdiction over the place of tax payment shall give notice to the relevant applicant using the Notice of Determination of Labor Encouragement Subsidy in the form prescribed by Ordinance of the Ministry of Economy and Finance, stating the details and date of, and grounds for the determination. In any of the following cases: the notice may be given by electronic service under Article 8 (1) of the Framework Act on National Taxes" <Amended on Feb. 29, 2008; Feb. 11, 2020; Feb. 15, 2022>

1. Where the applicant's requested amount is the same as the amount determined by the head of the tax office having jurisdiction over the place of tax payment;

2. Where the applicant submits an application for electronic service of the notice of determination in the form prescribed by Ordinance of the Ministry of Economy and Finance.

(3) If a person who has received a labor encouragement subsidy requests a certificate of grant of the subsidy, the head of the tax office having jurisdiction over the place of tax payment, who determined to pay the labor encouragement subsidy, shall issue a certificate of grant of the labor encouragement subsidy in the form prescribed by the Commissioner of the National Tax Service. <Newly Inserted on Feb. 7, 2017>

(4)"Amount prescribed by Presidential Decree" in Article 100-8 (5) 1 of the Act means 150,000 won. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020>

(5)"Cases prescribed by Presidential Decree" in Article 100-8 (5) 2 of the Act means the cases to which the following formula is applicable: <Newly Inserted on Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022>

Aggregate of the labor encouragement subsidy refunded under Article 100-8 of the Act for the first half of the relevant taxable period for income tax, and the labor encouragement subsidy to be refunded under Article 100-8 of the Act for the second half of the relevant taxable period for income tax ≥ Labor encouragement subsidy to be refunded under Article 100-8 of the Act for the relevant taxable period for income tax upon an application filed pursuant to Article 100-6 (1) of the Act

(6)"Amount prescribed by Presidential Decree" in Article 100-8 (6) of the Act means 1,850,000 won per year. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021>

(7) When the head of the tax office having jurisdiction over the place of tax payment recovers a labor encouragement subsidy already refunded under Article 100-8 (8) of the Act, he/she shall recover the amount in the following order: Provided, That if the applicant for the labor encouragement subsidy requests to give payment notice of income tax for the remaining recoverable amount instead of the subtraction under subparagraph 2, the head of the tax office with jurisdiction over the place of tax payment shall immediately give payment notice of income tax for the recoverable amount. <Newly Inserted on Feb. 11, 2020; Feb. 17, 2021>

1. Subtracting the recoverable amount from the child care subsidy for the relevant taxable period for income tax;

2. Subtracting the remaining recoverable amount, if any, from the labor encouragement subsidies and child care subsidies for five taxable periods from the taxable period for income tax immediately following the relevant taxable period for income tax, notwithstanding subparagraph 1;

3. Giving payment notice of income tax for the recoverable amount if there is a remaining recoverable amount, notwithstanding subparagraph 2.

(8) Where two or more residents of one household apply for a labor encouragement subsidy pursuant to Article 100-6 (1) or (7) of the Act and there are a labor encouragement subsidy to be refunded to one resident who is deemed to have filed an application for the labor encouragement subsidy pursuant to paragraph (4) of that Article and a labor encouragement subsidy to be recovered from the other residents, respectively, only the difference between the labor encouragement subsidy to be refunded and the labor encouragement subsidy to be recovered may be refunded or recovered after offsetting them with the consent of the resident who is deemed to have applied for the labor encouragement subsidy. <Newly Inserted on Feb. 28, 2023>

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 7, 2017]

Article 100-14(Scope of Institutions Requested for Data and Kinds of Data) #

(1)"Organization or institution prescribed by Presidential Decree" in the former part of Article 100-13 of the Act means any of the following organizations or institutions: <Amended on Feb. 22, 2008; Feb. 29, 2008; Dec. 31, 2008; Jun. 29, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015; Feb. 11, 2020>

1. The National Health Insurance Corporation incorporated under the National Health Insurance Act;

2. The Korea Worker’s Compensation and Welfare Service established under the Industrial Accident Compensation Insurance Act;

3. The National Pension Service established under the National Pension Act;

4. The Government Employees Pension Service established under the Public Officials Pension Act;

5. The Teachers’ Pension established under the Pension for Private School Teachers and Staff Act;

6. The Specific Post Office Pension Service Agency established under the Special Post Offices Act;

7. The Korea Financial Telecommunications and Clearings Institute established with permission from the Minister of Economy and Finance under Article 32 of the Civil Act;

8. An information and communications service provider under the Act on Promotion of Information and Communications Network Utilization and Information Protection;

9. The Korea Electric Power Corporation incorporated under the Korea Electric Power Corporation Act;

10. The Credit Finance Association incorporated under Article 62 of the Specialized Credit Finance Business Act;

11. The Korea Land and Housing Corporation incorporated under the Korea Land and Housing Corporation Act;

12. The Seoul Housing and Communities Corporation incorporated under the Local Public Enterprises Act;

13. Other organizations or institutions prescribed by Ordinance of the Ministry of Economy and Finance as similar to those listed in subparagraphs 1 through 12.

(2)"Data prescribed by Presidential Decree" in the former part of Article 100-13 of the Act means the following: <Amended on Feb. 22, 2008; Feb. 29, 2008; Jan. 7, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Apr. 22, 2014; Feb. 3, 2015; Aug. 11, 2016; Feb. 13, 2018; Feb. 12, 2019; Aug. 4, 2020; Feb. 17, 2021>

1. Electronic data from family relationship registration prepared and managed by the Minister of the National Court Administration under Article 11 (4) of the Act on Registration of Family Relationships;

2. Electronic data from resident registration prepared and managed by the head of an agency authorized to guide and supervise resident registration affairs under the Resident Registration Act;

3. Data for verifying persons with severe disabilities under the Enforcement Decree of theAct on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities;

4. Data about the wounded persons registered under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State, and data about the wounded persons registered under the Act on Compensation to Persons Associated with the May 18 Democratization Movement;

5. Data about aliens registered under the Immigration Act;

6. Data about property tax and comprehensive real estate holding tax under Article 119-2 (2) of the Enforcement Decree of the Local Tax Act;

7. Data about the status of motor vehicle management under Article 69 of the Motor Vehicle Management Act (based on the status of passenger cars registered as at June 1 each year);

8. Data about determination on the assessed values of motor vehicles under Article 4 (1) 3 of the Enforcement Decree of the Local Tax Act;

9. Data about the fixed dates of lease agreements under the Housing Lease Protection Act;

10. Data about the registration of leasehold interest on a deposit basis under the Registration of Real Estate Act;

11. Data about the monthly benefits paid to beneficiaries under the National Basic Living Security Act and data about the income and assets of beneficiaries for less than three months (including the updated data managed by State agencies);

12. Data about the income and assets of policy-holders, etc. under the National Health Insurance Act;

13. Data about the wages and salaries of the insured, etc. under the Employment Insurance Act;

14. Data about the wages and salaries of the insured, etc. under the Industrial Accident Compensation Insurance Act;

15. Data about the income, assets, and salaries of the insured under the National Pension Act;

16. Data about the salaries under the Public Officials Pension Act, the Military Pension Act, the Pension for Private School Teachers and Staff Act, or the Special Post Offices Act;

17. A list of the persons supplied with houses under Article 54 of the Housing Act, and reported data on the transactions of real estates under Article 3 (1) 2 and 3 of the Act on Report on Real Estate Transactions;

18. Personal information under the Personal Information Protection Act;

19. A statement of electric charges imposed under the Electric Utility Act and water charges imposed under the Water Supply and Waterworks Installation Act;

20. A statement of acquisition tax imposed on each person who has acquired any of the memberships referred to in Article 7 (1) of the Local Tax Act;

21. Data about determination on the assessed values of the memberships referred to in Article 4 (1) 9 of the Enforcement Decree of the Local Tax Act;

22. Data about the payment of the bills for the use of credit cards and debit cards by credit card members and debit card members under the Specialized Credit Finance Business Act;

23. Data about security deposits for lease (including key money for lease on a deposit basis) under housing lease agreements made between the Korea Land and Housing Corporation incorporated under the Korea Land and Housing Corporation Act or the Seoul Housing and Communities Corporation incorporated under the Local Public Enterprises Act and housing tenants;

24. Data necessary for the application for support of a single-parent family under the Single-Parent Family Support Act;

25. Data prescribed by Ordinance of the Ministry of Economy and Finance, similar to those listed in subparagraphs 1 through 24.

[This Article Newly Inserted on Feb. 28, 2007]

[Title Amended on Feb. 11, 2020]

Article 100-15(Scope of Application of Special Taxation for Partnership Firms) #

(1)"Organization prescribed by Presidential Decree" in Article 100-15 (1) 4 of the Act means: <Amended on Feb. 15, 2013; Feb. 21, 2014>

1. A law firm or law cooperative established under Article 40 or 58-18 of the Attorney-at-Law Act;

2. A patent firm established under Article 6-3 of the Patent Attorney Act or Article 14 of the Enforcement Decree of that Act;

3. A labor affairs consulting firm established under Article 7-2 of the Certified Public Labor Attorney Act;

4. A joint judicial scriveners firm established under Article 33 of the Certified Judicial Scriveners Act;

5. Any of the following firms or corporations that provide specialized personal services:

(a) A (limited) law firm established under Article 58-2 of the Attorney-at-Law Act;

(b) A (limited) patent firm established under Article 6-12 of the Patent Attorney Act;

(d) A tax accountant firm established under Article 16-3 of the Certified Tax Accountant Act;

(e) A customs broker firm established under Article 17 of the Licensed Customs Broker Act.

(2)"Foreign organization meeting the criteria prescribed by Presidential Decree" in Article 100-15 (1) 5 of the Act means any foreign organization falling each of the following subparagraphs: <Newly Inserted on Dec. 15, 2013; Oct. 23, 2015; Feb. 15, 2022>

1. A foreign organization similar to an organization referred to in Article 100-15 (1) 1 through 4 of the Act (excluding institutional private equity funds, among the organizations specified in subparagraph 3);

2. A foreign organization running a business with a domestic place of business under Article 94 of the Corporate Tax Act or Article 120 of the Income Tax Act;

3. A foreign organization to which a system similar to the special taxation for partnership firms is applied in a country where it was established (limited to a country with which the Republic of Korea has entered into a tax treaty).

(3) "Requirements prescribed by Presidential Decree" in the former part of Article 100-15 (2) of the Act means that only a corporation shall be a member: <Newly Inserted on Feb. 29, 2024>

[This Article Newly Inserted on Feb. 22, 2008]

[Title Amended on Feb. 21, 2014]

Article 100-16(Application for Eligibility for or Waiver of Special Taxation for Partnership Firms) #

(1) An enterprise that seeks the benefit of special taxation to partnership firms shall submit an application for special taxation to partnership firms in the form prescribed by Ordinance of the Ministry of Economy and Finance and the written consents of all partners (including documents which can verify the matters provided for in the subparagraphs of Article 100-15 (2), in cases of a foreign organization), to the head of a tax office having jurisdiction over the place of tax payment before (within one month from the start of the taxable year where it seeks such benefit from the taxable year in which the establishment date of the enterprise falls if an enterprise is established) the start of the first taxable year in which it intends to benefit from such special taxation to partnership firms. <Amended on Feb. 29, 2008; Dec. 30, 2010; Feb. 15, 2013>

(2) If a partnership firm that benefits from special taxation to partnership firms intends to waive the benefit of such special taxation to partnership firms, it shall submit an application for waiver of special taxation to partnership firms in the form prescribed by Ordinance of the Ministry of Economy and Finance and the written consents of all partners, to the head of a tax office having jurisdiction over the place of tax payment before the start of the first taxable year in which it intends to waive the special taxation to partnership firms. <Amended on Feb. 29, 2008; Dec. 30, 2010>

(3) The amount computed by subtracting the total amount of equity capital from the value of remaining assets as of the end (hereafter referred to as"quasi-liquidation day" in this Article) of the business year immediately preceding the first business year in which special taxation on partnership firm applies to the relevant domestic corporation shall be the tax base of corporate tax on quasi-liquidation income under Article 100-16 (3) of the Act (hereafter referred to as"quasi-liquidation income amount" in this Article). <Newly Inserted on Feb. 4, 2009>

(4)"Value of remaining assets" in paragraph (3) shall be an amount calculated by subtracting the total amount of liabilities from the total amount of assets. In such cases, the total amount of assets and the total amount of liabilities shall be calculated based on the book value. <Newly Inserted on Feb. 4, 2009>

(5) The sum of the capital or investment and surplus shall be the"total amount of equity capital" under paragraph (3); but where any corporate tax amount is refundable under the Framework Act on National Taxes after the quasi-liquidation day, the amount equivalent thereto shall be added to the total amount of equity capital as of the quasi-liquidation day, and the balance of deficit carried forward under Article 18 (1) of the Enforcement Decree of the Corporate Tax Act shall be offset by the amount equivalent thereto out of the total amount of equity capital as of the quasi-liquidation day: Provided, That the amount of deficit carried forward to be offset shall not exceed the amount of surplus out of the total amount of equity capital, and the amount of deficit carried forward in excess shall be deemed nil. <Amended on Feb. 12, 2019>

(6) Articles 14 through 54 of the Corporate Tax Act shall apply mutatis mutandis to calculation of the quasi-liquidation income amount, other than those prescribed in paragraphs (3) though (5). <Newly Inserted on Feb. 4, 2009>

(7) In filing a return under Article 100-16 (4) of the Act, a corporation converted into a partnership firm shall file a return on corporate tax base and a return on tax amount on the quasi-liquidation income in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents prescribed by Ordinance of the Ministry of Economy and Finance with the head of a ax office having jurisdiction over the place of tax payment. <Newly Inserted on Feb. 4, 2009>

[This Article Newly Inserted on Feb. 22, 2008]

Article 100-17(Rate of Allocation of Profits and Losses) #

(1) For the purposes of Article 100-18 of the Act, the rate of allocation of profits and losses shall be the rate reported as prescribed in Article 100-24 as a unitary rate of allocation of profits and losses for the relevant business year agreed upon in writing between partners (hereafter referred to as"agreed rate of allocation of profits and losses" in this Article): Provided, That profits and losses shall be allocated according to the rate of equity shares if no agreed rate of allocation of profits and losses exists. <Amended on Feb. 18, 2010>

(2) When any cause prescribed by Ordinance of the Ministry of Economy and Finance arise because it is recognized that there is apprehension of tax evasion in the application of paragraph (1), the rate of allocation of profits and losses of the immediately preceding taxable year shall apply to the taxable year in which the relevant cause arises. <Amended on Feb. 29, 2008>

(3) Where the sum total of equity shares of a certain partner and equity shares of other partner who is a related person to the former (referring to"related party" defined under Article 98 (1) of the Enforcement Decree of the Income Tax Act or"related party" defined under Article 2 (5) of the Enforcement Decree of the Corporate Tax Act); hereafter referred to as"related person" in this paragraph) is the largest when the main clause of paragraph (1) is applied, it shall be pursuant to the ratio of equity shares between such partner and another partner who is a related person to the former. <Amended on Feb. 4, 2009; Feb. 18, 2010; Feb. 12, 2019>

(4) Notwithstanding paragraphs (2) and (3), if the relevant partnership firm is a private equity fund defined under Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act (including pre-existing private equity funds deemed continuing as institutional private equity funds, private equity funds for corporate financial stability, or private equity funds for start-up and venture business under Article 8 (1) through (4) of the Addenda to the partial amendment (Act. No. 18128) to the Financial Investment Services and Capital Markets Act; hereafter in this Section referred to as"institutional private equity funds") and has reported the rate of dividend of profits or the rate of allocation of losses determined based on the rate, order, etc. stipulated in its articles of incorporation, terms and conditions, or an investment contract as the agreed rate of allocation of profits or losses, such agreed rate shall apply. In such cases, the performance remuneration under Articles 86 (1) and 249-14 (11) of that Act (hereafter referred to as"performance remuneration" in this Section) shall be deemed the preferred dividend of profits to an executive officer. <Newly Inserted on Feb. 4, 2009; Oct. 23, 2015; Feb. 15, 2022>

(5) For the purposes of Article 100-18 (1) of the Act, when the rate of allocation of profits and losses changes because a new partner is admitted into the partnership firm or a partner withdraws from the partnership firm in the taxable year, the amount of income or deficits allocable to a partner group computed for each period before and after such change shall be calculated according to the applicable rate of allocation of profits and losses. <Newly Inserted on Feb. 4, 2009>

[This Article Newly Inserted on Feb. 22, 2008]

Article 100-18(Calculation and Allocation of Income and Deficits of Partnership Firms) #

(1)"Partner prescribed by Presidential Decree" in the proviso of Article 100-18 (1) of the Act means any of the following partners (hereinafter referred to as"passive partners"): <Amended on Feb. 4, 2009; Feb. 18, 2010; Oct. 23, 2015; Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

1. A partner meeting each of the following requirements that:

(a) The partner shall not allow the partnership firm to use its name or trade name;

(b) The partner shall not agree to assume unlimited responsibility for the debt incurred out of the business of the partnership firm;

(c) The partner shall be neither an executive officer specified in any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act nor an equivalent person;

2. A limited partner, if the relevant partnership firm is an institutional private equity fund;

3. Deleted. <Feb. 4, 2009>

(2) If an upper-level partnership constitutes a passive partner of a lower-level partnership and thus has not allocated the loss of the lower-level partnership to the upper-level partnership pursuant to the proviso of Article 100-18 (1) of the Act, such loss shall not be allocated to the partner of the upper-level partnership, either. <Newly Inserted by Presidential Decree No. 1, Feb. 29, 2024>

(3) Where the income by a partner group is allocated to a passive partner as prescribed in the proviso of Article 100-18 (1) of the Act in each taxable year that ends within 15 years from the end of the taxable year in which the deficit allocated to each partner incurred, an amount calculated by subtracting the amount of subparagraph 2 from the amount of subparagraph 1 shall be allocated. In such cases, where the allocation is made to passive partners subject to the main clause of Article 100-18 (4) or proviso of Article 100-24 (3) of the Act, the income and deficit to be allocated under subparagraphs 1 and 2 shall be the amount calculated as classified under Article 119 of the Income Tax Act or Article 93 of the Corporate Tax Act: <Newly Inserted on Feb. 18, 2010; Feb. 15, 2013; Feb. 15, 2022; Feb. 29, 2024>

1. The following income to be allocated to the passive partner in the relevant taxable year:

[Income to be allocated to the relevant partner group in the relevant taxable year × (Allocation rate of profits and losses to the passive partner in the relevant taxable year/ Allocation rate of profits and losses to the relevant partner group in the relevant taxable year)]

2. The following deficit amount (applicable only to the amount not deducted in the taxable year after the taxable year in which the relevant deficit incurred) not allocated to the passive partner in the taxable year in which the allocable deficit by a partner group incurred:

[Deficit to be allocated to each partner group in the taxable year in which the allocable deficit by the relevant partner group incurred × (Allocation rate of profits and losses to the passive partner in the relevant taxable year in which the allocable deficit by the relevant partner group incurred ÷ Allocation rate of profits and losses to the relevant partner group in the taxable year in which the allocable deficit by the relevant partner group incurred)]

(4) For the purposes of Article 100-18 (1) of the Act, the following relevant provisions shall apply to the deduction of deficits carried forward by a partner group: <Newly Inserted on Feb. 18, 2010; Feb. 15, 2013; Feb. 12, 2019; Feb. 29, 2024>

1. A partner group comprised of residents (hereinafter referred to as"resident group"): Article 45 of the Income Tax Act;

2. A partner group comprised of non-residents (hereinafter referred to as"non-resident group"): Article 122 of the Income Tax Act;

3. A partner group comprised of domestic corporations (hereinafter referred to as"domestic corporation group"): Article 13 (1) 1 of the Corporate Tax Act;

4. A partner group comprised of foreign corporations (hereinafter referred to as"foreign corporation group"): Article 91 of the Corporate Tax Act.

(5) In applying the latter part of Article 100-18 (2) of the Act, the deficit exceeding the value of equity share (hereafter in this Section, referred to as "deficit exceeding allocation limits") held by the relevant partner shall be allocated additionally within the range of the deficit, only if the deficit in each taxable year of the partnership firm that is allocated to each taxable year carried forward falls short of the value of equity share. In such cases, the amount equivalent to the deficit exceeding the allocation limits shall be deemed incurred on the end date of the taxable year of the partnership firm that has incurred the deficit exceeding the allocation limits when applying the deduction of deficits carried forward under Article 45 of the Income Tax Act and Article 13 (1) 1 of the Corporate Tax Act. <Amended on Feb. 18, 2010; Feb 12, 2019; Feb. 29, 2024>

(6) In applying the latter part of Article 100-18 (2) of the Act and Article 100-18 (4) of the Act, if the deficit classified into at least two categories by partner group has incurred, the deficit exceeding the allocation limits shall be deemed to have incurred in proportion to the amount of each classified deficit. <Amended on Feb. 18, 2010; Feb. 29, 2024>

(7) For the purposes of Article 100-18 (4) of the Act, the income distributed to partners for each group of partners shall be classified as follows; In such cases, the amount of income distributed to the upper-level partnership from the lower-level partnership shall be based on the partners of the upper-level partnership. <Amended on Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 7, 2017; Feb. 15, 2022; Feb. 28, 2023; Feb. 29, 2024>

1. The resident group: Amounts received from the incomes referred to in Articles 16 through 19, 21, and 94 of the Income Tax Act;

2. The non-resident group:

(a) In cases of non-residents referred to in Article 121 (2) and (5) of the Income Tax Act: Amounts received from the incomes referred to in subparagraphs 1 through 6, and 9 through 12 of Article 119 of that Act;

(b) In cases of non-residents other than item (a): Amounts received from the income referred to in subparagraphs 1, 2, 4 through 6, and 10 through 12 of Article 119 of the Income Tax Act. In such cases, if an institutional private equity fund as a partnership firm distributes income received through a special purpose company under Article 249-13 of the Financial Investment Services and Capital Markets Act to passive partners, the amount of income allocated to each passive partner shall be based on the classification of income received by the special purpose company;

3. The domestic corporation group: Gross income provided for in Article 15 of the Corporate Tax Act;

4. The foreign corporation group:

(a) In cases of foreign corporations referred to in Article 97 (1) of the Corporate Tax Act: Gross income provided for in Article 92 (1) of that Act;

(b) In cases of foreign corporations other than item (a): Amounts received from the income referred to in subparagraphs 1, 2, 4 through 6, and 8 through 10 of Article 93 of the Corporate Tax Act. In such cases, if an institutional private equity fund as a partnership firm distributes income received through a special purpose company under Article 249-13 of the Financial Investment Services and Capital Markets Act to passive partners, the amount of income allocated to each passive partner shall be based on the income classification of the income received by the special purpose company;

(8) For the purposes of Article 100-18 (4) of the Act, the deficit distributed to partners shall be classified as follows for each group of partners; In such cases, the amount of deficits distributed to the upper-level partnership from the lower-level partnership shall be based on the partners of the upper-level partnership. <Amended on Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 29, 2024>

1. The resident group: Expenses incurred in relation to the incomes referred to in Articles 19 and 94 of the Income Tax Act;

2. The non-resident group: Expenses incurred in relation to the incomes referred to in subparagraphs 3 through 6 and 9 through 11 of Article 119 of the Income Tax Act (limited to the non-residents referred to in Article 121 (2) and (5) of the Income Tax Act);

3. The domestic corporation group: Deductible expenses provided for in Article 19 of the Corporate Tax Act;

4. The foreign corporation group: Deductible expenses provided for in Article 92 (1) of the Corporate Tax Act (limited to the foreign corporations referred to in Article 97 (1) of the Corporate Tax Act).

(9) For the purposes of Article 100-18 (4) of the Act, if the relevant partnership firm is an institutional private equity fund that distributes income to a passive partner who is a non-resident or a foreign corporation, an amount calculated by subtracting the amount that belongs to the relevant partner according to the allocation rate of profits and losses of the partnership firm (referring to the amount calculated by dividing in proportion to the amount of income referred to in Article 119 of the Income Tax Act or Article 93 of the Corporate Tax Act, in cases of a passive partner of an institutional private equity fund subject to the main clause of Article 100-18 (4) of the Act or the proviso to Article 100-24 (3) of the Act), out of the fees (excluding contingent fees) and commission paid under the Financial Investment Services and Capital Markets Act, from the amount of income distributed to the relevant partner under Article 100-18 (1) of the Act shall be deemed the amount of income distributed to the partner. <Newly Inserted on Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013; Oct. 23, 2015; Feb. 15, 2022; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 22, 2008]

Article 100-19(Calculation and Allocation of Tax Amount of Partnership Firms) #

(1) The amounts referred to in the subparagraphs of Article 100-18 (5) of the Act shall be calculated deeming the partnership firm to be a domestic corporation. <Amended on Feb. 29, 2024>

(2) For the purpose of Article 100-18 (6) of the Act, the amount allocated to partners under Article 100-18 (5) of the Act shall be deducted or added according to the following methods: <Amended on Feb. 4, 2009; Feb. 15, 2013; Feb. 29, 2024>

1. Amount of tax deduction and exemption: Deduct it from the calculated tax amount;

2. Amount of withholding taxes: Deduct it as already paid tax amount: Provided, That if any of the following applies, it shall be deducted from the relevant tax amount when income tax or corporate tax is withheld on the income allocated to the relevant partner under Article 100-24 of the Act or Article 127 of the Income Tax Act, however, the amount exceeding the relevant tax amount shall be deemed null:

(a) In cases of the passive partner who is a resident, non-resident, or foreign corporation;

(b) In cases of the partner (excluding passive partners) who is a resident, and where the allocated income is classified as the amount received from the income under Article 16, 17 or 21 of the Income Tax Act as prescribed in Article 100-18 (7) 1;

3. Penalty tax: Add it to the calculated tax amount;

4. Tax amount equivalent to the corporate tax on capital gains, such as land, etc.: Add it to the calculated tax amount. In such cases, the amount calculated by multiplying the amount calculated by deeming the partnership firm to be a domestic corporation by the sum total of the rate of allocating the profits and losses of partners who are domestic corporations and foreign corporations shall be the tax amount equivalent to the corporate tax on capital gains, such as land, etc.

(3) For the purpose of Article 100-18 (5) 3 of the Act, the penalty tax allocated to partners means the following penalty taxes: <Amended on Feb. 12, 2019; Feb. 29, 2024>

1. Penalty tax levied under Articles 75-3 and 75-5 through 75-8 the Corporate Tax Act;

2. Penalty tax levied under Article 100-25 (1) and (2) of the Act.

[This Article Newly Inserted on Feb. 22, 2008]

Article 100-21(Adjustment of Value of Equity Share) #

(1) The initial value of equity share held by a partner shall be an amount calculated by multiplying the total amount of investment by the partnership firm as at the end of the taxable year immediately preceding the taxable year in which special taxation to the partnership firm is applied for the first time (or as on the first day of the taxable year where special taxation to the partnership firm is applied from the taxable year in which the establishment date of the firm falls) by the investment ratio of the relevant partner.

(2)"Any event prescribed by Presidential Decree" in Article 100-20 (1) of the Act and the amount increased upon the occurrence of the relevant event are as follows:

1. Where investing assets in the partnership firm: Market price of assets as on the date of investment;

2. Where equity shares in the partnership firm are transferred, inherited or donated: The value of equity share as of the date of transfer, inheritance or donation;

3. Where dividends are distributed from the income of the partnership firm: Amount of income (including non-taxable income under the Income Tax Act, the Corporate Tax Act, and the Act).

(3)"Any event prescribed by Presidential Decree" in Article 100-20 (2) of the Act and the amount reduced upon the occurrence of the relevant event are as follows:

1. Where being allocated with the assets of partnership firm: Market price of the assets as of the date of allocation;

2. Where a partner transfers, bequeaths or donates equity share in the partnership firm: Equity amount of the equity share concerned as of the date of transfer, bequest or donation;

3. Where deficit is allocated from the partnership firm: Amount of deficit.

(4) If two or more causes for adjusting the value of equity share occur simultaneously for the purposes of paragraphs (2) and (3), the value of equity shares shall be adjusted according to the following order: Provided, That in cases falling under Article 100-23, subparagraph 3 or 4 shall be applied ahead of subparagraph 2:

1. Adjustment to increase under paragraph (2) 1 and 2;

2. Adjustment to reduction under paragraph (3) 1 and 2;

3. Adjustment to increase under paragraph (2) 3;

4. Adjustment to reduction under paragraph (3) 3.

(5) Where the value of equity shares is reduced as prescribed in paragraph (3), the minimum value of equity share shall be zero.

[This Article Wholly Amended on Feb. 4, 2009]

Article 100-31(Application Mutatis Mutandis to Matters Related to Child Care Subsidies) #

(1) The following provisions shall apply mutatis mutandis to the matters referred to in the following in implementing the special taxation for child encouragement under this Section. In such cases, "labor encouragement subsidy", "application for a labor encouragement subsidy", "notice of determination of a labor encouragement subsidy", and "notice of restriction on refund of a labor encouragement subsidy" shall be construed as "child encouragement subsidy", "application for a child encouragement subsidy", "notice of determination of a child encouragement subsidy", and "notice of restriction on refund of a child encouragement subsidy" respectively: <Amended on Feb. 11. 2020; Feb. 29, 2024>

1. The scope of dependent children and persons eligible for application for child encouragement subsidies: Article 100-2 (excluding paragraph (4));

2. The scope of annual gross income: Article 100-3;

3. The scope of one household and the criteria for determining property: Article 100-4 (excluding paragraph (2));

4. Determination of dependent children: Article 100-5;

5. Calculation of child care subsidies, etc.: Article 100-6 (excluding paragraphs (3) and (5));

6. Documentation for application, etc.: Article 100-7 (excluding paragraphs (1), (9), and (10));

7. Determination of child care subsidies: Article 100-8;

8. Refund of child care subsidies: Article 100-9 (excluding paragraphs (4), (5), and (7));

9. Restriction on refund of child care subsidies: Article 100-10;

10. Penalty tax: Article 100-11;

11. Verification and investigation: Article 100-12;

12. Manner of requesting details of financial transactions: Article 100-13;

13. The scope of organizations requested for data and the kind of data: Article 100-14.

(2) If an applicant (including his/her spouse) has been granted child tax credits as provided for in Article 59-2 of the Income Tax Act, the head of the tax office having jurisdiction over the place of tax payment shall deduct the amount calculated in accordance with that Article and Article 61 of that Act from a child care subsidy determined under paragraph (1). <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on Feb. 21, 2014]

[Title Amended on Feb. 7, 2017]

Article 100-32(Special Taxation for Facilitation of Investment and Mutually-Beneficial Cooperation) #

(1) Deleted. <Feb. 28, 2023>

(2) Deleted. <Feb. 28, 2023>

(3) A domestic corporation that intends to file a tax return under Article 100-32 (2) of the Act shall submit a corporate tax return on unappropriated earnings in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, when it files a report on tax base under Article 60 or 76-17 of the Corporate Tax Act.

(4)"Income prescribed by Presidential Decree" in Article 100-32 (2) 1 of the Act, with the exception of its items, shall be calculated by subtracting the aggregate amount referred to in subparagraph 2 from the amount obtained by adding the aggregate amount referred to in subparagraph 1 to the incomes for each business year referred to in Article 14 of the Corporate Tax Act (if the amount of such income is less than zero, it shall be deemed zero; hereafter in this paragraph, referred to as"corporate income"): Provided, That if the corporation is subject to the consolidated tax return system under Chapter II-3 of the Corporate Tax Act and the total amount of corporate income of each consolidated corporation exceeds 300 billion won, it shall be calculated by the following formula; and in cases of any other corporation whose corporate income exceeds 300 billion won, its corporate income shall be deemed 300 billion won: <Amended on Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023>

300 billion won x (Corporate income of the relevant consolidated corporation ÷ Total amount of corporate income of each consolidated corporation)

1. The aggregate of the following amounts:

(a) Interest on the refund under subparagraph 4 of Article 18 of the Corporate Tax Act;

(b) Deleted. <Feb. 28, 2023>

(c) Amount carried forward and included in deductible expenses for the relevant business year under Article 24 (5) of the Corporate Tax Act;

(d) Amount included in deductible expenses for the relevant business year, as the depreciation cost of the assets to which Article 100-32 (2) 1 (a) of the Act applies for the relevant business year;

2. The aggregate of the following amounts:

(a) Amount of corporate tax prescribed by Ordinance of the Ministry of Economy and Finance for the relevant business year (including the tax amount not included in deductible expenses as the amount of foreign corporate tax directly paid by a domestic corporation under Article 57 of the Corporate Tax Act and the amount of foreign corporate tax referred to in Article 15 (2) 2 of that Act), the amount of special rural development tax for the reduced or exempted amount of corporate tax, and the amount of local corporate income tax prescribed by Ordinance of the Ministry of Economy and Finance;

(b) Earned surplus reserve subject to mandatory accumulation in the relevant business year under Article 458 of the Commercial Act;

(c) Amount prescribed by Ordinance of the Ministry of Economy and Finance as a reserve subject to mandatory accumulation in accordance with statutes or regulations;

(d) Losses deductible in the relevant business year under Article 13 (1) 1 of the Corporate Tax Act. In such cases, .the limits prescribed in the proviso of the provisions, with the exception of the subparagraphs, of paragraph (1) shall not apply; and in cases of a surviving corporation, etc., the provisions concerning the restriction on deduction in Articles 45 (1) and (2) and 46-4 (1) of that Act).

(e) Amount included in the gross income of the relevant business year (referring to the amount before applying non-inclusion in gross income under Article 18-2 of the Corporate Tax Act), as the amount falling under Article 16 (1) 5 of that Act (limited to the portion received in stocks, etc. out of the costs of a merger);

(f) Amount included in the gross income of the relevant business year (referring to the amount before applying non-inclusion in gross income under Article 18-2 of the Corporate Tax Act), as the amount falling under Article 16 (1) 6 of that Act (limited to the portion received in stocks, etc. out of the costs of a merger);

(g) Amount not included in deductible expenses because it exceeds the ceiling of donations on inclusion in deductible expenses under Article 24 (2) of the Corporate Tax Act;

(h) Amount included in the gross income of the relevant business year, as the transfer gains or losses under Article 44 (1) of the Corporate Tax Act;

(i) Amount included in the gross income of the relevant business year, as the transfer gains or losses under Article 46 (1) of the Corporate Tax Act;

(j) Amount distributed as a dividend under Article 104-31 (1) of the Act or Article 51-2 of the Corporate Tax Act;

(k) Deleted; <Feb. 11, 2020>

(l) Deleted; <Feb. 29, 2024>

(m) Amount prescribed by Ordinance of the Ministry of Economy and Finance, as an amount disbursed in connection with the repayment of public funds defined in subparagraph 1 of Article 2 of the Special Act on the Management of Public Funds.

(5)"Rate prescribed by Presidential Decree" in Article 100-32 (2) 1 of the Act, with the exception of its items, means 70/100, and"rate prescribed by Presidential Decree" in Article 100-32 (2) 2 of the Act means 15/100. <Amended on Feb. 17, 2021>

(6)"Assets prescribed by Presidential Decree, such as machinery" in Article 100-32 (2) 1 (a) of the Act means the following assets: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The following assets, which is the business assets newly acquired for use in a domestic place of business (excluding secondhand assets and lease assets other than the financial leases referred to in Article 3; and in cases of a domestic corporation which is granted the special cases concerning calculating corporate tax base for shipping enterprises pursuant to Article 104-10 of the Act, limited to the assets prescribed by Ordinance of the Ministry of Economy and Finance): Provided, That they shall include capital expenditures under Article 31 (2) of the Enforcement Decree of the Corporate Tax Act but exclude the portion immediately depreciated in the relevant business year pursuant to paragraphs (4) and (6) of that Article:

(a) The following tangible fixed assets for business:

(i) Machinery and equipment, tools, instruments and furnishings, motor vehicles and transportation equipment, ships and aircraft, and other similar tangible fixed assets for business;

(ii) Buildings for business use newly built or extended, which are prescribed by Ordinance of the Ministry of Economy and Finance;

(b) Intangible assets referred to in Article 24 (1) 2 (a) through (d) and (f) of the Enforcement Decree of the Corporate Tax Act: Provided, That goodwill (excluding goodwill appropriated by a surviving corporation, etc., etc. due to a merger or division) shall be excluded herefrom;

2. Stocks acquired in return for the investment (including investment through a private equity fund specializing in business start-ups and venture businesses or a business start-up investment fund, etc. referred to in Article 13-2 (1) 2 of the Act) made in a venture business defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses by any of the following methods:

(a) Payment in capital at the time the relevant enterprise is established;

(b) Payment of the cost of capital increase, where the paid-in capital is increased after the incorporation of the relevant enterprise.

(7) Where the investment referred to in Article 100-32 (2) 1 (a) of the Act is made over at least two business years, total amount of investment made in each business year shall be calculated based on the amount actually disbursed in the relevant business year.

(8)"Full-time employees prescribed by Presidential Decree" in the provisions, with the exception of subitems (i) through (iii), Article 100-32 (2) 1 (b) means employees who have an employment contract concluded pursuant to the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Amended on Feb. 17, 2021; Feb. 15, 2022>

1. A person who falls under any of Article 26-4 (2) 1 and 3 through 6;

2. A employee whose earned income under Article 20 (1) 1 and 2 of the Income Tax Act is at 80 million won: Provided, That in cases of an employee whose period of employment for the relevant taxable year is less than one year, the amount of the employee's earned income shall be determined based on the amount calculated by dividing the amount of the employee's earned income by the number of months of employment in the relevant taxable year and multiplying the amount by 12.

(9) The increase in wages referred to in Article 100-32 (2) 1 (b) of the Act, with the exception of its subitems (i) through (iii), means the increased amount, compared with the amount for the immediately preceding business year, in the aggregate of earned income that is paid to the full-time employees as at the end of every month of the relevant business year, under Article 20 (1) 1 and 2 of the Income Tax Act (hereafter in this Article, referred to as "amount paid as wages") (including the book value of treasury stocks contributed to the employee ownership stock association under subparagraph 16 of Article 19 of the Enforcement Decree of the Corporate Tax Act or the amount of money or goods calculated by the formula prescribed by Ordinance of the Ministry of Economy and Finance, but limited to the amount included by the relevant corporation in deductible expenses). <Amended on Feb. 29, 2024>

(10) The increased amount of wages of existing full-time employees and the increased amount wages of newly hired full-time employees under Article 100-32 (2) 1 (b) (i) b. of the Act shall be calculated as follows. In such cases, the amount calculated pursuant to subparagraph 2 shall not exceed the increased amount of the wages of the full-time employees of the relevant year:

1. Increased amount of wages of existing full-time employees: An amount calculated by subtracting the amount calculated under subparagraph 2 from the increased amount of wages of full-time employees in the relevant year;

2. Increased amount wages of newly hired full-time employees: (Number of full-time employees in the relevant year - Number of full-time employees in the immediately preceding year) x Average amount paid as wages, prescribed by Ordinance of the Ministry of Economy and Finance, for the full-time employees who have concluded their labor contracts under the Labor Standards Act (excluding cases where they have renewed their labor contracts) for the first time in the relevant year.

(11) Article 26-4 (3) shall apply mutatis mutandis to the calculation of the number of full-time employees under paragraphs (8) and (10).

(12)"Regular youth employees prescribed by Presidential Decree" in Article 100-32 (2) 1 (b) (ii) of the Act means persons who are regular youth employees defined in Article 26-5 (3) and are between the ages of 15 and 34 (in cases of a person who has performed military service under any item of Article 27 (1) 1, referring to the age calculated by subtracting the period of military service of not more than six years from the current age). In such cases, Article 26-5 (8) 1 shall apply mutatis mutandis to the calculation of regular youth employees. <Amended on Feb. 28, 2023>

(13)"Employees whose statuses have been changed to regular employees and meet the requirements prescribed by Presidential Decree for the period, type, etc. of employment" in Article 100-32 (2) 1 (b) (iii) means the employees whose status has been changed to regular employees, referred to in Article 26-4 (13).

(14)"Amount prescribed by Presidential Decree, such as the amount disbursed for mutually-beneficial cooperation defined in subparagraph 3 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises" in Article 100-32 (2) 1 (c) of the Act means any of the following amounts disbursed in the relevant business year: Provided, That the amount disbursed to assist any related party referred to in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act shall be excluded herefrom: <Amended on Feb. 12, 2019>

1. Where a contribution is made under any subparagraph of Article 8-3 (1) of the Act under that paragraph, the relevant contribution;

2. Where a contribution is made to an intra-company labor welfare fund of a small or medium requiring cooperation under Article 8-3 (1) 1 of the Act, the relevant contribution;

3. Where contribution is made to a joint labor welfare fund under Article 86-2 of the Framework Act on Labor Welfare, the relevant contribution;

4. Where a corporation classified as follows makes a contribution for the purposes of providing a guarantee to, or supporting lending of, a small or medium enterprise as prescribed by Ordinance of the Ministry of Economy and Finance, the relevant contribution:

(a) Where a contribution is made to the Korea Credit Guarantee Fund established under the Korea Credit Guarantee Fund Act: A financial company, etc. defined in subparagraph 3 of Article 2 of that Act;

(b) Where a contribution is made to the Korea Technology Finance Corporation established under the Korea Technology Finance Corporation Act: A financial company, etc. defined in subparagraph 3 of Article 2 of that Act;

(c) Where a contribution is made to a credit guarantee foundation or the Korean Federation of Credit Guarantee Foundations established under the Regional Credit Guarantee Foundation Act: A financial company, etc. defined in subparagraph 4 of Article 2 of that Act;

5. Any other amount prescribed by Ordinance of the Ministry of Economy and Finance as the amount disbursed for mutually-beneficial cooperation.

(15)"Period prescribed by Presidential Decree" in Article 100-32 (3) of the Act means either of the following periods:

1. Where a domestic corporation files a return by choosing the method provided for in Article 100-32 (2) 1 of the Act: The business year in which three years elapse;

2. Where a domestic corporation files a return by choosing the method provided for in Article 100-32 (2) 2 of the Act: The business year in which one year elapses;

(16) Where a corporation subject to continuous application of the method chosen under Article 100-32 (3) of the Act merges with another corporation or acquires the business of another corporation, or in circumstances prescribed by Ordinance of the Ministry of Economy and Finance, it may change the method chosen.

(17) Where a domestic corporation has not chosen any of the methods provided for in subparagraphs of Article 100-32 (2) of the Act, the domestic corporation shall be deemed to have chosen a method by which the smaller amount of unappropriated earnings or the greater over-appropriated amount is computed for the business year that falls under any subparagraph of Article 100-32 (1) of the Act for the first time in filing the relevant tax return.

(18) Even where a domestic corporation that sets aside the reserve for appropriation for the next term during the relevant business year and deducts the reserve from unappropriated earnings pursuant to Article 100-32 (5) of the Act ceases to be a domestic corporation that belongs to a corporate group subject to limitations on cross shareholding under Article 31 (1) of the Monopoly Regulation and Fair Trade Act during the following two business years, it shall pay corporate tax on unappropriated earnings in accordance with Article 100-32 (1) and (6) of that Act. <Amended on Feb. 28, 2023>

(19) For the purposes of Article 100-32 (7) of the Act, if an over-appropriated amount is deducted, pursuant to Article 56 (6) of the Corporate Tax Act, from the reserve for appropriation in the next term accumulated in the immediately preceding business year pursuant to Article 56 (5) of the Corporate Tax Act (referring to that Act before it is amended by Act No. 16008), the amount left over after deducting the amount of subparagraph 2 from the amount of subparagraph 1 may be carried over to the next business year and deducted from the unappropriated income of the next year: <Amended on Feb. 12, 2019>

1. The over-appropriated amount of the relevant business year, calculated pursuant to Article 100-32 (2) of the Act;

2. The over-appropriated amount deducted from the reserve for appropriation in the next term pursuant to Article 56 (6) of the Corporate Tax Act (referring to that Act before it is amended by Act No. 16008).

(20)"Where a domestic corporation referred to in paragraph (1) has disposed of an asset referred to in paragraph (2) 1 (a), or in circumstances prescribed by Presidential Decree" in Article 100-32 (8) of the Act means the following cases: <Amended on Feb. 12, 2019; Jan. 5, 2021; Feb. 28, 2023>

1. Where the relevant asset is transferred or lent before two years pass from the completion date of investment in the asset under paragraph (6) 1 (a) (i) or the purchase date of the asset (limited to purchased assets) under paragraph (6) 1 (b), or the acquisition date of the asset under paragraph (6) 2: Provided, That this shall not apply where the asset falls under any of the following items:

(a) Where an asset falls under any subparagraph of Article 137 (1);

(b) Where an asset referred to in paragraph (6) 1 (a) (i) is transferred or lent, gratuitously to the commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises (excluding the related parties provided for in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act);

(c) Where assets that have become unusable because of destruction or damage by a natural disaster, fire, etc. are disposed of;

(d) Other cases prescribed by Ordinance of the Ministry of Economy and Finance in consideration of the type of business and other characteristics;

2. Cases prescribed by Ordinance of the Ministry of Economy and Finance, such as where the relevant asset ceases to be classified as a building for business use under paragraph (6) 1 (a) (ii).

(21) Pursuant to Article 100-32 (8) of the Act, a domestic corporation shall pay the amount calculated by multiplying the amount of tax not paid due to the deduction of the invested amount by the period specified in subparagraph 1 and the rate specified in subparagraph 2, as the amount equivalent to interest, when it files a tax base return for the business year in which the date prescribed by Ordinance of the Ministry of Economy and Finance falls (hereafter in this paragraph, referred to as"the payment date of the amount equivalent to interest"), where the cause or event referred to in any subparagraph of paragraph (20) occurs: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period between the day immediately after the filing date of the tax base return on corporate tax for the business year in which the invested amount was deducted and the payment date of the amount equivalent to interest;

2. The rate specified in Article 11-2 (9) 2.

(22) The aggregate of earned income referred to in paragraph (9) shall be calculated as follows:

1. Where a surviving corporation, a corporation newly established by a division, an invested corporation, or a transferred corporation (hereafter in this paragraph, referred to as"surviving corporation, etc.") accepts continuous employment of the employees engaged in former business divisions as a consequence of a merger, division, investment in kind, or acquisition of business, such employees shall be deemed employed by the surviving corporation, etc., before such event;

2. Where a new corporation is established, the aggregate of earned income for the immediately preceding business year shall be deemed nil: Provided, That this shall not apply to cases subject to subparagraph 1.

(23) Where the merged corporation or divided corporation disappears as a consequence of a merger or division, the surviving corporation or the corporation newly established by the division may succeed to the unappropriated earnings or the over-appropriated amount under Article 100-32 of the Act, as prescribed by Ordinance of the Ministry of Economy and Finance.

(24) Deleted; <Feb. 12, 2019>

(25) Methods for computing the aggregate of investments, the increased amount of wages, and unappropriated earnings upon a merger or division, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance.

[This Article Newly Inserted on Feb. 13, 2018]

Article 104(Special Taxation for Special Purpose Companies for Recapitalization) #

(1)"Financial institutions prescribed by Presidential Decree" in Article 104-3 (1) of the Act, with the exception of its subparagraphs, means the following institutions: <Amended on Nov. 15, 2010; Feb. 2, 2012; Feb. 7, 2017>

1. The Korea Development Bank incorporated under the Korea Development Bank Act;

2. The Export-Import Bank of Korea incorporated under the Export-Import Bank of Korea Act;

3. Deleted. <Feb. 7, 2017>

4. Deleted. <Feb. 7, 2017>

5. Deleted. <Feb. 7, 2017>

(2) "Manners prescribed by Presidential Decree" in the main clause of Article 104-3 (1) of the Act, with the exception of its subparagraphs, means raising and investing funds in the following manners in the relevant business year: <Amended on Feb. 18, 2010; Mar. 24, 2014; Dec. 30, 2014; Feb. 7, 2017; Feb. 17, 2022>

1. Fully or partially borrowing an investment fund from the Bank of Korea incorporated under the Bank of Korea Act or the Industrial Bank of Korea incorporated under the Industrial Bank of Korea Act (including any indirect borrowing through the Industrial Bank of Korea or the Korea Asset Management Corporation incorporated under the Act on the Establishment of Korea Asset Management Corporation);

2. Investing an investment fund in any of the following issued by the financial institutions referred to in paragraph (1):

(a) Hybrid securities (which constitutes the core capital defined in subparagraph 1 of Article 1-2 of the Enforcement Decree of the Banking Act among finance bonds provided for in Article 19 of the Enforcement Decree of the Banking Act);

(b) Subordinated bonds (which constitutes the supplementary capital defined in subparagraph 2 of Article 1-2 of the Enforcement Decree of the Banking Act among finance bonds provided for in Article 19 of the Enforcement Decree of the Banking Act).

(3)"Investment prescribed by Presidential Decree" in the main clause of Article 104-3 (1) 2 of the Act means 10/100 of the aggregate of the balance of hybrid securities referred to in paragraph (2) 2 (a) and the balance of subordinated bonds referred to in paragraph (2) 2 (b). <Amended on Feb. 7, 2017>

(4) Any person who intends to be eligible under Article 104-3 (1) of the Act shall submit a statement of loss compensation reserves, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.

[This Article Newly Inserted on Jun. 19, 2009]

Article 104-5(Tax Credits for Electronic Returns) #

(1)"Tax return of income tax, capital gains tax, or corporate tax prescribed by Presidential Decree" in the former part of Article 104-8 (1) of the Act means a final tax return filed on global income under Article 70 of the Income Tax Act, a provisional return filed on capital gains under Article 105 of that Act, or a tax return filed under Article 60 of the Corporate Tax Act. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 17, 2021>

(2)"Amount prescribed by Presidential Decree" in the former part of Article 104-8 (1) of the Act means 20,000 won (where a person eligible for an exception to a final tax return under Article 73 of the Income Tax Act files a final return on tax base, referring to the final tax amount additionally paid or refunded or 10 thousand won, whichever is smaller). <Amended on Feb. 12, 2019>

(3)"Return on value-added tax prescribed by Presidential Decree" in Article 104-8 (2) of the Act means a final tax return filed under Article 49 of the Value-Added Tax Act and a tax return filed under Article 67 of that Act. <Amended on Feb. 19, 2005; Feb. 18, 2010; Feb. 15, 2013; Jun. 28, 2013>

(4)"Amount prescribed by the Presidential Decree" in Article 104-8 (2) of the Act means 10,000 won. <Amended on Feb. 18, 2010>

(5) Deleted. <Feb. 11, 2020>

(6) Any person who wishes to be granted a tax credit for an electronic return pursuant to Article 104-8 (1) and (3) of the Act shall file an application for tax credits, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the competent tax office, when filing an electronic return (referring to when a certified public tax accountant files his/her tax return if the certified public tax accountant intends to be granted a tax credit under Article 104-8 (3) of the Act). <Amended on Feb. 29, 2008>

(7)"Amount prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 104-8 (5) of the Act means 1,000 won for each statement of payment. <Newly Inserted on Feb. 17, 2021>

[This Article Newly Inserted on Dec. 30, 2003]

[Title Amended on Feb. 17, 2021]

Article 104-6(Inclusion of Reserve Funds for Participation in EXPO 2012 Yeosu in Deductible Expenses) #

(1)"Projects prescribed by Presidential Decree" in Article 104-9 (1) of the Act means the following projects and businesses: <Amended on Feb. 3, 2015>

1. Manufacture and construction of direct facilities for the exposition defined in subparagraph 2 of Article 2 of the Special Act on Assistance to the EXPO 2012 Yeosu Korea;

2. The following classified under the Korea Standard Industrial Classification and conducted for the publicity of EXPO 2012 Yeosu or for the use of facilities in the venue of the EXPO 2012 Yeosu:

(a) Publishing activities;

(b) Motion picture, video and television program production, sound recording and music publishing activities;

(d) Creative, arts and recreation related services.

(2)"Expenses prescribed by Presidential Decree" in Article 104-9 (2) of the Act means expenses (excluding interest on loans and donations to the Organizing Committee for EXPO 2012 Yeosu Korea established under Article 4 of the Special Act on Assistance to the EXPO 2012 Yeosu Korea, local governments, other organizations, etc. related to EXPO 2012 Yeosu Korea) disbursed directly for the implementation of the projects and business activities provided for in the subparagraphs of paragraph (1), for which a contract of participation in the exhibition has been entered into as prescribed in Article 104-9 (1) of the Act.

(3)"Additional amount equivalent to interest calculated, as prescribed by Presidential Decree" in Article 104-9 (5) of the Act means an amount calculated by multiplying the difference of corporate tax occurred by including the reserve fund for participation in the deductible expenses as prescribed in Article 104-9 (1) of the Act, by the period referred to in subparagraph 1 and the rate referred to in subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. A period from the day following the end of the business year in which the reserve fund for participation was included in deductible expenses, until the end of the business year in which such reserve fund for participation is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(4) A domestic corporation that intends to be eligible under Article 104-9 (1) of the Act shall submit a detailed statement of the reserve fund for participation, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when it files a tax return for the business year in which it includes the reserve fund for participation in the deductible expenses or gross income.

[This Article Newly Inserted on Feb. 18, 2010]

Article 104-7(Special Cases concerning Calculating Corporate Tax Base for Shipping Enterprises) #

(1)"Shipping enterprise that operates the ocean-going shipping business prescribed by the Marine Transportation Act and meets the requirements prescribed by Presidential Decree" in Article 104-10 (1) of the Act, with the exception of its subparagraphs, means that an enterprise operates any of the following businesses, and the annual total navigational tonnage (referring to the tonnage calculated by multiplying the net tonnage by the number of navigation days in a year and the use rate of the ships; hereafter in this Article, the same shall apply) of ships chartered by the enterprise (including use of ships assigned by any other shipping enterprise for joint navigation prescribed by Ordinance of the Ministry of Economy and Finance; hereafter in this Article, the same shall apply), does not exceed five times the annual total navigation net tonnage of standard ships determined by Ordinance of the Ministry of Economy and Finance, such as ships owned by such enterprise: <Amended on Feb. 9, 2006; Nov. 30, 2007; Feb. 29, 2008; Feb. 4, 2009; Jun. 19, 2009; Feb. 18, 2010; Feb. 5, 2016>

1. The scheduled or non-scheduled overseas passenger transportation services provided for in Article 3 of the Marine Transportation Act;

2. The scheduled or non-scheduled overseas cargo transportation services provided for in Article 23 of the Marine Transportation Act: Provided, That the transportation business of fishery products shall be excluded;

3. The international cruise ship operation business defined in subparagraph 4 of Article 2 of the Cruise Industry Development and Support Act.

(2)"Income prescribed by Presidential Decree, related to ocean-going shipping activities" in Article 104-10 (1) 1 of the Act means the income generated from activities referred to in subparagraph 1 or 2 and the income referred to in subparagraph 3 (hereafter in this Article, referred to as"shipping income"): <Amended on Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 17, 2021; Feb. 28, 2023>

1. Overseas maritime transportation activities (including chartering or hiring of vessels defined in subparagraph 4 of Article 2 of the Marine Transportation Act to be used for the ocean-going transportation activities; hereafter in this Article, the same shall apply);

2. Any of the following activities related to overseas maritime transportation activities:

(a) Activities involving storage, loading, unloading, maintenance, and management of cargoes;

(b) Activities prescribed by Ordinance of the Ministry of Economy and Finance and related to the lease of facilities necessary to engage in ocean-going transportation activities;

(d) Activities involving the acquisition, maintenance, management, and disposal of ships;

(e) Activities involving sale of ships: Provided, That, where a ship that has been held from before applying a special case for calculating a tax base (hereafter in this Article, referred to as"special case for calculating a tax base") of a shipping enterprise under Article 104-10 (1) of the Act, is sold, an amount (hereafter in this item, referred to as"portion of amount for the period before applying a special case") calculated by the formula 1), shall be the non-shipping income, however, where a new ship is acquired with such sales proceeds by the end of the business year in which the date of sale of the relevant ship falls, the equivalent to 80/100 of the amount calculated by the formula 2) shall be the shipping income:

Profits or losses from sale of the relevant ship × (Period before applying the special case for calculating the tax base to the relevant ship ÷ Total holding period of the relevant ship)

Portion of amount for a period before applying a special case × (Amount of sales proceeds used to acquire a new ship ÷ Amount of sales proceeds of the relevant ship) × (80 ÷ 100)

(f) Combined shipping activities prescribed by Ordinance of the Ministry of Economy and Finance and conducted under a single shipping contract;

(g) Activities prescribed by Ordinance of the Ministry of Economy and Finance and similar to those referred to in items (a) through (f);

3. Any of the following incomes:

(a) The interest income provided for in Article 16 of the Income Tax Act, which is generated from ocean-going transportation activities, the dividend income generated from collective investment schemes provided for in Article 17 (1) 5 of that Act (hereafter in this Article, referred to as"interest income, etc."), and the interest paid: Provided, That the interest income, etc. generated from current assets under the Korean Financial Accounting Standards shall be included, but interest income, etc. generated from investment assets, among non-current assets under the Korea Financial Accounting Standards, and other interest income, etc. prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded;

(b) Profits or losses of the won currency amount and the won currency account amount, which occurs by appraising monetary foreign currency assets and liabilities that conform with the corporate accounting standards, which accrues from overseas maritime transportation activities;

(c) Profits or losses of the amount of the won currency of foreign currency debts and credits that are redeemed or are to redeem and the won currency account amount in connection with ocean-going transportation activities;

(d) Profits and losses that result from the transactions of derivatives executed in conformity with the corporate accounting standards to avoid the risk of fluctuation in the interest rates on borrowings, currency exchange rates, freights, and the price in major raw materials, including ship fuel oil, that all occur in connection with overseas maritime transportation activities.

(3) "Ship", "net tonnage", "number of navigation days", or "use rate" in paragraph (1) hereof and Article 104-10 (1) 1 of the Act means: <Newly Inserted on Feb. 4, 2009; Feb. 15, 2022>

1. Ship: Ship held or chartered by an enterprise to which the special case of the calculation of a tax base is applied (hereafter in this Article, referred to as"special case-applied enterprise");

2. Net tonnage: Net tonnage defined in Article 3 (1) 3 of the Ship Act;

3. Number of navigation days: Either of the following periods: Provided, That, when a ship has not been operated for at least 30 consecutive days due to its maintenance, improvement, repair, or other inevitable reasons, such period shall be excluded from the number of navigation days:

(a) Holding period in cases of a ship owned by a special case-applied enterprise;

(b) Chartered period in cases of a ship chartered by a special case-applied enterprise;

4. Use rate: Any of the following rates:

(a) Where a ship is owned or chartered entirely by a special case-applied enterprise: 100 percent;

(b) Where a ship is chartered partially by a special case-applied enterprise: The ratio of the quantity loaded by the special case-applied enterprise on the ship to the ship’ maximum load: Provided, That, if the charter by the special case-applied enterprise is based on the number of containers, it refers to the number of containers loaded by the special case-applied enterprise on the ship to the maximum number of containers that can be loaded on the ship (referring to the number of containers equivalent to 75/100 of the load capacity specified in the plans prepared for building the ship).

(4)"One navigation-day profit per ton" in Article 104-10 (8) of the Act shall be as follows: <Newly Inserted on Feb. 4, 2009>

Net Tonnage of Individual Ships One Navigation-Day Profit per Ton Not exceeding 1,000 tons 14 won More than 1,000 tons, but not exceeding 10,000 tons 11 won More than 10,000 tons, but not exceeding 25,000 tons 7 won Exceeding 25,000 tons 4 won

(5) Any corporation that seeks the benefit of the special case for calculating the tax base, shall file an application for a special case for calculating the tax base of corporate tax of a shipping enterprise in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by a letter of confirmation issued by the Minister of Oceans and Fisheries as to whether it satisfies the requirements under paragraph (1), with the head of a tax office having jurisdiction over the place of tax payment, by the deadline for filing its tax return of the first business year in which it wishes to be granted a special case for calculating a tax base. <Newly Inserted on Feb. 4, 2009; Mar. 23, 2013>

(6) When a special case-applied enterprise files a tax return for the business year (excluding the business year in which it is possible to confirm whether the requirements are satisfied based on the letter of confirmation of the Minister of Oceans and Fisheries submitted under paragraph (5)) which belongs to the period for the application of the special case for calculating a tax base under the main sentence of Article 104-10 (2) of the Act (hereafter in this Article, referred to as"special case-applied period"), it shall submit a detailed statement of requirements for a special case for calculating a tax base of corporate tax for shipping enterprises in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by a letter of confirmation issued by the Minister of Oceans and Fisheries as to whether it satisfies the requirements under paragraph (1), to the head of a tax office having jurisdiction over the place of tax payment. <Newly Inserted on Feb. 4, 2009; Jun. 19, 2009; Mar. 23, 2013>

(7) When a special case-applied enterprise is to renounce the application of the special case for calculating a tax base under the proviso of Article 104-10 (2) of the Act, it shall file an application for renunciation of the special case for calculating a tax base in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of payment, by a deadline for filing the tax return of the first business year in which it intends to have the special case for calculating a tax base not applied. <Newly Inserted on Jun. 19, 2009>

(8) Where a special case-applied enterprise becomes subject to the Corporate Tax Act instead of the special case for calculating a tax base because the special case-applied period has ended or it has fails to meet the requirement provided for in paragraph (1) or has renounced the application of the special case for calculating a tax base under the proviso of Article 104-10 (2) of the Act, it shall calculate the income for each business year deeming that it has been subject to the Corporate Tax Act continuously even during the special case-applied period: Provided, That, for the purposes of the following provisions of the Corporate Tax Act, the following relevant calculation method shall apply: <Newly Inserted on Feb. 4, 2009; Jun. 19, 2009; Feb. 12, 2019>

1. For the purposes of Article 19-2 of the Corporate Tax Act, where the reasons of incapable of collecting bonds, which are bad debt expenses under Article 19-2 (1) of that Act, listed under Article 19-2 (1) of the Enforcement Decree of the Corporate Tax Act, arise during the special case-applied period, bad debt expenses shall be deemed included in the deductible expenses of the business year in which the relevant reason has arisen, notwithstanding the provisions of Article 19-2 (3) of that Act;

2. For the purposes of Article 23 of the Corporate Tax Act, Article 30 of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to calculating the depreciation limit amount under Article 23 (1) of the Corporate Tax Act. In such cases, when depreciable assets differently classified in each subparagraph of Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or depreciable assets, the standard durable years according to classifications by assets and types of business under Article 28 (1) 2 of the Enforcement Decree of that Act which are different, are newly acquired during the special case-applied period, notwithstanding the provisions of Articles 26 (3) and 28 (3) of the Enforcement Decree of that Act, a report on methods of depreciation or a report on durable years about the relevant assets may be submitted to the head of a tax office having jurisdiction over the place of tax payment (including submittal through the Home Tax Service Network), by a deadline for a tax return of corporate tax for the first business year subject to application of the Corporate Tax Act;

3. For the purposes of Article 33 of the Corporate Tax Act, the accumulated amount of reserve for retirement benefits under Article 60 (2) of the Enforcement Decree of the Corporate Tax Act shall be calculated, deeming that the amount equivalent to that exceeding the ceiling of inclusion in the deductible expenses for retirement benefits reserve each business year calculated according to Article 60 (1) through (3) of the Enforcement Decree of the Corporate Tax Act, is included in deductible expenses as the reserve for retirement benefits of the corresponding business year, during the special case-applied period;

4. For the purposes of Articles 13 and 34 of the Corporate Tax Act and Article 144 of this Act, the following items shall complied with: Provided, That where the relevant corporation prepares the documents prescribed by Ordinance Ministry of Economy and Finance, such as tax adjustment calculation under Article 60 (2) 2 of the Corporate Tax Act with regards to the special case-applied period and submits them to the head of a tax office having jurisdiction over the place of tax payment, along with reports under Article 60 (1) of that Act, by a deadline for filing a tax return of the first business year subject to application of the Corporate Tax Act, it is deemed that the Corporate Tax Act continues on applying to the special case-applied period and Articles 13 and 34 of the Corporate Tax Act and Article 144 of this Act shall apply:

(a) For the purposes of Article 13 of the Corporate Tax Act, notwithstanding paragraph (1) 1 of that Article, it shall be deemed that there is no balance of the deficit carried forward under Article 16 (1) of the Enforcement Decree of that Act as at the date the special case-applied period ends;

(b) For the purposes of Article 34 of the Corporate Tax Act, notwithstanding the provisions of paragraph (3) of that Article, the balance of allowance for bad debt as at the date the business year immediately before the year subject to the special case for calculating the tax base ends, shall be included in gross income, when calculating the amount of income for the first business year subject to application of the Corporate Tax Act;

(c) For the purposes of Article 144 of this Act, notwithstanding the provisions of paragraph (1) of that Article, the un-deducted amount transferred under that paragraph as at the date the special case-applied period ends shall be deemed nil.

(9) A special case-applied enterprise shall divide maritime transportation income and non-maritime transportation income and keep separate account thereof; and the gross income and deductible expenses applied to both shipping income and non-shipping income, shall be calculated pro rata, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 4, 2009; Jun. 19, 2009>

[This Article Newly Inserted on Feb. 19, 2005]

[Title Amended on Feb. 4, 2009]

Article 104-12(Method of Calculating Tax Amount of Special Provisions on Taxation of Gross Real Estate Tax on Confucian Schools and Religious Organizations) #

(1) Where an individual organization reports the gross real estate tax for house under Article 104-13 (1) of the Act, the"total amount of tax amount imposed as property tax for house" in the arithmetic formula in Article 4-2 of the Enforcement Decree of theGross Real Estate Tax Act shall include the property tax for house which should have been imposed deeming that the individual organization possesses the house in question.

(2) Where an individual organization reports the gross real estate tax for land under Article 104-13 (1) of the Act, the"total amount of tax amount imposed as property tax for land, which is the object of composite cumulative taxation" in the arithmetic formula in Article 5-3 (1) of the Enforcement Decree of theGross Real Estate Tax Act or the"total amount of tax amount imposed as property tax for land, which is the object of separate cumulative taxation" in the arithmetic formula in Article 5-3 (2) of the same Decree shall include the property tax for land which should have been imposed deeming that the individual organization possesses the land in question.

(3) Where the Confucian school foundation, etc. report the gross real estate tax for house deeming that they do not possess the house in question under Article 104-13 (3) of the Act, the"total amount of tax amount imposed as property tax for house" in the arithmetic formula in Article 4-2 of the Enforcement Decree of theGross Real Estate Tax Act shall be the property tax for house which should have been imposed deeming that the Confucian school foundation, etc. do not possess the house in question.

(4) Where the Confucian school, etc. report the gross real estate tax for land deeming that they do not possess the land in question under Article 104-13 (3) of the Act, the"total amount of tax amount imposed as property tax for land, which is the object of composite cumulative taxation" in the arithmetic formula in Article 5-3 (1) of the Enforcement Decree of theGross Real Estate Tax Act or the"total amount of tax amount imposed as property tax for land, which is the object of separate cumulative taxation" in the arithmetic formula in Article 5-3 (2) of the same Decree shall be the property tax for land which should have been imposed deeming that the Confucian school foundation, etc. do not possess the land in question.

[This Article Newly Inserted on Feb. 22, 2008]

Article 104-15(Special Taxation for Investment in Development of Overseas Resources) #

(1) "Contributions prescribed by Presidential Decree" in Article 104-15 (1) 2 of the Act means contribution to a foreign corporation meeting all the following requirements which occupies at least 10/100 of the total number of issued stocks or total amount of contribution, or contribution in cases where the executive officers or employees of an overseas resources development business operator under subparagraph 5 of Article 2 of the Overseas Resources Development Business Act (hereinafter referred to as "overseas resources development business operator") is dispatched as the executive officers or employees of a foreign corporation: <Amended on Dec. 30, 2010; Feb. 29, 2024>

1. That the overseas resources development business operator shall have a mining right or mining right by lease to the mining area (hereafter referred to as "relevant mining area" in this Article) of the business reported under Article 5 of that Act;

2. That it shall have been established for the purpose of development and operation of the relevant mining area.

(2)"Investment prescribed by Presidential Decree pursuant to Article 3 (1) 18 (a) of the Foreign Exchange Transactions Act" in Article 104-15 (1) 3 of the Act means any of the following investment: <Amended on Jun. 3, 2011>

1. Investment for participating in the capital increase of a foreign subsidiary (referring to a foreign corporation in which a Korean resident directly invests 100/100 of the total number of issued stocks or the total amount of investment; hereinafter the same shall apply in this Article) owned by a person with Korean nationality;

2. Investment for lending money to a foreign subsidiary owned by a national with a redemption period of at least five years;

3. Investment made by an overseas resources development project operator jointly with a national under subparagraph 1 or 2 to lend money to a foreign subsidiary owned by a Korean resident with a redemption period of at least five years.

(3) The investment or contribution for the development of mineral resources of an overseas resources developer when Article 104-15 (1) of the Act is applied shall be limited to the amount of mining right or concession acquired or being held as prescribed in subparagraphs of Article 104-15 (1) of the Act, which shall be calculated by multiplying the total investment (limited to the amount of mining right or concession) by the investment ratio of each overseas resources developer in cases under paragraph (2) 3. <Newly Inserted on Feb. 4, 2009>

(4) "Amounts prescribed by Presidential Decree" in Article 104-15 (2) of the Act means the amounts classified as follows: <Newly Inserted on Feb. 29, 2024>

1. Where it falls under Article 104-15 (2) 1 of the Act: Amount calculated according to the following formula;

Tax amount deducted pursuant to Article 104-15 (1) of the Act x (Acquisition value of transferred or recovered investment assets or investment shares/Total acquisition value of investment assets or investment shares)

2. Where it falls under Article 104-15 (2) 2 of the Act: The full amount of tax deducted pursuant to Article 104-15 (1) of the Act.

(5) The additional amount equivalent to interest under Article 104-15 (2) of the Act shall be the amount calculated by multiplying the deducted tax amount by the period under subparagraph 1 and the rate under subparagraph 2. <Amended on Feb. 4, 2009; Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

1. Period from the day next to the day of a report of a tax base in the taxable year in which deduction was granted until the day of a report of a tax base of the taxable year in which the reason in Article 104-15 (2) of the Act occurred;

2. The rate specified in Article 11-2 (9) 2.

(6) Those who intend to be subject to Article 104-15 (1) of the Act shall submit an application for tax deduction and a report of investment in the overseas resources development prescribed by Ordinance of the Ministry of Economy and Finance along with a tax base return to the head of a tax office having jurisdiction over the place of tax payment. <Amended on Feb. 29, 2008; Feb. 4, 2009; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 22, 2008]

Article 104-16(Special Taxation for Financial Soundness of Universities and Colleges) #

(1)"Primary assets for profit-making prescribed by Presidential Decree" in the former part of Article 104-16 (1) of the Act means land and buildings among the basic assets for profit-making under Article 7 of the Regulations on the Establishment and Operation of Universities and Colleges.

(2)"Acquiring another primary assets for profit-making within one year from the date of transfer" in the former part of Article 104-16 (1) of the Act, includes acquiring another basic assets for profit-making after the end of the business year in which the previous basic assets for profit-making are disposed of.

(3)"Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 104-16 (1) of the Act means the amount calculated by multiplying the amount in subparagraph 1 by the rate in subparagraph 2: <Amended on Feb. 12, 2019>

1. The disposal price of endowment for profit-making being disposed of - (book value of the endowment for profit-making being disposed of + deficit carried-forward under Article 13 (1) 1 of the Corporate Tax Act as at the end of immediately previous business year);

2. The ratio of acquisition value of endowment for profit-making being acquired to the disposal price of endowment for profit-making being disposed of (the ratio shall not exceed 100/100).

(4) For the purposes of paragraph (3), where another endowment for profit-making has not been acquired by the end of business year in which the previous endowment for profit-making are transferred, the price of asset scheduled for acquisition (hereafter in this Article, referred to as"value of asset scheduled for acquisition") may be the price of endowment for profit-making being acquired.

(5)"Amount calculated as prescribed by Presidential Decree" in the former part of Article 104-16 (2) of the Act means the whole of the amount (referring to the amount exceeding the amount calculated under paragraph (3) on the basis of actual acquisition value where an asset with a value less than the value of asset scheduled for acquisition has been acquired) that has not been included in the profit under paragraph (3).

(6) An educational foundation that intends to be eligible under Article 104-16 (1) of the Act shall submit the details of transfer gains and statement of split profit, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of tax office having jurisdiction over the place of tax payment, along with a tax return of the business year in which the endowment for profit-making are transferred. <Amended on Feb. 29, 2008>

(7) When endowment for profit-making is acquired after having paragraph (4) applied, a report of completion of acquisition in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with a tax return of the business year in which such assets are acquired, shall be submitted to the head of tax office having jurisdiction over place of tax payment. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 22, 2008]

Article 104-20(Special Taxation for Establishment and Operation of Corporate Sport Teams) #

(1)"Sport team for any event prescribed by Presidential Decree" in Article 104-22 (1) of the Act means a sport team for an event prescribed by Ordinance of the Ministry of Economy and Finance, among events of sport organizations affiliated with the Korean Sport and Olympic Committee established pursuant to Article 33 of the National Sports Promotion Act (hereinafter referred to as"Korean Sport and Olympic Committee"), which meets each of the following requirements that: <Amended on Feb. 21, 2014; Feb. 15, 2022>

1. The sport team shall be established (or re-established) and operated with players registered with a sport organization affiliated with the Korean Sport and Olympic Committee or the Korea Paralympic Committee established pursuant to Article 34 of the National Sports Promotion Act (hereinafter referred to as"Korea Paralympic Committee");

2. The number of players per sport event shall be not less than the prescribed number of the relevant event;

3. The sport team shall have at least one sport instructor for each sport event.

(2)"Sport team for persons with disabilities prescribed by Presidential Decree" in Article 104-22 (2) of the Act means a sport team for an event for which a sport organization affiliated with the Korea Sports Association for the Disabled exists, which satisfies each of the requirements prescribed under paragraph (1). <Newly Inserted on Feb. 21, 2014>

(3)"Team for the games prescribed by Presidential Decree" in Article 104-22 (2) of the Act means an e-sports team for the games prescribed by Ordinance of the Ministry of Economy and Finance, among the games selected pursuant to Article 12 of the Act on Promotion of E-Sports (Electronic Sports), which meets all the following requirements: <Newly Inserted on Feb. 15, 2022>

1. The sport team shall be established (or re-established) and operated with e-sports players defined in the Act on Promotion of E-Sports (Electronic Sports);

2. The sport team shall have at least one sport instructor for each sports game.

(4)"Expenses prescribed by Presidential Decree" in Article 104-22 (1) through (3) of the Act means: <Amended on Feb. 21, 2014; Feb. 15, 2022>

1. Personnel expenses for players, directors, and coaches of a sport team or an e-sports team under paragraphs (1) through (3) (hereafter in this paragraph referred to as"sport team") and persons who directly support operations of the sport team;

2. Expenses prescribed by Ordinance of the Ministry of Economy and Finance as those incurred in operating a sport team, such as expenses incurred in participating in competitions and purchasing training equipment.

(5) A domestic corporation that seeks a tax credit under Article 104-22 (1) through (3) of the Act shall file an application for the tax credit in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with a tax return. <Amended on Feb. 21, 2014; Feb. 15, 2022>

(6)"Requirements prescribed by Presidential Decree concerning the composition, etc. of sport teams" in Article 104-22 (5) of the Act means the requirements prescribed in paragraph (1) or (3). <Amended on Feb. 21, 2014; Feb. 15, 2022>

(7)"Equivalent to the interest calculated as prescribed by Presidential Decree" in Article 104-22 (4) of the Act means an amount calculated by multiplying the amount of tax deducted under Article 104-22 (1) or (2) of the Act, by the period under subparagraph 1 and the rate under subparagraph 2: <Amended on Feb. 21, 2014; Feb. 12, 2019; Feb. 15, 2022>

1. Period from the day following the end of the taxable year in which deduction is granted, until the end of the taxable year in which a ground for payment arises;

2. The rate specified in Article 11-2 (9) 2.

[This Article Newly Inserted on Dec. 30, 2010]

Article 104-21(Tax Reductions or Exemptions for Overseas Korean Enterprises on their Return to Korea) #

(1)"Person prescribed by Presidential Decree, including a Korean national" in Article 104-24 (1) of the Act means a Korean national (including an overseas Korean entitled to stay as overseas Korean under Article 5 of the Act on the Immigration and Legal Status of Overseas Koreans) or a corporation incorporated under the law of the Republic of Korea (including a foreign-capital-invested company defined in subparagraph 6 of Article 2 of the Foreign Investment Promotion Act) who owns an overseas place of business operated continuously by him/her for at least two years, or takes de facto control over it, as prescribed by Ordinance of the Ministry of Economy and Finance; and a person who relocates his/her place of business to the Republic of Korea pursuant to Article 104-24 (1) 1 of the Act shall meet one of the following requirements that: <Amended on Aug. 15, 2013; Feb. 7, 2017; Feb. 14, 2020; Feb. 15, 2022; Feb. 28, 2023>

1. The person shall transfer or close his/her overseas place of business within four years from the date he/she commences a business by incorporating a business or establishing or expanding a place of business in an area outside the over-concentration control region of the Seoul Metropolitan area;

2. The person shall incorporate a business or establish or expand a place of business in an area outside the over-concentration control region of the Seoul Metropolitan area within three years from the date he/she has transferred or closed his/her overseas place of business.

(2) Deleted. <Feb. 29, 2024>

(3) A person who returns to the Republic of Korea pursuant to Article 104-24 (1) 2 of the Act shall meet any of the following requirements that: <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Apr. 14, 2020; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023>

1 The person is a national who has no place of business in the Republic of Korea and establishes a new business in an area outside of the over-concentration control region of the Seoul Metropolitan area;

2. The person who downsized an overseas place of business operated by him/her and had the downsizing confirmed by the Minister of Trade, Industry and Energy pursuant to public notification issued by the Minister of Trade, Industry and Energy under Article 6 (2) 2 of the Enforcement Decree of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation establishes or expands a place of business in an area outside of the over-concentration control region of the Seoul Metropolitan area within three years from the beginning of the taxable year following the taxable year in which the downsizing was completed.

(4)"Overseas place of business" in Article 104-24 (1) of the Act includes a place of business in the Gaeseong Industrial District defined in subparagraph 1 of Article 2 of the Act on the Support of Gaeseong Industrial District. <Newly Inserted on May 10, 2016; Feb. 7, 2017; Feb. 12, 2019>

(5) "Income…prescribed by Presidential Decree" in Article 104-24 (2) of the Act means income calculated according to the following formula. In such cases, "turnover" in the formula means the turnover generated through the management of the same or similar line of business under each subparagraph of Article 104-24 (6) of the Act; and if the income calculated according to the calculation formula exceeds the income generated during the relevant taxable year at the new place of business after relocation (if an existing place of business was expanded, it means the income generated from the expanded part; hereafter in this paragraph, the same shall apply), it shall be deemed that there is no excess amount. <Newly Inserted on Apr. 14, 2020; Feb. 17, 2021; Feb. 29, 2024>

1. Where a place of business is relocated pursuant to paragraph (1) 1:

Income generated during the relevant taxable year from the new place of business after relocation × Turnover from the overseas place of business during the taxable year in which the business relocated to the Republic of Korea commenced, as converted as prescribed by Ordinance of the Ministry of the Economy and Finance in consideration of exchange rate, etc./Turnover generated during the relevant taxable year from the new place of business after relocation.

2. Where a place of business is relocated pursuant to paragraph (1) 2:

Income generated during the relevant taxable year from the place of business after relocation × Turnover from the overseas place of business during the taxable year in which the overseas business was transferred or closed, as converted as prescribed by Ordinance of the Ministry of the Economy and Finance in consideration of exchange rate, etc./Turnover generated during the relevant taxable year from the new place of business after relocation

(6) "Income…prescribed by Presidential Decree" in Article 104-24 (3) of the Act means income calculated according to the following formula. In such cases, "turnover" in the formula means the turnover generated through the management of the same or similar line of business under each subparagraph of Article 104-24 (6) of the Act; and if the income calculated according to the calculation formula exceeds the income generated during the relevant taxable year at the new place of business after relocation (if an existing place of business was expanded, it means an income generated from the expanded part; hereafter in this paragraph, the same shall apply), it shall be deemed that there is no excess amount. <Newly Inserted on Apr. 14, 2020; Feb. 17, 2021; Feb. 29, 2024>

1. Where a new business is established in the Republic of Korea pursuant to paragraph (3) 1:

2. Where a place of business is established or expanded in the Republic of Korea pursuant to paragraph (3) 2:

Income generated during the relevant taxable year from the place of business after repatriation × Downsized production capacity of the overseas place of business, as calculated by converting the amount equivalent to the production capacity confirmed by the Minister of Trade, Industry and Energy as prescribed by Ordinance of the Ministry of the Economy and Finance in consideration of exchange rate, etc./Turnover generated during the relevant taxable year from the new place of business after repatriation

(7) An amount of tax payable under 104-24 (4) of the Act shall be calculated as follows: <Amended on Feb. 17, 2021>

1. In cases of Article 104-24 (4) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure (or the date of closure of the expanded part) or the date of dissolution of the corporation;

2. In cases of Article 104-24 (4) 2 of the Act: The full amount of income tax or corporate tax reduced or exempted under Article 104-24 (2) of the Act;

3. In cases of Article 104-24 (4) 3 of the Act: A tax amount by which the tax was reduced or exempted retroactively within three years from the date the business commenced at the established or expanded overseas place of business.

(8)"Where the national fails to transfer or close the place of business operated in a foreign country, as prescribed by Presidential Decree" in Article 104-24 (4) 2 of the Act means a case that does not meet the requirements of paragraph (1). <Amended on Feb. 15, 2013; May. 10, 2016; Feb. 27 2017; Feb. 12, 2019; Apr. 14, 2020; Feb. 17, 2021>

(9)"Where a person who reduced a place of business operated in a foreign country extends the place of business again after receiving a tax reduction or exemption under paragraph (3), as prescribed by Presidential Decree" in Article 104-24 (4) 3 of the Act means where an enterprise that meets the requirements of paragraph (3) 2 establishes a new overseas place of business or expand an existing overseas place of business during the period of tax reduction or exemption under Article 104-24 (3) of the Act. <Newly Inserted on Feb. 17, 2021>

(10) In Article 104-24 (6) 2 of the Act, the term "where similarity of business types has been confirmed as prescribed by Presidential Decree" means the type of business operated at the place of business before the relocation or reinstatement and the place of business after the relocation or reinstatement on the basis of the major classification under the Korean Standard Industrial Classification are the same, in which case the similarity of business type between the places of business is confirmed by the Support Committee for Repatriating Enterprises under Article 6 of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation. In such cases, necessary matters concerning the criteria, procedures, etc. for determining similarity shall be determined and publicly notified by the Minister of Trade, Industry and Energy. <Newly Inserted on Feb. 29, 2024>

(11) The scope of the extension under Article 104-24 (7) of the Act shall be the cases falling under any of the following: <Newly Inserted on Apr. 14, 2020; Feb. 17, 2021; Feb. 28, 2023; Feb. 29, 2024>

1. Where the total floor area of the relevant place of business increases as a result of installing new fixed assets for business use, as prescribed by Ordinance of the Ministry of Economy and Finance;

2. Where the quantity of fixed assets for business use increases as a result of installing new fixed assets for business use: Provided, That if the place of business is a factory prescribed by Ordinance of the Ministry of Economy and Finance, relevant cases shall be limited to those where new fixed assets for business use are installed in an area confirmed as an unused space according to public notice issued by the Minister of Trade, Industry and Energy pursuant to Article 6 (2) 2 of the Enforcement Decree of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation; but if the place of business is not a factory, such cases shall be limited to those where new production facilities necessary for business performance are installed.

(12) Separate accounting under Article 104-24 (7) of the Act shall be carried out by applying Article 143 (1) of the Act mutatis mutandis and separating income generated from the expanded part from income generated from the pre-existing part before the expansion for the purposes of accounting. <Newly Inserted on Apr. 14, 2020; Feb. 17, 2021; Feb. 29, 2024>

(13) A person who wishes to be granted a tax reduction or exemption under Article 104-24 (1) through (3) of the Act shall submit an application for the tax reduction or exemption, a statement of tax reduction or exemption, and other necessary documents, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return. <Amended on Feb. 15, 2013; May. 10, 2016; Feb. 7 2017; Feb. 12, 2019; Apr. 14, 2020; Feb. 17, 2021; Feb. 29, 2024>

[This Article Newly Inserted on Dec. 30, 2010]

Article 104-25(Special Taxation for 2018 PyeongChang Olympic and Paralympic Winter Games) #

(1)"Foreign corporations prescribed by Presidential Decree" in Article 104-28 (1) 4 of the Act means the following: <Amended on Feb. 7, 2017; Jan. 9, 2018>

1. The International Sports Federation or the International Sports Federation of the Disabled for each Olympic sport;

2. The World Anti-Doping Agency;

3. The Court of Arbitration for Sport;

4. The Olympic cultural heritage foundation, the broadcast marketing company, and Olympic channel service company established by the International Olympic Committee;

5. Organizations established by the International Paralympic Committee to promote and support sports activities of persons with disabilities;

6. Business entities that use the emblem of the International Olympic Committee under a contract entered into with the International Olympic Committee to measure the time and scores of each competition or to operate the information system for the management of competitions (limited to where they have no place of business in the Republic of Korea);

7. Rights Holding Broadcasters (RHBs) of the 2018 PyeongChang Olympic and Paralympic Winter Games by region.

(2) A business operator who wishes to be granted a deduction of input tax amount pursuant to Article 104-28 (5) of the Act shall file a report (including filing it through the Home Tax Service Network) on the deduction of a deemed input tax amount in the form prescribed by Ordinance of the Ministry of Economy and Finance along with an aggregate invoice for each purchaser under Article 163 of the Income Tax Act or Article 121 of the Corporate Tax Act when filing a return under Article 48 or 49 of the Value-Added Tax Act. In such cases, if the following information is not entered in the report on the deduction of a deemed input tax amount or the details of the transaction is different from the fact, no input tax shall be deducted: <Newly Inserted on Jan. 9, 2018>

1. Name and registration number of the supplier;

2. Purchase value.

(3) The proviso of Article 39 (1) 1 of the Value-Added Tax Act shall apply mutatis mutandis to deduction of input tax amount under paragraph (2). <Newly Inserted on Jan. 9, 2018>

[This Article Newly Inserted on, Feb. 5, 2016]

[Title Amended on Aug. 29, 2016]

Article 104-28(Income Deductions for Project Financing Investment Companies) #

(1)"Distributable profit prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 104-31 (1) of the Act means an amount calculated in accordance with Article 86-3 (1) of the Enforcement Decree of the Corporate Tax Act. <Amended on Feb. 15, 2022>

(2) An investment company similar to any of those referred to in Article 51-2 (1) of the Income Tax Act shall be deemed to meet the requirements of Article 104-31 (1) 1 of the Act when it distributes to its stockholders its profits from a housing construction project jointly performed with a housing construction business entity in accordance with the Housing Act by using its assets for the housing construction project.

(3)"Requirements prescribed by Presidential Decree" in Article 104-31 (1) 5 of the Act means the following requirements that:

1. At least one incorporator shall meet any of the following criteria:

(a) A financial company, etc. falling under any of subparagraphs 1 through 4, 6 through 13, and 24 of Article 61 (2) of the Enforcement Decree of the Corporate Tax Act;

(b) the National Pension Service under the National Pension Act (limited cases of an investment company performing a public-private partnership project in a manner prescribed in subparagraph 2 of Article 4 of the Act on Public-Private Partnerships in Infrastructure);

2. An incorporator falling under subparagraph 1 (a) or (b) shall make a contribution equivalent to at least 5/100 of the capital (if two or more incorporators fall under subparagraph 1 (a) or (b), their contributions shall be aggregated).

(4)"Requirements prescribed by Presidential Decree" in Article 104-31 (1) 8 of the Act means the following requirements that:

1. The capital shall be at least five billion won: Provided, That, in cases of an investment company performing a public-private partnership project in the manner prescribed in subparagraph 2 of Article 4 of the Act on Public-Private Partnerships in Infrastructure, the capital shall be at least one billion won;

2. Services for the management, administration, and disposition of assets shall be entrusted to a person falling under any of the following (hereafter in this Article referred to as"asset management company"): Provided, That, in cases of the proviso of subparagraph 6, services for a trust contract under Article 4 (1) 1 of the Act on Sale of Building Units shall be entrusted to a company entrusted with fund management under subparagraph 3:

(a) A corporation that has invested in the company;

(b) A corporation established solely or jointly by a person who has invested in the company;

3. Fund management shall be entrusted with a financial company, etc. engaged in a trust business under the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as"company entrusted with fund management");

4. Stockholders shall meet the following requirements. In such cases,"incorporator" shall be construed as"stockholder";

5. A report on the establishment of a shell company with the following information stated thereon shall be submitted to the head of the tax office having jurisdiction over the place of tax payment, within two months from the registration date of incorporation, along with documents attached thereto in the forms prescribed by Ordinance of the Ministry of Economy and Finance:

(a) Business objectives in the articles of incorporation;

(b) Names and resident registration numbers of directors and auditors;

(d) The name of the company entrusted with fund management;

6. The asset management company and the company entrusted with fund management shall not be the same person: Provided, That, this shall not apply to cases where the relevant company has entered into a trust contract and agency contract with the company entrusted with fund management (the relevant company shall not be a controlling stockholder, etc. under Article 43 (7) of the Enforcement Decree of the Corporate Tax Act, and the investment ratio shall be less than 10/100) pursuant to Article 4 (1) 1 of the Act on the Sale of Building Units.

(5) If any director, auditor, or stockholder of of a corporation falling under Article 104-31 (1) of the Act ceases to meet the requirements of Article 104-31 (1) 6 and 7 of the Act and paragraph (4) 4 of this Article after making a report pursuant to paragraph (4) 5 of this Article, but the corporation subsequently meets the requirements within one month from the date of occurrence of the cause of failure to meet the requirements, the corporation shall be deemed to continuously meet the requirements.

(6) If a change occurs in any information referred to in paragraph (4) 5 after a corporation falling under Article 104-31 (1) of the Act makes a report pursuant to that subparagraph, the corporation shall report the change, within two weeks from the date of occurrence of such change, to the head of the tax office having jurisdiction over the place of tax payment by submitting a report on the change in the shell company and documents attached thereto, in the forms prescribed by Ordinance of the Ministry of Economy and Finance.

(7) Deleted. <Feb. 28, 2023>

(8) A corporation that wishes to be granted an income deduction under Article 104-31 (1) of the Act shall submit an application for the income deduction in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return under Article 60 of the Corporate Tax Act.

(9) A corporation falling under the proviso of Article 51-2 (2) 1 of the Corporate Tax Act shall, when applying for a tax deduction, attach a written confirmation of the application of special case of taxation on partnership enterprise and partnership taxation status in the form prescribed by Ordinance of the Ministry of Economy and Finance submitted by the deadline for reporting pursuant to Article 100-23 (1) of the Act from the partnership enterprise that received the dividends (including the higher-level partnerships if all or part of the partners constitute the higher-level partnerships under Article 100-15 (3) of the Act), in addition to the documents pursuant to paragraph (8). <Amended on Feb. 29, 2024>

[This Article Newly Inserted on Feb. 17, 2021]

Article 104-30(Special Cases concerning Inclusion of Loans paid to Overseas Construction Subsidiaries in Deductible Expenses) #

(1) "Overseas construction subsidiary prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 104-33 (1) of the Act means corporations that meet all of the following requirements:

1. It shall be a local corporation under subparagraph 6 of Article 2 of the Overseas Construction Promotion Act;

2. It shall be a corporation in which an overseas construction business operator referred to in paragraph (2) 5 of the Overseas Construction Promotion Act invests not less than 90/100 of the total amount of investment or owns not less than 90/100 of the total number of issued stocks (if the overseas construction company is created through a split-off, it includes the cases where the split-off entity is a holding company and invests not less than 90/100 of the total amount of investment or holds not less than 90/100 of the total number of issued shares of the overseas construction company).

(2) The term "claims prescribed by Presidential Decree" in the main clause, with the exception of subparagraphs, of Article 104-33 (1) of the Act, means claims accruing from labor costs paid by an overseas construction business operator to executive officers and employees dispatched to an overseas construction subsidiary on behalf the overseas construction subsidiary.

(3) "Cases prescribed by Presidential Decree where it is deemed remarkably difficult to collect" in Article 104-33 (1) 4 of the Act means any of the following cases:

1. Where the overseas construction subsidiary has continuously eroded capital for 10 years immediately before the end of the business year in which the allowance for bad debt is included in deductible expenses;

2. In cases similar to subparagraph 1, where it is confirmed by an overseas bond collection agency prescribed by Ordinance of the Ministry of Economy and Finance that it is impossible to collect loans, etc. of overseas construction subsidiaries under the provisions, with the exception of the subparagraphs, of Article 104-33 (1) of the Act.

(4) A person who intends to be subject to Article 104-33 (1) of the Act shall, when filing a return under Article 60 of the Corporate Tax Act, attach documents verifying the fact that the case falls under any subparagraph of paragraph (3) to a written application for special cases of inclusion in deductible expenses prescribed by Ordinance of the Ministry of Economy and Finance, and submit them to the head of the tax office having jurisdiction over the place of tax payment.

[This Article Newly Inserted on Feb. 29, 2024]

Article 106(Exemption from Value-Added Tax) #

(1) Deleted. <Dec. 29, 2000>

(2)"Entrustment contract prescribed by Presidential Decree" in Article 106 (1) 2 (b) of the Act means a contract that meets all of the following requirements that: <Amended on Feb. 11, 2020; Feb. 15, 2022>

1. The business entity providing food services (hereafter in this paragraph referred to as"entrusted business entity") and the association composed of route passenger transportation business entities (hereinafter referred to as"transportation business entities") that concluded a joint transportation agreement pursuant to Article 11 of the Passenger Transport Service Act (hereinafter referred to as"association") or the transportation business entities (including executive directors and employees of each association and transportation business entity) shall not be related persons under subparagraph 20 of Article 2 of the Framework Act on National Taxes;

2. The entrusted business entity shall provide food services only to the transportation business entities of the association.

(3)"Services prescribed by Presidential Decree" in Article 106 (1) 3 of the Act means the services for agricultural management and farming operations which are provided by an agricultural partnership established under Article 16 of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities or an agricultural company established under Article 19 of that Act as an agency, and the services for fishery management and fishing operations which are provided by a fishery partnership established under Article 16 of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities or a fisheries company established under Article 19 of that Act as an agency. <Amended on Dec. 29, 2000; Feb. 19, 2005; Oct. 31, 2007; Jun. 20, 2008; Oct. 8, 2009; Feb. 18, 2010; Feb. 7, 2017>

(4)"National housing prescribed by Presidential Decree and services for the construction thereof" in Article 106 (1) 4 of the Act means: <Amended on Dec. 30, 2002; Nov. 29, 2003; Feb. 19, 2005; Sep. 27, 2007; Feb. 4, 2009; Feb. 18, 2010; Jan. 17, 2011; Feb. 13, 2018; Feb. 17, 2021>

1. A house not larger than the scale prescribed in subparagraph 6 of Article 2 of the Housing Act (referring to an area based on the exclusive habitable area for each household in cases of a multi-unit house prescribed by Ordinance of the Ministry of Planning and Finance), among the houses defined in subparagraph 1 of Article of that Act;

2. Construction services for the housing provided for in subparagraph 1, which are provided by persons registered under the Framework Act on the Construction Industry, the Electrical Construction Business Act, the Fire-Fighting System Installation Business Act, the Information and Communications Construction Business Act, the Housing Act, the Sewerage Act, and the Act on the Management and Use of Livestock Excreta: Provided, That fire-fighting system installation supervision shall be excluded herefrom;

3. Design services for the housing provided for in subparagraph 1, which are provided by persons registered or reported under the Certified Architects Act, the Electric Technology Management Act, the Fire-Fighting System Installation Business Act, the Professional Engineers Act, and the Engineering Industry Promotion Act.

(5)"Remodeling services prescribed by Presidential Decree" in Article 106 (1) 4 of the Act means any of the following remodeling services under the Housing Act, the Act on the Improvement of Urban Areas and Residential Environment, and the Building Act, and it shall be limited to the remodeling of the housing which does not exceed the scale provided for in paragraph (4) 1 (excluding where the scale of the relevant housing after remodeling exceeds the scale provided for in paragraph (4) 1, and 130/100 of the scale of housing before remodeling): <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Sep. 27, 2007; Feb. 18, 2010>

1. Services provided by a person registered under the Framework Act on the Construction Industry, the Electrical Construction Business Act, the Fire-Fighting System Installation Business Act, the Information and Communications Construction Business Act, the Housing Act, the Sewerage Act, and the Act on the Management and Use of Livestock Excreta;

2. Design services used for the relevant remodeling, which are provided by a person registered under the Certified Architects Act.

(6)"General management services, security services, and cleaning services prescribed by Presidential Decree" in Article 106 (1) 4-2 through 4-4 of the Act means: <Amended on Feb. 4, 2009; Jul. 6, 2010; Dec. 30, 2010; Aug. 11, 2016>

1. Security services and cleaning services provided by the managing entity or the custodian or operator of a welfare house for elderly persons defined in Article 32 (1) 3 of the Welfare of Older Persons Act (hereafter in this paragraph, referred to as"welfare house for elderly persons") respectively to multi-family housing or a welfare house for elderly persons, and general management services provided by the managing entity collecting the following expenses:

(a) In cases of multi-family housing subject to Article 23 of the Enforcement Decree of the Multi-Family Housing Management Act: General management expenses referred to in subparagraph 1 of attached Table 2 to the same Decree (excluding general management expenses if such expenses include management expenses referred to in subparagraphs 2 through 10 of attached Table 2 to the same Decree, and similar expenses);

(b) In cases of multi-family and welfare houses for elderly persons not subject to Article 23 of the Enforcement Decree of the Multi-Family Housing Management Act: Expenses equivalent to general management expenses referred to in item (a);

2. Security services that a security business operator provides to multi-family housing or a welfare house for elderly persons, or provides to multi-family housing or a welfare house for elderly persons under an outsourcing contract with the managing entity or the custodian or operator of the welfare house for elderly persons;

3. Cleaning service that a cleaning contractor provides to multi-family housing or a welfare house for elderly persons, or provides to multi-family housing or a welfare house for elderly persons under an outsourcing contract with the managing entity or the custodian or operator of the welfare house for elderly persons.

(7) "Organization performing governmental affairs prescribed by Presidential Decree on behalf of the Government" in Article 106 (1) 6 of the Act means any of the following organizations or institutions: <Amended on Oct. 11, 1999; Jan. 10, 2000; Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2003; Apr. 24, 2004; Feb. 19, 2005; Feb. 9, 2006; Apr. 28, 2006; Feb. 28, 2007; Sep. 28, 2007; Feb. 22, 2008; Jan. 14, 2009; Feb. 4, 2009; Jun. 26, 2009; Sep. 21, 2009; Jan. 27, 2010; Feb. 18, 2010; Mar. 26, 2010; Dec. 30, 2010; Dec. 31, 2010; Dec. 28, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Aug. 29, 2016; Nov. 29, 2016; Feb. 7, 2017; Feb. 13, 2018; Jun. 11, 2019; Feb. 18, 2020; Feb. 17, 2021; Aug. 31, 2021; Feb. 28, 2023; Feb. 29, 2024>

1. A special post office established under the Special Post Offices Act;

2. A person entrusted with post office counter services pursuant to the Act on Entrustment of Services of Post Office Counters;

3. Deleted. <Jan. 10, 2000>

4. The Korea Rural Community Corporation incorporated under the Korea Rural Community Corporation and Farmland Management Fund Act;

5. An agricultural cooperative, a corporation incorporated for a joint project of agricultural cooperatives, or the National Agricultural Cooperative Federation incorporated under the Agricultural Cooperatives Act (including the NongHyup Agribusiness Group incorporated under that Act and its subsidiaries);

6. A fisheries cooperative, the National Federation of Fisheries Cooperatives, and a corporation incorporated for a joint project of cooperatives, and a fishing fraternity established under the Fisheries Cooperatives Act;

7. A tobacco producers’ cooperative and the National Federation of Tobacco Producers Cooperatives incorporated under the Tobacco Producers Cooperatives Act;

8. Deleted; <Jan. 10, 2000>

9. An inspection agency of white and Taegeuk ginseng designated under the Ginseng Industry Act;

10. The Korea Land and Housing Corporation incorporated under the Korea Land and Housing Corporation Act;

11. The Korea Expressway Corporation incorporated under the Korea Expressway Corporation Act;

12. The Human Resources Development Service of Korea incorporated under the Human Resources Development Service of Korea Act;

13. Deleted; <Feb. 18, 2010>

14. The Korea Minting, Security Printing, and ID Card Operating Corporation incorporated under the Korea Minting and Security Printing and ID Card Operating Corporation Act;

15. A forestry cooperative, National Federation of Forestry Cooperatives, and a forestry fraternity established under the Forestry Cooperatives Act;

16. Deleted; <Jan. 10, 2000>

17. Deleted; <Dec. 30, 2002>

18. Deleted; <Dec. 29, 2000>

19. Deleted; <Feb. 18, 2010>

20. A wholesale market corporation, a market wholesaler, an intermediary wholesaler dealing with unlisted items, or an organization settling accounts for payments who is designated by the founder of a wholesale market of agricultural and fishery products pursuant to the Act on Distribution and Price Stabilization of Agricultural and Fishery Products;

21. A local corporation incorporated by a local government to perform the wholesale marketing of agricultural and fishery products pursuant to the Local Public Enterprises Act;

22. A local government public corporation incorporated under Article 76 of the Local Public Enterprises Act;

22-2. A local corporation incorporated under Article 49 of the Local Public Enterprises Act, which meets each of the following requirements:

(a) It shall be incorporated by the local government of a Si, a Gun, or an autonomous Gu;

(b) It shall be the only local corporation incorporated by the relevant local government, except the local corporation referred to in subparagraph 21;

23. The Korea Agro-Fisheries and Food Trade Corporation incorporated under the Korea Agro-Fisheries and Food Trade Corporation Act;

24. The Korea Maritime Transportation Safety Authority incorporated under the Korea Maritime Transportation Safety Authority Act;

25. Deleted; <Feb. 18, 2010>

26. Deleted; <Feb. 18, 2010>

27. The Korea Communications Agency incorporated under Article 66 of the Radio Waves Act;

28. The Korea Occupational Safety and Health Agency incorporated under the Korea Occupational Safety and Health Agency Act;

29. Deleted; <Dec.30, 2003>

30. Deleted; <Dec. 30, 2003>

31. Deleted; <Jan. 10, 2000>

32. A person who performs the duties of an enforcement officer pursuant to the Enforcement Officers Act;

33. A person who performs the duties of a notary public pursuant to the Notary Public Act;

34. Deleted; <Dec. 30, 2003>

35. Deleted; <Feb. 9, 2006>

36. The Korea Chamber of Commerce and Industry established under the Chambers of Commerce and Industry Act, the Korea Institute for Nuclear Safety established under the Korea Institute of Nuclear Safety Act, the Korean Film Council established under the Promotion of the Motion Pictures and Video Products Act, the Korea Creative Content Agency established under the Framework Act on the Promotion of Cultural Industries, and the Korea Mine Rehabilitation and Mineral Resources Corporation established under the Korea Mine Rehabilitation and Mineral Resources Corporation Act;

37. The Korea Water Resources Corporation established under the Korea Water Resources Corporation Act;

38. Deleted; <Sep. 21, 2009>

39. A port authority established under Article 4 (2) of the Port Authority Act;

40. A concessionaire defined in subparagraph 7 of Article 2 of the Act on Public-Private Partnerships in Infrastructure that is established with at least 40/100 of its investment made jointly by any corporation that specializes in the construction and operation of roads which belong to the public sector defined in subparagraph 10 of Article 2 of that Act and any financial investor who provides long-term investment funds;

41. The Korea Federation of SMEs established under the Small and Medium Enterprise Cooperatives Act;

42. Deleted; <Feb. 2, 2012>

43. A national tax payment agency designated under the provisions, with the exception of the items, of Article 12 (1) 3 of the National Tax Collection Act;

44. An organizing committee established under the International Athletic Games Support Act and recognized and publicly notified by the Minister of Economy and Finance as necessary for efficient preparation and operation;

45. Deleted; <Feb. 13, 2018>

46. The Construction Association of Korea, which is an organization of construction business entities established under Article 50 of the Framework Act on the Construction Industry;

47. The Korea Environment Corporation incorporated under the Korea Environment Corporation Act;

48. The Road Traffic Authority established under Article 120 of the Road Traffic Act;

49. Any person referred to in subparagraph 3 of Article 62 of the Enforcement Decree of the Local Accounting Act;

50. Deleted; <Feb. 15, 2013>

51. Deleted; <Feb. 21, 2014>

52. The Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games established under Article 5 of the Special Act on Support for the 2018 PyeongChang Olympic and Paralympic Winter Games;

53. The Organizing Committee for the 2010 Formula 1 Korean Grand Prix established under Article 4 of the Act on Assistance to the 2010 Formula 1 Korean Grand Prix;

54. The Organizing Committee for the 7th World Water Forum established under Article 3 of the Special Act on Assistance to the 7th World Water Forum;

55. The Korea 2015 6th Military World Games Organizing Committee established under Article 3 of the Act on Assistance to the 2015 Military World Games Korea;

56. A specialized agency entrusted with the duties related to contracts for the management and sale of electronic revenue stamps, etc. pursuant to Article 9 (2) of the Revenue Stamp Act.;

57. The Korea Worker’s Compensation and Welfare Service established under Article 10 of the Industrial Accident Compensation Insurance Act.

58. The Korea Fisheries Resources Agency established under Article 55-2 of the Fishery Resources Management Act;

59. The Korea Fisheries Infrastructure Public Agency established under Article 57 of the Fishing Villages and Fishery Harbors Act;

60. A distribution center for small and medium business under Article 71 (1) of the Enforcement Decree of the Small and Medium Enterprises Promotion Act;

61. The Korea Marine Environment Management Corporation established under Article 96 of the Marine Environment Management Act;

62. An institution or organization entrusted with the operation of a mobility support center under Article 16 (2) of Act on Promotion of the Transportation Convenience of Mobility Disadvantaged Persons and operation of a wide-area mobility support center under Article 16 (3) of that Act, pursuant to Article 16 (11) of that Act.

(8)"Goods and services prescribed by Presidential Decree" in Article 106 (1) 6 of the Act means goods or services supplied by any entity listed under paragraph (7) for its proper purpose business prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That the following shall be excluded, but subparagraph 7 shall be applied, notwithstanding subparagraph 1 of Article 45 of the Enforcement Decree of the Value-Added Tax Act: <Amended on Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2003; Apr. 24, 2004; Feb. 19, 2005; Feb. 9, 2006; Feb. 29, 2008; Feb. 18, 2010; Jun. 28, 2013>

1. Retail trade, food service activities, accommodations service activities, public bath business, and wedding chapel services;

2. Business activities provided for in Article 3 (2) of the Enforcement Decree of the Value-Added Tax Act;

3. Real estate renting and leasing;

4. Business operating the driving range, the skiing ground, or other sports facilities;

5. Water recreation services;

6. Business operating the amusement and park;

7. Business operating parking lots and business towing vehicles.

(9)"School facilities prescribed by Presidential Decree" in Article 106 (1) 8 of the Act means basic educational facilities, support facilities, and research facilities among the school building facilities listed in attached Table 2 to Article 4 (1) of the Regulations on the Establishment and Operation of Universities and Colleges. <Newly Inserted on Feb. 15, 2013>

(10) Deleted; <Dec. 29, 2000>

(11) Deleted; <Dec. 29, 2000>

(12) For the purposes of Article 105 (1) 1 through 3, 3-2, and 4 of the Act, and Article 106 (1) 1 and 4 of the Act, a preliminary or final return, or an early refund return based on the zero tax rate filed under the Value-Added Tax Act shall be accompanied by the following documents: <Amended on Jan. 10, 2000; Dec. 29, 2000; Feb. 19, 2005; Feb. 9, 2006; Feb. 22, 2008; Feb. 29, 2008>

1. In cases falling under Article 105 (1) 1 through 3 and 3-2 of the Act, a certificate of supply issued by the head of an agency in receipt of goods or documents evidencing the provision of services;

2. In cases falling under Article 105 (1) 4 of the Act, the monthly total sales table in the form prescribed by Ordinance of the Ministry of Economy and Finance;

3. In cases falling under Article 106 (1) of the Act, a certificate of tax-free supply in the form prescribed by Ordinance of the Ministry of Economy and Finance;

4. Deleted. <Dec. 29, 2000>

(13) A school meal supplier who provides meal services under an outsourcing contract for supplying meal services, which are exempt from the value-added tax under Article 106 (1) 2 of the Act shall submit a certificate of the supply price of meal services as confirmed by the principal of the school supplied with the meal services, to the head of the tax office having jurisdiction over its place of business, at the time of filing a report on the status of a business place under Article 78 of the Income Tax Act (or a preliminary or final return on value-added tax under Articles 48 and 49 of the Value-Added Tax Act in cases of a school meal supplier who concurrently engages in business activities subject to value-added tax). <Newly Inserted on Jun. 30, 1999; Feb. 19, 2005; Jun. 28, 2013>

(14) "Items prescribed by Presidential Decree" in Article 106 (1) 10 of the Act means the following goods provided for in subparagraph 4 of Article 91 of the Customs Act: <Newly Inserted on Oct. 30, 1999; Dec. 29, 2000; Feb. 19, 2005; Sep. 21, 2009; Feb. 18, 2010; Feb. 21, 2014; Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023; Feb. 29, 2024>

1. Cerezyme and other medicines to be used by patients with Gaucher disease, and Lorenao’s oil and other medicines to be used by patients with adrenoleukodystrophy (ALD);

2. Heat-treated blood clotting-factor concentrates to be used by persons with mental or physical disabilities caused by hemophilia;

3. Medicines to be used for patients with muscular dystrophy;

4. Medicines to be used for patients with Wilson's disease;

5. Medicines to be used for persons with mental or physical disabilities caused by AIDS;

6. Medicines for dysphagia to be used for persons with disabilities to take in food;

7. Medicines to be used for treating patients with lymphoid hyperplasia caused by a complication of immunosuppressant after organ transplantation;

8. Nitisinone and other medicines to be used by patients with tyrosinemia;

9. Deleted. <Feb. 21, 2014>

10. Deleted; <Feb. 21, 2014>

11. Medicines to be used for treating patients with paroxymal nocturnal hemoglobinuria, atypical hemolytic uremic syndrome, myas thenia gravis, and optic neuromyelitis categorical disease;

12. Therapeutic agents to treat patients with neurofibromatosis type 1;

13. Other rare disease treatment drugs prescribed by Ordinance of the Ministry of Economy and Finance.

(15)"Wooden pallets prescribed by Presidential Decree" in Article 106 (1) 12 of the Act means wooden pallet among forest products defined in subparagraph 7 of Article 2 of the Creation and Management of Forest Resources Act. <Newly Inserted on Feb. 13, 2018>

(16) A business operator who supplies goods falling under Article 106 (1) 12 of the Act shall prepare a sales ledger in the form prescribed by Ordinance of the Ministry of Economy and Finance and keep it in his/her place of business. In such cases, the sale ledger may be prepared in an electronic form using a data processing device, an electronic tape, diskette, etc. <Newly Inserted on Feb. 13, 2018>

(17)"Which are prescribed by Presidential Decree" in Article 106 (2) 9 of the Act means the machinery and materials used for agriculture, livestock, forestry, and environment-friendly agriculture provided for in Article 3 (3) through (6) of the Regulations on Special Cases concerning Application of Zero Rate of, or Exemption from, Value Added Tax on Materials and Petroleum Products for Agriculture, Livestock Industry, Forestry, and Fisheries, which are imported by persons confirmed as farmers by a cooperative established under the Agricultural Cooperatives Act, as prescribed by Ordinance of the Ministry of Economy and Finance, and the machinery and materials used for fisheries provided for in Article 3 (7) of the same Regulations, which are imported by persons confirmed as fishers by a cooperative established under the Fisheries Cooperatives Act, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Jan. 10, 2000; Feb. 19, 2005; Feb. 29, 2008; Feb. 18, 2010; Feb. 13, 2018>

Article 106-3(Special Taxation for Value-Added Tax on Gold Bullion Trade) #

(1)"Gold bullion of the form, purity, etc. prescribed by Presidential Decree" in Article 106-3 (1) of the Act, with the exception of its subparagraphs, means gold with at least 995/1000 purity in the state of raw material, such as gold ingot (lumps), or gold bar. <Amended on Feb. 4, 2009>

(2)"Wholesaler and refiner of gold bullion prescribed by Presidential Decree" in Article 106-3 (1) 1 of the Act means any of the following persons (hereafter referred to as"gold bullion wholesaler, etc." in this Article and Articles 106-4 and 106-5): Provided, That gold craftsmen who concurrently operate the gold bullion wholesale and persons for whom two years have not passed from the date when approval for trading tax-free gold bullion was revoked under Article 106-4 (7) shall be excluded: <Amended on Oct. 5, 2004; Feb. 29, 2008; Feb. 18, 2010>

1. A gold bullion wholesaler: A person operating the gold bullion wholesale, who satisfies the following requirements (hereafter referred to as"tax-free gold bullion wholesaler" in this Article):

(a) To be operating the gold bullion wholesale for at least one year from the date of commencing the business;

(b) Turnover by the gold bullion wholesale shall be at least the amount stipulated by Ordinance of the Ministry of Economy and Finance;

(c) The wholesaler or his/her representative or officers shall not have failed to pay national taxes for at least three occasions within the latest two years, or shall not be subjected to any disposition for his/her failure to pay national taxes within five years;

2. A gold bullion refiner: A person operating the business of producing gold bullion by refining or smelting the precious metal, nonferrous metal ores, lumps, scraps, etc.

(3)"Person prescribed by Presidential Decree" in Article 106-3 (1) 1 and (2) of the Act means any of the following persons equipped with the computer systems stipulated by the Commissioner of the National Tax Service, and a person conducting gold bullion brokerage among those who have obtained a license for foreign exchange brokerage under Article 9 of the Foreign Exchange Transactions Act, who satisfies the requirements stipulated by Ordinance of the Ministry of Economy and Finance (hereafter referred to as"tax-free gold bullion broker" in this Article and Article 106-4), shall be deemed a recommender of tax-free gold bullion trade or a recommender of tax-free gold bullion import provided for in subparagraphs 1 through 3: <Amended on Feb. 19, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Aug. 27, 2013>

1. A recommender of tax-free gold bullion trade referred to in Article 106-3 (1) 1 or 4 of the Act (hereafter referred to as"recommender of tax-free gold bullion trade" in this Article, and Articles 106-4 and 106-5): The Korea Chamber of Commerce and Industry established under the Chambers of Commerce and Industry Act and the Federation of Precious Stone Processing Business Cooperatives established under the Small and Medium Enterprise Cooperatives Act;

2. A recommender of tax-free gold bullion trade referred to in Article 106-3 (1) 2 of the Act: The Korea Federation of Banks, an incorporated association under Article 32 of the Civil Act where financial institutions referred to in paragraph (5) 1, 3 through 8 intend to purchase the tax-free gold bullion, and the Exchange established under the Financial Investment Services and Capital Markets Act where financial investment dealers referred to in paragraph (5) 2 intend to purchase the tax-free gold bullion for the exchange traded derivative transactions of gold bullion;

3. A recommender of tax-free gold bullion import referred to in Article 106-3 (2) of the Act (hereafter referred to as"recommender of tax-free gold bullion import" in this Article, and Articles 106-4 and 106-5): Any of the following (an entity intending to import the tax-free gold bullion, among the following recommenders of tax-free gold bullion import, may choose it, in the case of imports with the mixed trade purposes):

(a) The Korea Chamber of Commerce and Industry established under the Chambers of Commerce and Industry Act and the Federation of Precious Stone Processing Business Cooperatives established under the Small and Medium Enterprise Cooperatives Act, in cases of imports with the trade purposes under Article 106-3 (1) 1 of the Act;

(b) The Korea Federation of Banks, an incorporated association under Article 32 of the Civil Act, in cases of imports with the trade purposes under Article 106-3 (1) 2 and 4 of the Act;

(c) The Exchange established under the Financial Investment Services and Capital Markets Act, in cases of imports with the trade purposes under Article 106-3 (1) 3 of the Act.

(4)"Gold craftsmen, etc. prescribed by Presidential Decree" in Article 106-3 (1) 1 of the Act means the following persons: Provided, That persons for whom two years have not passed from the date approval for trading tax-free gold bullion was revoked under Article 106-4 (7) shall be excluded: <Amended on Oct. 5, 2004; Feb. 18, 2010>

1. A tax-free gold bullion wholesaler;

2. A producer of precious metals using gold bullion as raw materials, etc. for the precious metal products, who or whose representative or executive officer shall not have failed to pay national taxes for at least three occasions within the latest one year, or shall not be subject to any disposition for his/her failure to pay national taxes within five years;

3. A general taxable person of the value-added tax who carries on the sales business of relevant precious metal products by entrusting the manufacturing of precious metal products to another precious metal manufacturer without making precious metal products himself/herself, who or whose representative or officer shall not have failed to pay national taxes for at least three occasions within the latest one year, or shall not be subject to any disposition for his/her failure to pay national taxes within five years.

(5)"Financial institution prescribed by Presidential Decree" in Article 106-3 (1) 2 of the Act means any of the following: <Amended on Feb. 19, 2005; Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012>

1. The Bank of Korea established under the Bank of Korea Act;

2. Financial investment dealers licensed under the Financial Investment Services and Capital Markets Act (hereafter referred to as"financial investment dealer" in this Article);

3. Banks established under the Banking Act;

4. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;

5. The Korea Development Bank established under the Korea Development Bank Act;

6. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act;

7. Nonghyup Bank established under the Agricultural Cooperatives Act;

8. The National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act.

(6)"Collecting agent of value-added tax prescribed by Presidential Decree" in Article 106-3 (4) of the Act, with the exception of its subparagraphs, means the following relevant institution: <Amended on Feb. 4, 2009>

1. For gold bullion supplied by a financial institution referred to in the subparagraphs of paragraph (5) (hereafter referred to as"financial institution" in this Article, and Articles 106-4 and 106-5) under the consumption loan for gold bullion: the financial institution;

2. Where actual gold bullion is delivered through an exchange traded derivative transaction of gold bullion to a person, other than the tax-free gold bullion wholesalers, etc. referred to in subparagraphs of paragraph (4) (hereafter referred to as"gold craftsman, etc." in this Article, and Articles 106-4 and 106-5; including financial institutions in this paragraph): The financial investment dealer who makes intermediation, brokerage or proxy by transferring or being consigned the relevant gold bullion.

(7)"Timing for supply, as prescribed by Presidential Decree" in Article 106-3 (4) of the Act, with the exception of its subparagraphs, means either of the following: <Amended on Feb. 4, 2009>

1. For the consumption loan for gold bullion: When the redemption is made;

2. For the exchange traded transaction of gold bullion: When actual gold bullion is delivered.

(8)"Person subject to collection of value-added tax prescribed by Presidential Decree" in Article 106-3 (4) of the Act, with the exception of its subparagraphs, means either of the following persons (hereafter referred to as"person subject to collection of value-added tax" in this Article): <Amended on Feb. 4, 2009>

1. A person who has failed to redeem after having received the supply of gold bullion from a financial institution under the consumption loan for gold bullion;

2. A person, other than the gold craftsmen who have taken over the actual object of gold bullion (including financial institutions) in cases of exchange traded derivative transaction of gold bullion.

(9) Persons liable for collecting value-added tax who have collected the value-added tax under Article 106-3 (4) of the Act (hereafter referred to as"value-added tax collecting agent" in this Article) shall either pay the collected value-added tax to the head of a tax office having jurisdiction over the place of tax payment of the value-added tax collecting agent by the end of the month following that in which the date of collection falls, along with the payment return of gold bullion value-added tax in the form stipulated by Ordinance of the Ministry of Economy and Finance, stating the following matters, or pay it to the Bank of Korea or postal offices with the payment statement under the National Tax Collection Act, accompanied by the payment return of gold bullion value-added tax: <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008>

1. Full name of a person supplied with the gold bullion (trade name in the case of a business operator), address (address of the business place in the case of a business operator), resident registration number (business registration number in the case of a business operator);

2. Personal details of the business operator who has collected and paid;

3. Supply value, value-added tax amount, and supply quantity;

4. Other reference matters.

(10) Every value-added tax collecting agent who has collected the value-added tax under Article 106-3 (5) of the Act shall deliver a receipt for collecting value-added tax on gold bullion in the form stipulated by Ordinance of the Ministry of Economy and Finance, stating the following matters, to persons subject to collection of value-added tax under paragraph (8), when it collects the value-added tax: <Amended on Feb. 29, 2008>

2. Personal details of the business operator who has collected and paid;

3. Supply value, value-added tax amount, and supply quantity;

4. Other reference matters.

(11) If gold bullion is supplied under any subparagraph of Article 106-3 (1) of the Act, no value-added tax shall be collected under the proviso of Article 106-3 (6) of the Act.

(12) Persons who have supplied or imported tax-free gold bullion, recommenders of tax-free gold bullion trade, recommenders of tax-free gold bullion import, and financial institutions referred to in Article 106-3 (7) of the Act shall respectively submit, to the head of a tax office having jurisdiction over the relevant business place, the specification of facts of the tax-free gold bullion trade (import) and the specification of facts of the consigned trade of gold bullion in the form stipulated by Ordinance of the Ministry of Economy and Finance, stating the following matters, by the end of the month following the last month of each quarter, and the specification of facts of a recommendation of tax-free gold bullion by the 5th day of the month following the month in which the date of recommendation falls. In such cases, the specification of the fact of tax-free gold bullion trade (import), etc. shall be submitted on computer-processed tapes, diskettes or disks determined by the Commissioner of the National Tax Service: <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008; Feb. 4, 2009>

1. The following details, in cases of the specification of facts of the tax-free gold bullion trade (import) submitted by a person who has supplied or imported tax-free gold bullion:

(a) Trade name, address of the business place, business registration number of a person supplied with tax-free gold bullion;

(b) Personal details of the supplier and importer of tax-free gold bullion;

(d) Other reference matters.

2. The following details, in cases of statement of the fact that the exchange traded derivative transaction of gold bullion has been made on entrustment, which is submitted for the portion of intermediation, brokerage or proxy for such entrustment by a financial investment dealer who was entrusted with the exchange traded derivative transaction of gold bullion:

(a) Personal details of a person supplied with gold bullion;

(b) Personal details of the consignor of gold bullion;

(d) Other reference matters.

3. Supply value, value-added tax amount, and supply quantity;

(a) Personal details of a person who has been recommended tax-free gold bullion;

(b) Personal details of the other party of trade who has been recommended tax-free gold bullion;

(d) Other reference matters.

(13) Persons liable for recording and keeping the books for the facts of trade and recommendation of tax-free gold bullion under Article 106-3 (7) of the Act shall record and keep the books to make it possible to objectively ascertain all trading facts concerning relevant tax-free gold bullion. In such cases, even when such facts are kept in the electronically-processed tapes or diskettes, it shall be deemed to have recorded and kept the books.

(14) "Causes prescribed by Presidential Decree" in Article 106-3 (10) of the Act means where a person subject to the value-added tax falls under any of the following circumstances: <Amended on Feb. 19, 2005; Mar. 29, 2006; Feb. 18, 2010>

1. Where it is confirmed that it is impracticable to recover from the person by a decision authorizing his/her rehabilitation program authorization under the Debtor Rehabilitation and Bankruptcy Act;

2. Where it is impracticable to recover from the person due to bankruptcy, compulsory execution, execution of penalty, closure of his/her business, death, disappearance, missing, etc.

[This Article Newly Inserted on Dec. 30, 2002]

Article 106-4(Approval, Alteration, and Withdrawal for Gold Bullion Trade) #

(1) Where the gold bullion wholesalers, etc. under Article 106- 3 (2) intend to make a trade of tax-free gold bullion, they shall submit a written application for approval for tax-free gold bullion trade with matters falling under the following subparagraphs entered, which is stipulated by Ordinance of the Ministry of Economy and Finance by not later than the 10th day of the month preceding that in which the first trade of such tax-free gold bullion is intended, to the head of tax office having jurisdiction over relevant business place, and obtain his/her approval: <Amended on Feb. 19, 2005; Feb. 29, 2008>

1. Personal details of the business operator;

2. Reasons for the application for approval for tax-free gold bullion trade;

3. The monthly average required quantity of tax-free gold bullion: Provided, That in the case of any gold bullion refiner provided for in Article 106-3 (2) 2, no entries shall be required;

4. Other reference matters.

(2) Persons who intend to make the trade recommendation or the import recommendation of the tax-free gold bullion under Article 106-3 (3) shall submit a written application for approval for recommendation of trade (import) of the tax-free gold bullion indicating matters falling under the following subparagraphs, which is stipulated by Ordinance of the Ministry of Economy and Finance, by not later than the 10th day of the month preceding that in which it is intended to make a recommendation of trade and import of the tax-free gold bullion, to the Commissioner of the National Tax Service, and obtain his/her approval: <Amended on Feb. 19, 2005; Feb. 29, 2008>

1. Personal details of the recommender of trade (import) of tax-free gold bullion;

2. Reasons for the application for approval for recommendation of trade (import) of tax-free gold bullion trade;

3. Other reference matters.

(3) Where any trade of gold bullion which is intermediated by a tax-free gold bullion broker under Article 106-3 (3), with the exception of its subparagraphs, falls under Article 106-3 (1) and (2) of the Act, it shall be deemed to be the trade and import of gold bullion exempted from the value-added taxes.

(4) Where the gold craftsmen, etc. under Article 106-3 (4) intend to receive a supply of tax-free gold bullion, they shall submit a written application for approval for tax-free gold bullion trade indicating matters falling under the following subparagraphs, which is stipulated by Ordinance of the Ministry of Economy and Finance, by not later than the 10th day of the month preceding that in which it is intended to obtain the first supply of tax-free gold bullion, to the head of tax office having jurisdiction over relevant business place, and obtain his/her approval: <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008>

1. Personal details of the business operator;

2. Reasons for the application for approval for tax-free gold bullion trade;

3. Agency recommending the tax-free gold bullion trade (import);

4. The monthly average required quantity of tax-free gold bullion: Provided, That where any free-tax gold bullion wholesaler provided for in Article 106-3 (4) 1 files the written application referred to in paragraph (1), such case shall be excluded;

5. Other reference matters.

(5) In applying paragraphs (1) and (4), if it is expected that the approved monthly average required quantity of tax-free gold metals is to be increased or decreased, gold bullion wholesalers, etc. and gold craftsmen, etc. shall submit to the head of tax office having jurisdiction over the relevant business place a written report on a change of approval for the tax-free gold bullion trade as stipulated by Ordinance of the Ministry of Economy and Finance by not later than the 10th day of the month immediately preceding the month in which it is intended to change the said required quantity. <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005, Feb. 29, 2008>

(6) Where the representative of businessmen is changed in applying Article 106-3 (2) 1 and (4), the gold bullion wholesalers and gold craftsmen, etc. shall submit a written application for change of approval for the tax-free gold bullion trade which is stipulated by Ordinance of the Ministry of Economy and Finance to the head of tax office having jurisdiction over the relevant business place. <Amended on Feb. 29, 2008>

(7) Where any gold bullion wholesaler, etc. and any gold crafts- man, etc. fall under any case of the following subparagraphs, the head of tax office having jurisdiction over their business places may withdraw his/her approval for the supply of tax-free gold bullion to them or their eligibility for the supply of tax-free gold bullion: <Amended on Feb. 19, 2005; Feb. 22, 2008>

1. Where the gold bullion wholesaler, etc. and the gold craftsman, etc. (including the representative and officers of the relevant business operators) are each subject to a disposition taken to collect arrears or a deficit disposition;

2. Where the gold bullion wholesaler, etc. and the gold craftsman, etc. purchase gold bullion in excess of 110/100 of the monthly average required quantity of tax-free gold bullion referred to in paragraphs (1) 3 and (4) 4 for which they have obtained the approval;

3. Where the gold bullion wholesaler, etc. and the gold craftsman, etc. quarterly supply tax-free gold bullion in excess of 100 kilograms in a manner that is not prescribed in Article 106-3 (1) 1 through 4 of the Act;

4. Where they are accused of committing the act of violating the regulations provided for in Articles 9, 11-2, 12-3 and 13 of the Punishment of Tax Offenses Act;

5. Where they fall under the publication that is made by the Commissioner of the National Tax Service after the import of gold bullion sharply soars or is feared to sharply soar compared with their import during the preceding month or the preceding quarter and that he/she judges that it is necessary to control their trading patterns in advance in order to halt the illegal distribution of tax-free gold bullion.

(8) In case where the Commissioner of the National Tax Service recognizes the inappropriateness to recommend the transaction import of tax-free gold bullion after the recommended trader or importer of tax-free gold bullion falls under any of the following subparagraphs, he/she may withdraw the approval that makes it possible to recommend the transaction or import of tax-free gold bullion: <Newly Inserted on Feb. 19, 2005; Feb.29, 2008>

1. Where he/she fails to equip himself/herself with adequate computer information- processing facilities, etc. that make it possible for him/her to stably perform his/her work involving the recommendation of tax-free gold bullion and the report thereon;

2. Where he/she makes the recommendation of transaction or import for per- sons who have failed to submit their written confirmations of offered security for tax payment provided for in Article 106-8 (2);

3. Where he/she violates matters that are prescribed by Ordinance of the Ministry of Economy and Finance after judging that he/she needs to adjust the distribution channel and the quantity recommendation in order to coordinate the transaction of tax-free gold bullion.

(9) In case where the gold craftsmen, etc. intend to be supplied or to import the tax-free gold bullion by receiving the recommendation from the recommended trader or importer of tax-free gold bullion, the agency from which the first recommendation has been received shall become the recommended trader or importer of tax-free gold bullion, and in case where they intend to change the recommended trader or importer of tax- free gold bullion, they shall submit a return of changing the recommended trader or importer of tax-free gold bullion, which is stipulated by Ordinance of the Ministry of Economy and Finance, to the head of tax office having jurisdiction over relevant business place by not later than the 10th day of the month preceding the month of intending to change them, and obtain his/her approval. <Amended on Feb. 19, 2005; Feb. 29, 2008>

[This Article Newly Inserted on Dec. 30, 2002]

Article 106-5(Issuance of Tax Invoices for Gold Bullion Trade, and Methods of Filing Returns) #

(1) When a business operator, other than financial institutions, issues a tax invoice after having supplied tax-free gold bullion under Article 106-3 (1) of the Act, he/she need not fill in value-added tax amount of the tax invoice, and he/she shall make a payment of value-added tax by self-return under Articles 48 and 49 of the Value-Added Tax Act, by applying mutatis mutandis the trade of goods or services subject to the zero tax rate. <Amended on Feb. 19, 2005; Jun. 28, 2013>

(2) The head of the competent tax office shall issue an import tax invoice on gold bullion imported pursuant to Article 106-3 (2) of the Act by applying mutatis mutandis paragraph (1). <Newly Inserted on Feb. 19, 2005>

(3) Where a financial institution makes a trade of gold bullion by means of the gold bullion-related savings, such as an installment account of gold bullion, the value-added tax shall be levied, deeming the time the depositor of the gold bullion withdraws the gold bullion in kind to be the supply time of such gold bullion, notwithstanding the provisions of Articles 15 through 17 of the Value-Added Tax Act. <Amended on Feb. 19, 2005; Jun. 28, 2013>

(4) Where a financial institution is unable to recover the gold bullion supplied under a consumption loan for gold bullion under Article 106-3 (10) of the Act due to any of the causes provided for in Article 106-3 (14) of this Decree, it shall submit a report on the refund of the value-added tax on gold bullion in the form stipulated by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the relevant business place when such cause occurs, and the head of the competent tax office shall make a refund to the relevant financial institution within 30 days after receipt of the report on refund. <Amended on Feb. 29, 2008>

(5) In applying Article 106-3 of the Act, the Commissioner of the National Tax Service shall notify the recommenders of tax-free gold bullion trade of the data, etc. on approval for the trade of tax-free gold bullion under Article 106-4 (1) of this Decree with regard to the gold bullion wholesalers, etc., the recommended trader of tax-free gold bullion, the recommended importer of tax-free gold bullion, the gold craftsmen, etc. and the financial institution, etc.

[This Article Newly Inserted on Dec. 30, 2002]

Article 106-6(Business Operators Subject to Offering Security for Tax Payment) #

"Gold bullion wholesalers, etc. and gold craftsmen, etc. prescribed by Presidential Decree" in Article 106-3 (11) of the Act means the business operators with the exception of those falling under any of the following subparagraphs, who are designated by the head of competent tax office as persons liable to offer the security for tax payment from among the persons provided for in Article 106-3 (2) 1 and (4) (hereinafter referred to as a"business operator liable to offer the security for his/her tax payment"): <Amended on Feb. 18, 2010; Jan. 5, 2021>

1. Model and faithful taxpayers who are designated by the Commissioner of the National Tax Service;

2. Persons who have run the gold bullion wholesale business for not less than two years from the date on which they commence their business and the relevant business operators, the representative of the relevant business operators or their officers have not defaulted in the national tax in the last two years and have not taken any deficit disposition in the last five years and that the head of competent tax office recognizes that they are not required to offer any security taking into account the scale of their transactions and their returns, etc.;

3. The business entity and the representative or executive officers of the relevant business entity under Article 106-3 (4) 2 and 3 did not default in the national tax in the last year and have not taken any deficit disposition in the last five years and that the head of competent tax office recognizes that they are not re-quired to offer any security taking into the scale of their transactions and their returns, etc.;

4. The head of competent tax office recognizes that persons corresponding to the persons referred to in subparagraphs 1 through 3 are not required to offer any security taking into the period of their business, their returns, the payment of their taxes and the scale and details, etc. of their transactions.

[This Article Wholly Amended on Feb. 19, 2005]

Article 106-8(Time and Procedures, etc. for Offering Security for Tax Payment) #

(1) The head of competent tax office shall determine the amount of the security for tax payment and the period therefor provided for in Article 106-7 and then notify every business operator liable to offer the security for his/her tax payment by the 20th day of the month preceding the month during which he/she intends to receive the security for tax payment of the details thereof.

(2) Every business operator liable to offer the security for his/her tax payment shall offer the security for his/her tax payment by the last day of the month during which he/she is notified of offering the security for his/her tax payment and the head of competent tax office shall, upon receiving the security for tax payment, promptly confirm whether contents of the security for tax payment offered are genuine and then issue a written confirmation of the offered security for tax payment (hereinafter referred to as"written confirmation of the offered security for tax payment") that is prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008>

(3) Every business operator liable to offer the security for his/her tax payment shall submit the written confirmation of the offered security for his/her tax payment that issued by the head of competent tax office to the recommended trader of tax-free gold bullion and the recommended importer of tax-free gold bullion.

(4) The recommended trader of tax-free gold bullion and the recommended importer of tax-free gold bullion shall be prohibited from making the recommendation of the transaction of free-tax gold bullion and the recommendation of the import of free-tax gold bullion for anyone who fails to submit the written confirmation of the offered security for his/her tax payment under paragraph (3).

(5) Where any business operator liable to offer the security for his/her tax payment is confirmed that the tax-free gold bullion for which he/she receives the recommendation of transaction or the recommendation of import pursuant to paragraph (4) in the immediately preceding month have been supplied in a manner provided for in Article 106-3 (1) 1 through 4 of the Act, the head of competent tax office shall promptly take the procedures for cancelling the security. <Amended on Feb. 22, 2008>

(6) In the application of Articles 106-3 through 106-8, procedures for supplying tax-free gold bullion, the coordination of transaction patterns and the methods of making them free of tax shall be governed by Ordinance of the Ministry of Economy and Finance, except as otherwise provided for in this Decree. <Amended on Feb. 29, 2008>

[This Article Newly Inserted on Feb. 19, 2005]

Article 106-9(Special Taxation for Payment of Value-Added Tax by Purchasers of Gold-Related Products) #

(1)"Gold bullion in the shape, purity, etc. prescribed by Presidential Decree" in Article 106-4 (1) 1 of the Act means gold with at least 995/1,000 purity in the state of raw materials, such as gold ingot (lumps) or gold bar (hereafter in this Article, referred to as"gold bullion");"gold products in the shape, purity, etc. prescribed by Presidential Decree" in Article 106-4 (1) 2 of the Act means gold with at least 585/1,000 purity in the state of products, such as rings that have been bought by a consumer; and"gold waste and scrap prescribed by Presidential Decree" in Article 106-4 (1) 3 of the Act means waste and scrap with the gold content of at least 1/100000. <Amended on Feb. 21, 2014; Feb. 3, 2015>

(2) The gold trading account referred to in Article 106-4 (1) of the Act shall meet each of the following requirements that:

1. It shall be an account opened at a financial institution (hereafter in this Article, referred to as"financial institution") designated by the Commissioner of the National Tax Service as he/she deems that the financial institution is capable of stably operating the special taxation system for the payment of value-added tax by purchasers, from among the financial institutions listed under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality;

2. Deleted; <Feb. 4, 2009>

3. The trade name of a business operator shall also be specified in the description of the holder of the account opened (limited to where a trade name exists);

4. The words"gold trading account" shall be stated on the cover of the passbook for the account opened.

(3) A business operator may use one trading account for two or more places of business and open two or more trading accounts for each place of business. <Amended on Feb. 13, 2018>

(4) Payments made through a gold trading account shall be deemed payments made through a business account referred to in Article 160-5 of the Income Tax Act.

(5)"Person designated by Presidential Decree" in the main clause of Article 106-4 (3) of the Act, with the exception of its subparagraphs, means a person designated by the Commissioner of the National Tax Service as he/she deems that the person is capable of stably operating the special taxation system for the payment of value-added tax by purchasers, such as refunding the collected value-added tax and depositing such tax into the National Treasury. <Amended on Feb. 4, 2009>

(6)"Methods prescribed by Presidential Decree, such as a loan for financing business purchases" in the proviso of Article 106-4 (3) of the Act, with the exception of its subparagraphs, means the following: <Amended on Feb. 7, 2017; Feb. 12, 2019>

1. A bill of exchange, a written request for the collection of proceeds from sale, an exclusive-use card for corporate purchase, the account receivable collateral loan system, the purchase loan system, and the network loan system referred to in Article 7-2 of the Act;

2. Electronic bonds defined in Article 2 of the Electronic Financial Transactions Act;

3. Transactions of proceeds in a foreign currency through a foreign exchange bank;

4. A deposit under the Civil Act.

(7)"Methods prescribed by Presidential Decree" in Article 106-4 (4) of the Act means the method by which an importer files a separate import declaration of gold bullion and pays the value-added tax on the gold bullion as prescribed in Article 106-4 (3) of the Act. <Newly Inserted on Feb. 4, 2009>

(8)"Interest rate prescribed by Presidential Decree" in Article 106-4 (8) of the Act means the rate specified in Article 11-2 (9) 2. <Amended on Feb. 4, 2009; Feb. 12, 2019; Feb. 15, 2022>

(9)"Ratio prescribed by Presidential Decree" in the main clause of Article 106-4 (10) of the Act, with the exception of its subparagraphs, means 70/100. <Amended on Feb. 4, 2009>

(10)"Amount prescribed by Presidential Decree" in Article 106-4 (10) 1 of the Act means five million won. <Amended on Feb. 4, 2009>

(11) The period for which the refund can be postponed under Article 106-4 (10) of the Act shall be within six months from the day following the deadline for filing the relevant preliminary or final return. <Amended on Feb. 4, 2009>

(12)"Circumstances prescribed by Presidential Decree" in Article 106-4 (10) 2 of the Act means where a gold business operator, or the representative or any executive officer of the gold business operator, meets each of the following criteria that: <Amended on Feb. 4, 2009>

1. He/she has not been punished as a tax evader for the most recent three years from the end of the deadline for the relevant return and payment;

2. He/she has not been delinquent in paying national taxes for the most recent one year from the end of the deadline for the relevant return and payment;

3. He/she has not been given deficit disposal for the most recent three years from the end of the deadline for the relevant return and payment;

4. He/she has not traded any gold-related products without using the gold trading account for the most recent one year from the end of the deadline for the relevant return and payment;

5. Other cases recognized by the Commissioner of the National Tax Service as having no concern over tax evasion in consideration of the status of filing returns on and paying value-added tax.

(13) The value-added tax deposited with the persons designated by the Commissioner of the National Tax Service under paragraph (5), shall be managed, as stipulated by the Commissioner of the National Tax Service. <Amended on Feb. 4, 2009>

(14) Detailed matters necessary for operating the special taxation system for the payment of value-added tax by purchasers, such as gold trading accounts, deposit of value-added tax, and management of deposited value-added tax, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008; Feb. 4, 2009>

[This Article Newly Inserted on Feb. 22, 2008]

Article 106-13(Special Taxation for Payment of Value-Added Tax by Purchasers of Scrap) #

(1) The account for trading scrap, etc. referred to in Article 106-9 (1) of the Act shall meet each of the following requirements that: <Amended on Feb. 5, 2016>

1. It shall be an account opened at a financial institution designated by the Commissioner of the National Tax Service as he/she deems that the financial institution is capable of stably operating the special taxation system for the payment of value-added tax by purchasers, such as refunding the collected value-added tax and depositing such tax into the National Treasury, from among financial institutions, etc. listed under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality;

2. The trade name of a business operator shall be also specified in the description of the holder of the account opened (limited to where a trade name exists);

3. The words"account for trading scrap, etc." shall be stated on the cover of the passbook for the account opened.

(2) A business operator may use one trading account for two or more places of business and open two or more accounts for trading scrap, etc. for each place of business. <Amended on Feb. 13, 2018>

(3) Payments made through an account for trading scrap, etc. shall be deemed payments made through a business account referred to in Article 160-5 of the Income Tax Act. <Amended on Feb. 5, 2016>

(4)"Person designated by Presidential Decree" in the main clause of Article 106-9 (3) of the Act, with the exception of its subparagraphs, means a person designated by the Commissioner of the National Tax Service as he/she deems that the person is capable of stably operating the special taxation system for the payment of value-added tax by purchasers, such as refunding the collected value-added tax and depositing such tax into the National Treasury. <Amended on Feb. 5, 2016>

(5)"Methods prescribed by Presidential Decree, such as a loan for financing business purchases" in the proviso of the provisions, with the exception of the subparagraphs, of Article 106-9 (3) of the Act means the following: <Amended on Feb. 7, 2017; Feb. 12, 2019>

2. Electronic bonds defined in Article 2 of the Electronic Financial Transactions Act;

3. Transactions of proceeds in a foreign currency through a foreign exchange bank;

4. A deposit under the Civil Act.

(6)"Methods prescribed by Presidential Decree" in Article 106-9 (4) of the Act means the method by which an importer files a separate import declaration of scrap, etc. and pays the value-added tax on such scrap, etc., as calculated under Article 106-9 (3) 2 of the Act, pursuant to Article 106-9 (3) of the Act. <Amended on Feb. 5, 2016>

(7)"Interest rate prescribed by Presidential Decree" in Article 106-9 (7) of the Act means the rate specified in Article 11-2 (9) 2. <Amended on Feb. 12, 2019; Feb. 15, 2022>

(8)"Ratio prescribed by Presidential Decree" in the main clause of Article 106-9 (9) of the Act, with the exception of its subparagraphs, means 70/100.

(9) The period for which the refund can be postponed under Article 106-9 (9) of the Act shall be within six months from the day following the deadline for filing the relevant preliminary or final return.

(10)"Amount prescribed by Presidential Decree" in Article 106-9 (9) 1 of the Act means five million won.

(11)"Cases prescribed by Presidential Decree" in Article 106-9 (9) 2 of the Act means where a business operator of scrap, etc., or the representative or any executive officer of the business operator of scrap, etc. meets each of the following criteria that: <Amended on Feb. 5, 2016>

1. He/she has not been punished as a tax evader for the most recent three years from the end of the deadline for the relevant return and payment;

2. He/she has not been delinquent in paying national taxes for the most recent one year from the end of the deadline for the relevant return and payment;

3. He/she has not been given deficit disposal for the most recent three years from the end of the deadline for the relevant return and payment;

4. He/she has not traded any scrap, etc. without using the account for trading scrap, etc. for the most recent one year from the end of the deadline for the relevant return and payment;

5. Other cases recognized by the Commissioner of the National Tax Service recognizes as having no concern over tax evasion in consideration of the status of filing returns on and paying value-added tax.

(12) The value-added tax deposited with the persons designated by the Commissioner of the National Tax Service under paragraph (4), shall be managed, as stipulated by the Commissioner of the National Tax Service.

(13) Detailed matters necessary for operating the special taxation system for the payment of value-added tax by purchasers, such as accounts for trading scrap, etc., deposit of value-added tax, and management of deposited value-added tax, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 5, 2016>

[This Article Newly Inserted on Nov. 29, 2013]

[Title Amended on Feb. 5, 2016]

Article 106-14(Proxy Payment of Value-Added Tax on Amounts of Settlement by Credit Cards) #

(1)"Credit card company prescribed by Presidential Decree" in Article 106-10 (1) of the Act means a person designated by the Commissioner of the National Tax Service as being recognized to be able to manage proxy payment of value-added tax stably, as a credit company defined in subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act (hereafter in this Article, referred to as"credit card company"):

(2)"Entrepreneur prescribed by Presidential Decree" in Article 106-10 (1) of the Act means an entrepreneur who engages in any of the following types of business, as an entrepreneur who supplies goods and services subject to value-added tax: Provided, That persons subject to simplified taxation under Article 61 of the Value-Added Tax Act shall be excluded herefrom:

1. General amusement and drinking places (including karaoke bar business under subparagraph 8 (c) of Article 21 of the Enforcement Decree of the Food Sanitation Act);

2. Dancing and drinking halls.

(3)"Return of value-added tax payment by proxy prescribed by Presidential Decree" in Article 106-10 (1) of the Act means a return of tax payment by proxy prescribed by Ordinance of the Ministry of Economy and Finance, which includes the following information:

1. Personal information of the credit company;

2. Personal information of the entrepreneur eligible for the application of special cases;

3. Supply value related to payment by proxy;

4. Value-added tax amount paid by proxy;

5. Other referential information.

(4)"Interest rate prescribed by Presidential Decree" in the former part of Article 106-10 (4) of the Act means 1/100.

(5) Where any entrepreneur falls under an entrepreneur eligible for the application of proxy payment under Article 106-10 of the Act, the head of the competent tax office shall notify him/her of such fact at least one month before the commencement of the taxable period subject to the relevant provisions. In such cases, if the relevant entrepreneur fails to receive such notice at least one month before the commencement of the taxable period subject to the application of Article 106-10 of the Act, that Article shall apply from the first day of the month following the month in which the date such written notice is received.

(6) Where a person who newly commences a business becomes subject to the application of Article 106-10 of the Act, the head of the competent tax office shall notify him/her of such fact when he/she issues a business registration certificate pursuant to Article 8 (6) of the Value-Added Tax Act. In such cases, Article 106-10 of the Act shall apply from the first taxable period of the relevant entrepreneur. <Amended on Feb. 17, 2021>

[This Article Newly Inserted on Feb. 13, 2018]

Article 107(Refund of Value-Added Tax to Foreign Business Operators) #

(1)"Goods or services prescribed by Presidential Decree" in Article 107 (6) 3 of the Act means: <Amended on Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010>

1. Electricity or communications services;

2. Renting services of real estate;

3. Goods or services necessary for foreign business operators to operate and maintain their offices in the Republic of Korea, and prescribed by Ordinance of the Ministry of Economy and Finance.

(2) Any foreign business operator who intends to get a refund of the value-added tax under Article 107 (6) of the Act shall file an application for refund of the value-added tax on goods or services supplied from January 1 to December 31 each year, with the Administrator of the Regional Tax Office designated by the Commissioner of the National Tax Service (hereafter in this Article, referred to as"Administrator of the Regional Tax Office") in person, or by an agent designated by the Commissioner of the National Tax Service, along with the following documents by no later than June 30 of the following year: <Amended on Feb. 19, 2005; Feb. 22, 2008; Jun. 28, 2013>

1. A copy of the business operator certificate (limited to English or Korean version);

2. A statement of transactions;

3. Original tax invoices (including credit card sale slips, etc. separately stating the person receiving goods or services and the amount of value-added tax as prescribed in Article 46 (3) of the Value-Added Tax Act);

4. A letter of attorney if an application is filed by its agent.

(3) Upon receipt of an application for refund under paragraph (2), the Administrator of the Regional Tax Office shall verify the details of transactions and refund the value-added tax related to such transactions to the relevant foreign business operator by no later than December 31 of the year in which the application is filed.

(4) Where a foreign business operator requests the return of the original tax invoices referred to in paragraph (2) 3 within six months from the date of tax refund specified in paragraph (3), the Administrator of the Regional Tax Office shall return them to the foreign business operator. <Newly Inserted on Jan. 10, 2000>

(5)"Amount prescribed by Presidential Decree" in the proviso of Article 107 (6) of the Act, with the exception of its subparagraphs, means 30 thousand won. <Amended on Feb. 22, 2008; Feb. 18, 2010>

(6) Other matters necessary for the refund of value-added tax to foreign business operators, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008>

(7)"Goods or services prescribed by Presidential Decree" in the main clause of Article 107 (9) of the Act, with the exception of its subparagraphs, means the following goods or services: Provided, That goods or services for which the input tax amount is not deductible under Article 39 (1) 2 and 4 through 7 of the Value-Added Tax Act shall be excluded herefrom: <Newly Inserted on Feb. 7, 2017>

1. Goods or services related to the construction, installation, and dismantlement of facilities for relaying broadcasts of the Games;

2. Equipment for relaying broadcasts, including cameras, cables, and vehicles for broadcasting;

3. Rental, maintenance, and repair services of equipment and vehicles for broadcasting and telecommunications;

4. Consulting, transportation, and security and guard services related to replay broadcasting;

5. Other goods or services similar to those specified above and related to relaying broadcasts of the Games.

(8)"Foreign corporations prescribed by Presidential Decree" in Article 107 (9) 4 of the Act means the corporations referred to in subparagraphs 1 through 5 of Article 104-25. <Newly Inserted on Feb. 7, 2017>

Article 108(Refund of Value-Added Tax to Diplomats) #

(1)"Person prescribed by Presidential Decree" in Article 107 (7) of the Act means an employee belonging to diplomatic or consular establishments (excluding consular establishments, the head of which is an honorary consular official), the United Nations, and international organizations equivalent thereto (limited to where privileges and exemptions may be granted pursuant to treaties to which the Republic of Korea is a party and other local statutes or regulations) which are stationed in the Republic of Korea, who hold the public officials' status of the relevant country or is not a national among those verified as having status equivalent thereto from the Minister of Foreign Affairs (hereafter in this Article, referred to as"diplomats, etc."). <Amended on Dec. 30, 2010; Mar. 23, 2013>

(2)"Duty-free shop prescribed by Presidential Decree" in Article 107 (7) of the Act means the place of business designated by the head of the competent tax office, as prescribed by the Commissioner of National Tax Service (including a shop designated under Article 28 of the Enforcement Decree of the Individual Consumption Tax Act; hereafter in this Article, referred to as"duty-free shops for diplomats"). <Amended on Feb. 19, 2005; Dec. 31, 2007; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010>

(3) Where the diplomats, etc. in receipt of goods or services intend to have the value-added tax related to such goods or services refunded, they shall submit a receipt issued by a duty-free shop for diplomats, along with an application for refund prescribed by Ordinance of the Ministry of Economy and Finance, to the Minister of Foreign Affairs. <Amended on Dec. 30, 2010; Mar. 23, 2013>

(4) The Minister of Foreign Affairs may request the Commissioner of National Tax Service to pay the amount of value-added tax recorded in the receipt within the limit of the amount under Article 107 (7) of the Act after verifying the details of the application for refund submitted by the diplomats, etc. <Amended on Dec. 30, 2010; Mar. 23, 2013>

(5) The Commissioner of the National Tax Service in receipt of a request for payment from the Minister of Foreign Affairs under paragraph (4), may order the head of the competent tax office to pay the relevant amount; and the head of the competent tax office shall pay the relevant amount to the Minister of Foreign Affairs who may, in turn, pay the amount paid by the head of the competent tax office to the diplomats, etc. <Amended on Dec. 30, 2010; Mar. 23, 2013>

(6) Other matters necessary for the refund of value-added tax to diplomats, etc., shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008>

Article 109-2(Special Cases concerning Value-Added Tax for Foreign Tourists) #

(1) A foreign tourist, etc. referred to in Article 107-2 (1) of the Act means a foreign tourist defined in Article 2 (1) of the Regulations on Special Cases concerning Value-Added Tax and Individual Consumption Taxes for Foreign Tourists (hereafter in this Article, referred to as"foreign tourist, etc.").

(2) "Tourist hotel which meets the requirements prescribed by Presidential Decree" in Article 107-2 (1) of the Act means any hotel determined and publicly notified by the Minister of Culture, Sports and Tourism, which meets each of the following requirements (hereafter in this Article, referred to as "tourist hotel eligible for special taxation"): <Amended on Sep. 11, 2014; Feb. 13, 2018; Feb. 15, 2022; Feb. 29, 2024>

1. Facilities for the hotel business under Article 3 (1) 2 (a) of the Tourism Promotion Act;

2. Its average supply price of each type of guest rooms provided for accommodation services for foreign tourists, etc., does not exceed 110/100 of the average supply price of each type of guest rooms provided during the same period of the immediately preceding year or the year before the immediately preceding year (or one year, among four immediately preceding years, in cases of accommodation services provided in 2022) for accommodation services provided by the hotel to foreign tourists, etc.

(3) When the operator of a tourist hotel eligible for special taxation has provided accommodation services to a foreign tourist, etc., he/she shall issue two copies of a document proving that he/she has provided accommodation services (hereafter in this Article, referred to as"certificate of supply of accommodation services") to the foreign tourist, etc. provided with the accommodation services: Provided, That, where the operator of a tourist hotel eligible for special taxation has transmitted the certificate of supply of accommodation services in an electronic form to a person who operates a business refunding value-added tax paid by a foreign tourist, etc. (referring to a person designated by applying mutatis mutandisArticle 5-2 of the Regulations on Special Cases concerning Value-Added Tax and Individual Consumption Taxes for Foreign Tourists; hereafter in this Article, referred to as"tax-refunding service operator") as at the time the foreign tourist, etc. was provided with the accommodation services through the information and communications network, he/she need not issue the certificate of supply of accommodation services.

(4) Where a foreign tourist, etc. is provided with accommodation services from a tourist hotel eligible for special taxation, the foreign tourist, etc. is eligible to a refund of the value-added tax related to the relevant accommodation services from a tax-refunding service operator. In such cases, Articles 6 (2) and (3) and 10-2 of the Regulations on Special Cases concerning Value-Added Tax and Individual Consumption Taxes for Foreign Tourists shall apply mutatis mutandis to the refund of value-added tax by tax-refunding service operators; but "where duty-free goods are purchased" or "at the time of purchase of duty-free goods" shall be construed as "at the time of receipt of accommodation services." <Amended on Feb. 13, 2018>

(5) A tax-refunding service operator who has refunded the value-added tax to a foreign tourist, etc. under paragraph (4), shall forward a document certifying the refund (hereafter in this Article, referred to as"certificate of refund") to the operator of the relevant tourist hotel subject eligible for special taxation.

(6) The operator of a tourist hotel eligible for special taxation can be granted a deduction of the relevant value-added tax, if the fact that a foreign tourist, etc. has received a refund of value-added tax within three months from the date he/she was provided with the accommodation services, is confirmed.

(7) Where the operator of a tourist hotel eligible for special taxation wishes to be granted a deduction of the value-added tax under paragraph (6), the operator shall submit a certificate of refund records for accommodation services to foreign tourists in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the competent tax office, along with the tax return for the tax base and the payable tax amount or the refunded tax amount for the taxable period in which he/she received the relevant certificates of refund. <Amended on Feb. 11. 2020>

(8) Notwithstanding paragraphs (6) and (7), the value-added tax refunded to a foreign tourist, etc. under paragraph (4) shall not be deducted from the value-added tax payable by the operator of a tourist hotel eligible for special taxation if:

1. Such operator fails to meet the requirement prescribed in paragraph (2) 2 concerning the supply price of accommodation services;

2. Such operator has issued a false certificate of supply of accommodation services.

(9)"Person prescribed by Presidential Decree, such as the tourist hotel subject to application of special cases" in Article 107-2 (2) of the Act means the operator of a tourist hotel eligible for special taxation that has provided accommodation services to the relevant foreign tourist, etc.

(10) Articles 57, 58, and 60 of the Value-Added Tax Act shall apply to the determination and collection of the amount of the value-added tax to be collected under Article 107-2 (2) of the Act.

(11) Where necessary for refunding an amount of value-added tax on accommodation services eligible for refund, the Minister of Culture, Sports and Tourism may request the departure record of a foreign tourist from the Minister of Justice under Article 28 of the Immigration Act. In such cases, the Minister of Justice in receipt of such request shall comply therewith except in extenuating circumstances. <Newly Inserted on Feb. 13, 2018>

(12) Except as otherwise prescribed in paragraphs (1) through (11), selection of tourist hotels subject to application of special taxation; procedures for refunds by tax-refunding service operators; and other necessary matters, shall be publicly notified by the Minister of Culture, Sports and Tourism following consultation thereon with the Minister of Economy and Finance. <Amended on Feb. 13, 2018>

[This Article Newly Inserted on Feb. 21, 2014]

Article 109-3(Special Cases concerning Refunds of Value-Added Tax to Foreign Tourists Provided with Medical Services for Cosmetic Surgeries) #

(1)"Foreign tourist prescribed by Presidential Decree" in Article 107-3 (1) of the Act means a foreign tourist defined in Article 2 (1) of the Regulations on Special Cases concerning Value-Added Taxes and Individual Consumption Taxes for Foreign Tourists (hereafter in this Article, referred to as"foreign tourist").

(2)"Medical services prescribed by Presidential Decree" in Article 107-3 (1) of the Act means the following medical services not exempt from value-added tax pursuant to the proviso of subparagraph 1 of Article 35 of the Enforcement Decree of the Value-Added Tax Act, with the exception of its items, (hereafter in this Article, referred to as"medical services eligible for refund"), among medical services provided by any medical institution eligible for special treatment defined in Article 107-3 (1) of the Act (hereafter in this Article, referred to as"medical institution eligible for special treatment"): <Amended on Jun. 21, 2016>

1. Where a medical institution registered under Article 6 (1) of the Act on Supporting of Overseas Expansion of Medical Services and Attraction of International Patients or a broker soliciting foreign patients registered under paragraph (2) of that Article, directly solicits a foreign tourist;

2. Where a foreign tourist visits in person a medical institution eligible for special treatment.

(3) Article 5-2 of the Regulations on Special Cases concerning Value-Added Taxes and Individual Consumption Taxes for Foreign Tourists shall apply mutatis mutandis to the requirements for, and procedures for designation of, business operators of refund desks provided for in Article 107-3 (2) of the Act (hereafter in this Article, referred to as "business operator of refund desks"). In such cases, "at the time of purchase of duty-free goods" shall be construed as "at the time of receipt of medical services eligible for refund."

(4) Article 10-2 of the Regulations on Special Cases concerning Value-Added Taxes and Individual Consumption Taxes for Foreign Tourists shall apply mutatis mutandis to the refund of value added taxes by business operators of refund desks upon receipt of requests for refund under Article 107-3 (3) of the Act. In such cases, "certificate of sales confirmed by the head of the customs office having jurisdiction over the departing port" shall be construed as "certificate of provision of medical services"; "at the time of purchase of duty-free goods" as "at the time of receipt of medical services eligible for refund"; and "duty-free seller" as "medical institution eligible for special treatment," respectively.

(5) Upon the refund or remittance of the value-added tax paid by a foreign tourist at the time of receiving medical services eligible for refund to the foreign tourist under paragraph (4) (hereafter in this Article, referred to as"refundable value-added tax"), a business operator of refund desks shall forward a document certifying such refund or remittance under Article 10-3 of the Regulations on Special Cases concerning Value-Added Taxes and Individual Consumption Taxes for Foreign Tourists (hereafter in this Article, referred to as"certificate of refund or remittance") to the relevant medical institution eligible for special treatment.

(6) A business operator of refund desks shall file a statement of refunds or remittances respectively with the Commissioner of the National Tax Service and the Minister of Health and Welfare by the 20th of the month following the end of the quarter in which refundable value-added tax is refunded or remitted to foreign tourists.

(7) Upon receipt of a certificate of refund or remittance forwarded under paragraph (5), the operator of a medical institution eligible for special treatment shall pay refundable value-added tax to the business operator of refund desks.

(8) The operator of a medical institution eligible for special treatment can be granted a deduction of refundable value-added tax, at the time of filing its tax return and amount of tax payable or refundable for the taxable period in which it received a certificate of refund or remittance under paragraph (5).

(9) When the operator of a medical institution eligible for special treatment wishes to be granted a deduction of refundable value-added tax under paragraph (8), the operator shall submit a certificate of refund records for medical services of cosmetic surgery to foreign tourists in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with the tax return on the tax base and the payable tax amount or the refunded tax amount for the taxable period in which it received the relevant certificates of refund or remittance. <Amended on Feb. 11. 2020>

(10) If the operator of a medical institution eligible for special treatment fails to pay refundable value-added tax to a business operator of refund desks, without just grounds, the head of the relevant tax office shall either add the refundable value-added tax deducted under paragraph (8) to the amount of tax payable, or deduct it from the amount of tax refundable.

(11) If the operator of a medical institution eligible for special treatment does not receive a certificate of refund or remittance under paragraph (5) by the 20th of the month following the third month after the date of provision of medical services eligible for refund, it becomes ineligible for a deduction of the refundable value-added tax.

(12)"Grounds prescribed by Presidential Decree" in Article 107-3 (4) of the Act means the following cases: <Amended on Feb. 11. 2020>

1. Where the operator of a medical institution eligible for special treatment aids or abets a foreign tourist to receive a refund of value-added tax by issuing or transmitting a certificate of provision of medical services under Article 107-3 (2) (hereafter in this Article referred to as"certificate of provision of medical services") with a false statement contained therein;

2. Where the operator of a medical institution eligible for special treatment aids and abets a foreign tourist to receive a refund of value-added tax by issuing or transmitting a certificate of provision of medical services, although the relevant medical services are ineligible for refund.

(13) Except as otherwise provided for in paragraphs (1) through (12), selection of medical institutions eligible for special treatment; procedures for refunds by business operators of refund desks; and other necessary matters, shall be publicly notified by the Minister of Health and Welfare, in consultation with the Minister of Economy and Finance.

[This Article Newly Inserted on, Feb. 5, 2016]

Article 110(Special Cases concerning Deduction of Input Tax Amount for Value-Added Tax on Recycled Waste Resources) #

(1)"Persons prescribed by Presidential Decree" in Article 108 (1) of the Act means persons who do not operate any business subject to value-added tax (including concurrent operation of a tax-exempt and a taxable business) and persons subject to simplified taxation who supply goods or provide services in the period to which the provisions concerning the issuance of receipts shall apply under Article 36-2 (1) or (2) of the Value-Added Tax Act. <Amended on Jan. 10, 2000; Feb. 19, 2005; Feb. 18, 2010; Jun. 28, 2013; Feb. 17, 2021>

(2) Deleted. <Feb. 9, 2006>

(3) The scope of business operators eligible for input tax deductions as prescribed in Article 108 of the Act shall be as follows: <Amended on Dec. 29, 2000; Dec. 30, 2002; Jun. 11, 2004; Feb. 19, 2005; Feb. 9, 2006; Feb. 29, 2008; Dec. 24, 2009; Feb. 18, 2010>

1. Persons licensed to provide interim waste treatment services (limited to recycling of wastes), or persons who have reported on waste recycling under the Wastes Control Act;

2. Persons registered to conduct the car dealer business under the Motor Vehicle Management Act;

3. The Korea Environment Corporation incorporated under the Korea Environment Corporation Act;

4. Persons who export used cars referred to in paragraph (4) 2;

5. Other business operators prescribed by Ordinance of the Ministry of Economy and Finance who collect recycled waste resources.

(4) The scope of recycled waste resources and used cars (hereafter in this Article, referred to as"recycled waste resources, etc.") eligible for input tax deductions as prescribed in Article 108 of the Act shall be as follows: <Amended on Feb. 9, 2006; Aug. 18, 2010; Feb. 21, 2014>

1. Recycled waste resources:

(a) Scrap iron;

(b) Waste paper;

(d) Waste synthetic resin;

(e) Waste synthetic rubber;

(f) Waste metal cans;

(g) Waste dry batteries;

(h) Waste non-ferrous metal ores;

(i) Waste tires;

(j) Waste textiles;

(k) Waste oil;

2. Used cars provided for in the Motor Vehicle Management Act: Provided, That the following cars shall be excluded herefrom:

(a) A used car to be exported, in the case of which the period from the date of manufacture stated in the Motor Vehicle Register provided for in Article 8 of the Motor Vehicle Registration Decree until the date of receipt of an export declaration stated in a report on the implementation of export required under Article 32 of the same Decree, is less than one year;

(b) A car which any of the persons provided for in paragraph (1) has sold to a business operator who collects used cars, after being granted a deduction of the input tax amount under Article 38 of the Value-Added Tax Act regarding the purchase of the car (including any related person granted a deduction of the input tax amount regarding the purchase of the car, instead of any of the persons provided for in paragraph (1)): Provided, That excluded herefrom shall be a person subject to simplified taxation who is granted a deduction of the input tax amount under Article 63 (3) of the Value-Added Tax Act.

(5) Any person who intends to be granted a deduction of the input tax amount under Article 108 of the Act shall file (including filing through the Home Tax Service Network) a statement of deduction of the input tax amount on recycled waste resources, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance and the aggregate invoices for individual suppliers or purchasers or receipts under Article 163 of the Income Tax Act or Article 121 of the Corporate Tax Act, with the head of the tax office, at the time of filing a return pursuant to Article 48 or 49 of the Value-Added Tax Act. In such cases, if the statement of deduction of the input tax amount on recycled waste resources, etc. omits any of the following descriptions or contains any false description of a transaction, no input tax amount shall be deducted: <Amended on Jan. 10, 2000; Mar. 17, 2004; Feb. 19, 2005; Feb. 29, 2008; Jun. 28, 2013>

1. The registration number (in cases of an individual, his/her resident registration), and trade name of the supplier, and the name of its representative (in cases of an individual, his/her full name);

2. The acquisition value;

3. Deleted. <Dec. 30, 2003>

(6) Article 74 of the Enforcement Decree of the Value-Added Tax Act shall apply mutatis mutandis to the deduction of the input tax amount under paragraph (5). <Newly Inserted by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 27848, Feb. 7, 2017>

Article 110-3(Reduction or Exemption of Value-Added Tax for Small-Scale Sole Proprietorship) #

(1)"Businesses prescribed by Presidential Decree as ineligible for tax reduction or exemption" in Article 108-4 (1) 3 of the Act means the following business (hereinafter referred to as"businesses ineligible for tax reduction or exemption"):

1. Real estate rental and supply business;

2. Business operating a taxable entertainment venue falling under Article 1 (4) of the Individual Consumption Tax Act.

(2)"Amount of tax credits prescribed by Presidential Decree, including tax credits for the use of credit cards, etc. under Article 46 of that Act" in the formula of Article 108-4 (3) of the Act means a tax amount falling under any of the following:

1. A tax credit amount for the use of credit cards, etc. under Article 46 (1) of the Value-Added Tax Act;

2. A tax credit amount for electronic tax return filing under Article 104-8 (2) of the Act;

3. A tax amount reduced for general taxicab business operators under Article 106-7 (1) of the Act;

4. A tax credit amount for cash receipt service operators and cash receipt merchants under Article 126-3 (1) of the Act.

(3)"Value-added rate prescribed by Presidential Decree for each type of business" in the formula of Article 108-4 (3) of the Act means the value-added rate specified for the relevant category in the following table: CategoryValue-added rate1. Electricity, gas, steam, and water supply business5 percent2. Retail business, wholesale business, and restaurant business10 percent3. Agriculture, forestry, fisheries, manufacturing, lodging, transportation, and information and communications services20 percent4. Construction, mining, warehousing, financial and insurance business, and other service businesses30 percent

(4) For the purposes of Article 108-4 (3) of the Act, the reduced tax amount shall be calculated by including the tax base, the payable or refundable tax amount, and the tax credit amount if a provisional tax return has been filed pursuant to Article 48 of the Value-Added Tax Act.

(5) If a business operator is concurrently engaged in a business ineligible for tax reduction or exemption and any business other than a business ineligible for tax reduction or exemption (hereafter in this Article and Article 110-4 referred to as"business eligible for tax reduction or exemption"), the tax amount to be reduced or exempted under Article 108-4 (3) of the Act shall be calculated pro rata according to the following formula:

Tax amount to be reduced or exempted = (A × B/C) - D

A: Payable tax amount under Article 37 (2) of the Value-Added Tax Act minus a tax credit amount under paragraph (2)

B: Total amount of supply prices of the business eligible for tax reduction or exemption

C: Total amount of gross supply prices

D: Tax amount according to the simplified taxation for a business eligible for tax reduction or exemption

(6) If a business operator operates two or more different businesses eligible for tax reduction or exemption, the tax amount for simplified taxation system according to the formula of Article 108-4 (3) of the Act shall be the aggregate of the amounts calculated for each type of business under paragraph (3).

(7) A business operator who wishes to apply for a tax reduction or exemption pursuant to Article 108-4 (4) of the Act shall submit an application for the reduction or exemption of value-added tax for small-scale sole proprietor in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with the tax return on value-added tax.

[This Article Newly Inserted on Apr. 14, 2020]

Article 111(Reduction or Exemption of Individual Consumption Tax for Replacing Decrepit Motor Vehicles) #

(1) A new vehicle buyer who wishes to be granted to be granted a reduction or exemption of individual consumption tax pursuant to Article 109-2 of the Act shall apply for reduction or exemption to the relevant taxpayer provided for in Article 3 of the Individual Consumption Tax Act (hereafter in this Article, referred to as"taxpayer"), and file with such taxpayer an application for tax reduction or exemption for replacing a decrepit motor vehicle in the form prescribed by Ordinance of the Ministry of Economy and Finance, the Motor Vehicle Registers of the decrepit motor vehicle (referring to a decrepit motor vehicle defined in the former part of Article 109-2 (1) of the Act; hereafter in this Article, the same shall apply) and the new vehicle, a copy of his/her resident registration certificate (or a copy of the business registration certificate in cases of a business operator), and other evidentiary documents prescribed by Ordinance of the Ministry of Economy and Finance, by the end of the second month after the month in which the tax invoice of the new vehicle (referring to a new vehicle defined in the former part of Article 109-2 (1) of the Act; hereafter in this Article, the same shall apply) is issued. <Amended on Jan. 10, 2017; Feb. 11, 2020>

(2) Upon receipt of an application for tax reduction or exemption filed by a new vehicle buyer under paragraph (1), a taxpayer shall verify the vehicle identification number, the license plate number, and the date of first registration of the decrepit motor vehicle with the Motor Vehicle Register, and whether the new vehicle buyer owns a decrepit motor vehicle as at June 30, 2019, and shall register such information in the system operated for replacing decrepit motor vehicles (hereinafter referred to as the"Decrepit Motor Vehicle Replacement Checking System") by the association specified and publicly notified by the Minister of Economy and Finance, among incorporated associations established pursuant to the Civil Act to conduct surveys and research projects for policies on the development of the automotive industry under articles of incorporation. <Amended on Mar. 23, 2013; Jan. 10, 2017; Feb. 12, 2019; Feb. 11, 2020>

(3) Upon receipt of an application for tax reduction or exemption filed by a new vehicle buyer, a taxpayer shall sell a new vehicle to such buyer giving a tax reduction as prescribed in Article 109-2 (1) and (2) of the Act, and issue the new vehicle buyer a written confirmation of a motor vehicle for replacing the decrepit motor vehicle (limited to where individual consumption tax is paid) in the form prescribed by Ordinance of the Ministry of Economy and Finance and the tax invoice stamped with the word"For Replacing a Decrepit Motor Vehicle." <Amended on Jan. 10, 2017; Feb. 11, 2020>

(4) A taxpayer shall verify whether a new vehicle buyer meets the requirements prescribed in Article 109-2 (1) of the Act based on the materials submitted by the new vehicle buyer under paragraph (1), and submit relevant materials (hereafter in this paragraph, referred to as"paper-based forms") and data converting paper-based forms into an electronic form, such as a diskette or disk, to the head of a tax office having jurisdiction over the place of tax payment and the head of the customs office having jurisdiction over the place of clearance, by the 25th of the month following the second month after the month in which the tax invoice of the new vehicle is issued: Provided, That the taxpayer may submit paper-based forms to the head of the tax office and the head of the customs office having jurisdiction over the place where the new vehicle is sold.

(5) Deleted. <Jan. 10, 2017>

(6) Where a new vehicle buyer who has filed an application for tax reduction or exemption under paragraph (1), purchases a passenger car on which individual consumption tax and education tax has been already paid, the taxpayer or the person who has sold the passenger car to the new vehicle buyer shall get a refund or deduction by filing an application for refund (deduction) for replacing a decrepit motor vehicle in the form prescribed by Ordinance of the Ministry of Economy and Finance with regards to the difference between the individual consumption tax and education tax already paid and the individual consumption tax and education tax calculated under Article 109-2 (1) and (2) of the Act (hereafter in this Article, referred to as"difference"), with the head of the tax office and the head of the customs office who has collected the individual consumption tax and education tax on the new vehicle, by the 25th of the month following the month in which the tax invoice of the new vehicle is issued (or 25th of the month following the end of each quarter if a motor vehicle locally manufactured is shipped out of the Republic of Korea). <Amended on Jan. 10, 2017; Feb. 11, 2020>

(7)"In circumstances prescribed by Presidential Decree" in the proviso of Article 109-2 (3) of the Act, with the exception of its subparagraphs, means the following circumstances: <Amended on Jan. 10, 2017; May 8, 2017; Feb. 11, 2020>

1. Where a person fails to register a new vehicle under his/her name within the two-month period before and after the date the decrepit motor vehicle is deregistered;

2. In cases of a tax reduction or exemption and a penalty tax for one new vehicle, first registered in the Decrepit Motor Vehicle Replacement Checking System provided for in paragraph (2), where a person has been granted a tax reduction or exemption for at least two new vehicles in replacement of one decrepit motor vehicle;

3. Where a person fails to deregister a decrepit motor vehicle within two months from the date a new vehicle is registered;

4. Where it is deemed impracticable for the taxpayer to verify whether a new vehicle buyer meets the requirements prescribed in Article 109-2 (1) of the Act due to any other reason, such as forgery of the Motor Vehicle Register.

(8)"Extenuating circumstances prescribed by Presidential Decree" in Article 109-2 (4) of the Act means the following: <Amended on Jan. 10, 2017; May 8, 2017; Feb. 11, 2020; Apr. 14, 2020>

1. Where it is impossible to scrap or export the decrepit motor vehicle due to the death of the new vehicle buyer or the occurrence of a natural disaster within two months from the date the new vehicle is registered;

2. Where the decrepit motor vehicle is deregistered after two months from the date the new vehicle is registered due to a delay in the scrapping process or any other cause, although a request has been made to a business operator engaging in scrapping and recycling of motor vehicles (referring to a person whose business scrapping and recycling motor vehicles is registered under Article 53 of the Motor Vehicle Management Act) to scrap the decrepit motor vehicle in accordance with Article 13 (1) 1 of the Motor Vehicle Management Act within two months from the date the new vehicle is registered.

3. Where a new vehicle is registered two months after the date of deregistration of the old vehicle due to a delay in production or importation because of the interruption of operation of the factory, caused by a natural disaster or a disaster referred to in subparagraph 1 of Article 3 of the Framework Act on the Management of Disasters and Safety.

(9) To verify whether a new vehicle buyer meets the requirements prescribed in Article 109-2 of the Act, the Commissioner of the National Tax Service and the Commissioner of Korea Customs Service shall request the Minister of Land, Infrastructure and Transport to provide data recorded in the Motor Vehicle Register referred to in Article 5 of the Motor Vehicle Management Act; and the Minister of Land, Infrastructure and Transport shall provide the Commissioner of the National Tax Service and the Commissioner of Korea Customs Service with such data. <Amended on Mar. 23, 2013>

(10) To additionally collect the amount of tax reduced or exempted pursuant to Article 109-2 (3) of the Act, the head of the tax office or the head of the customs office shall notify the head of the Si (including Special Self-Governing City Mayors and the head of the Administrative Si established under Article 11 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City), Gun, or Gu (referring to an autonomous Gu) having jurisdiction over the place for payment of acquisition tax on the new vehicle buyer, of information about additional collection of tax by the end of the month following the month in which the tax is additionally collected. <Amended on Jan. 10, 2017>

[This Article Newly Inserted on Jun. 19, 2009]

[Title Amended on Jan. 10, 2017; Feb. 11, 2020]

Article 112-2(Refund of Traffic, Energy and Environment Tax and Individual Consumption Tax on Fuel for Motor Vehicles) #

(1)"Motor vehicle that does not exceeds the criteria prescribed by Presidential Decree, such as a vehicle with the engine displacement of less than 1,000 cc, among passenger vehicles, motor vehicles for passengers and freight, trucks, or motorcycles" in Article 111-2 (1) of the Act means a passenger vehicle or a motor vehicle for passengers and freight with the engine displacement of less than 1,000 cubic centimeters, which does not exceed 3.6 meters in length, 1.6 meters in width, and 2.0 meters in height. <Amended on Feb. 28, 2023>

(2)"Person who…meets the requirements prescribed by Presidential Decree concerning the number of units of motor vehicles owned by the person, etc." in Article 111-2 (1)) of the Act means a person who meets all of the following requirements that: <Newly Inserted on Feb. 28, 2023>

1. The total number of passenger cars or the total number of motor vehicles for passengers and freight, owned by the owner of the motor vehicles eligible for refund and his/her household members living together on the resident registration card, shall be one unit, respectively;

2. The person shall not be a person with disabilities or a person of distinguished service to the State, who is a beneficiary of a support project following structural changes to the petroleum pricing regime under Article 3 (1) 10-2 of the Enforcement Decree of theEnergy and Resources Special Account Act;

(3) The annual limit on refund under Article 111-2 (3) of the Act shall be 300,000 won. In such cases, the calculation of the annual limit on refund under Article 111-2 (1) of the Act shall be based on the period from January 1 to December 31 every year. <Amended on Feb. 18, 2010; Dec. 30, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 7, 2017; Apr. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 29, 2024>

(4) The Commissioner of the National Tax Service shall designate a credit card company defined in subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act (hereafter in this Article, referred to as"credit card company") to issue oil purchase cards for refund (hereafter in this Article, referred to as"oil purchase card for refund") pursuant to Article 111-2 (4) of the Act. In such cases, the Commissioner of the National Tax Service may impose a condition that no annual fees shall be collected on the oil purchase cards for refund when designating a credit card company.

(5) A person who intends to get a refund of the traffic, energy and environment tax, and individual consumption tax under Article 111-2 (1) and (3) of the Act (hereafter in this Article, referred to as"eligible person"), shall apply for the issuance of an oil purchase card for refund to any of credit card companies. <Amended on Feb. 18, 2010>

(6) To verify whether a person is eligible for refunds under Article 111-2 (1) of the Act, the Commissioner of the National Tax Service may request the Minister of Patriots and Veterans Affairs, the Special Self-Governing Province Governor, and the head of a Si/Gun/Gu (the head of a Gu refers to the head of an autonomous Gu; hereafter in this Article, referred to as"competent authority") having jurisdiction over the address of the person to provide information necessary to verify his/her eligibility for refunds, such as the electronic data from resident registration, electronic data on motor vehicles registered under Article 69 (2) of the Motor Vehicle Management Act, and a list of the persons of distinguished services to the State, and a list of persons of distinguished service to the State and persons with disabilities, who are eligible for benefits from the assistance projects provided for in Article 3 (1) 10-2 of the Enforcement Decree of theEnergy and Resources Special Account Act, to the credit card company which has received an application under paragraph (5) as prescribed in Article 111-2 (11) of the Act, and the Minister of Patriots and Veterans Affairs and the competent authority shall supply the related information immediately. In such cases, the competent authority shall provide only the information verifying whether the person in question is eligible for refunds electronically. <Amended on Apr. 11, 2023>

(7) Deleted. <Feb. 18, 2010>

(8) Paragraph (6) shall apply mutatis mutandis to requests for information and provision of the information if the information provided under paragraph (6) is revised. <Amended on Feb. 18, 2010>

(9) A credit card company shall determine whether the person in question is eligible for refunds based on the information provided under paragraph (6), and shall issue an oil purchase card for refund to the relevant applicant within 15 days after receipt of the application, or notify the applicant that he/she is not eligible.

(10) Deleted; <Feb. 18, 2010>

(11) A credit card company that intends to get a refund of the amount of tax refundable or to be granted a deduction thereof from the amount of tax payable under Article 111-2 (5) of the Act shall submit an application stating the volume (to be calculated by the method prescribed by Ordinance of the Ministry of Economy and Finance) of oil for refund that the eligible persons have purchased each month with the oil purchase card for refund, amount of tax refundable, etc. and evidentiary documents to the head of the competent tax office by the 10th of the following month. In such cases, the application form and evidentiary documents shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(12) Upon receipt of an application under paragraph (11), the head of the tax office shall either refund a tax to the relevant credit card company or deduct the relevant amount from the amount of tax payable, by the end of the month in which he/she receives the application.

(13) In any of the following cases, the Commissioner of the National Tax Service and the credit card company shall immediately notify each other thereof, and the credit card company shall suspend the oil purchase card for refund:

1. Where a person who has been issued an oil purchase card for refund becomes ineligible for refunds;

2. Where an eligible person has become ineligible for refunds as prescribed in Article 111-2 (8) of the Act;

3. Where Article 111-2 (10) 1 or 2 of the Act is applicable.

(14) The Minister of Land, Infrastructure and Transport shall provide electronic data on motor vehicle registered under Article 69 (2) of the Motor Vehicle Management Act to the competent authority for the performance of the duties provided for in paragraphs (6) and (8) (limited to cases to which paragraph (6) shall apply mutatis mutandis). <Amended on Mar. 23, 2013>

(15) At the time of issuing an oil purchase card for refund to an eligible person, every credit card company shall give the eligible person detailed explanations about the disadvantages associated with the wrongful issuance or unlawful use of the oil purchase card for refund.

(16) Except as otherwise provided for in this Decree, the provisions of the Specialized Credit Finance Business Act prescribing filing applications for, and issuance of, credit cards and debit cards, shall apply to filing applications for, and issuance of, oil purchase cards for refund.

[This Article Wholly Amended on Oct. 7, 2008]

[Title Amended on Feb. 18, 2010; Feb. 28, 2023]

Article 112-3(Reduction or Exemption of Individual Consumption Tax on Taxi Fuel) #

(1) The general taxi transport business operator and the owner-driver taxi transport business operator (hereafter referred to as"taxi transport business operator" in this Article) who intend to have individual consumption tax and education tax reduced or exempted under Article 111-3 (1) of the Act shall apply for the issuance of tax-exempted taxi oil purchase card (hereafter in this Article referred to as"tax-exempted taxi oil purchase card") to the credit card company under subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act (hereafter in this Article referred to as"credit card company"), who is designated by the Commissioner of the National Tax Service under Article 111-3 (2) of the Act. <Amended on Dec. 30, 2010>

(2) The credit card company who has received application under paragraph (1) shall confirm, within 15 days from the day he/she received the application, whether the taxi transport business operator conforms to the requirements with the Special Metropolitan City Mayor/Metropolitan City Mayor/Do governor (referring to the head of a Si/Gun, where the authority of Do governor has been delegated to the head of a Si/Gun)/Special Self-Governing Province governor (hereafter referred to as"competent authority" in this Article) who issued license to the taxi transport business operator, and shall issue tax-exempted taxi oil purchase card or notify the applicant that he/she is not eligible.

(3) The credit card company who intends to have tax refund refunded or to have tax amount deducted under Article 111-3 (3) of the Act shall submit an application stating the volume (to be calculated by a calculation method prescribed by Ordinance of the Ministry of Economy and Finance) of butane for tax reduction or exemption that the taxi transport business operator has purchased every month through tax-exempted taxi oil purchase card, amount of tax refund, etc. and evidencing papers to the head of the competent tax office by 10th of the next month. In such cases, application and evidencing papers shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Dec. 30, 2010>

(4) The head of tax office who has received application under paragraph (3) shall either refund the reduced or exempted tax amount to the credit card company or shall deduct it from the tax amount to be paid by the end of the month. <Amended on Dec. 30, 2010>

(5) Where it falls under any of the following subparagraphs, the competent authority, the Commissioner of the National Tax Service and credit card company shall notify each other immediately, and the credit card company shall suspend the function of the tax-exempted taxi oil purchase card of the person concerned:

1. Where the taxi transport business operator ceases to fall under the taxi transport business operator, due to cessation of business, transfer of license, etc.;

2. Where the taxi transport business operator has been excluded from the list of recipients of tax-exempted taxi oil purchase card under Article 111-3 (6) of the Act;

3. Where he/she falls under Article 111-3 (8) 1 or 2 of the Act.

(6) When the credit card company issues tax-exempted taxi oil purchase card to the taxi transport business operator, he/she shall expound the disadvantages to suffer when it is issued unjustly or used unlawfully.

(7) Matters that are not prescribed in this Decree concerning the application and issuance of tax-exempted taxi oil purchase card shall be pursuant to the example of application and issuance of credit card and debit card under the Specialized Credit Finance Business Act.

[This Article Newly Inserted on Apr. 30, 2008]

[Title Amended on Dec. 30, 2010]

Article 112-4(Special Cases concerning Refund of Individual Consumption Tax on Fuel of Motor Vehicles for Diplomats) #

(1)"Foreign diplomatic mission, foreign diplomat, etc. in the Republic of Korea prescribed by Presidential Decree" in Article 111-4 (1) of the Act means any of the following entities. Article 16 (5) of the Individual Consumption Tax Act, Article 14 (3) of the Traffic, Energy and Environment Tax Act or Article 25 of the Value-Added Tax Act shall apply mutatis mutandis thereto: <Amended on Mar. 23, 2013; Jun. 28, 2013>

1. Diplomatic missions, consular posts (excluding those headed by honorary consular officers), the United Nations, and corresponding international organizations, which are stationed in the Republic of Korea (only applicable to where privileges and exemptions may be granted pursuant to treaties to which the Republic of Korea is a party and other local statutes or regulations);

2. Non-Korean nationals who belong to the institutions mentioned in subparagraph 1 and are granted the status of public officials from the relevant countries, or persons verified as having equivalent status from the Minister of Foreign Affairs.

(2) The Commissioner of the National Tax Service shall designate a credit card company as defined in subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act (hereafter referred to as"credit card company" in this Article) to issue oil purchase cards for refund under Article 111-4 (2) of the Act (hereafter referred to as"oil purchase card" in this Article). In such cases, the Commissioner of the National Tax Service may impose a condition that no annual fees shall be imposed on the oil purchase cards when designating a credit card company.

(3) A person who intends to obtain a tax refund under Article 111-4 (1) of the Act (hereafter referred to as"person eligible for refund" in this Article) shall file an application for issuance of an oil purchase card with the credit card company, along with a document issued by the Minister of Foreign Affairs confirming that he/she is a person eligible for refund. <Amended on Mar. 23, 2013>

(4) Upon receiving an application under paragraph (3), a credit card company shall issue an oil purchase card to the relevant applicant within 15 days from the date of receipt of the application.

(5) A credit card company that intends to obtain a tax refund or a deduction of the relevant amount from the tax payable under Article 111-4 (1) of the Act shall submit an application stating the kind and quantity (referring to the quantity calculated by the method prescribed by Ordinance of the Ministry of Economy and Finance) of the oil subject to refund purchased with the oil purchase card in the relevant month, amount of the refund, etc. as well as the evidentiary documents, to the head of the competent tax office by the 10th of the following month. In such cases, the application form and the evidentiary documents shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(6) The head of a tax office in receipt of an application under paragraph (5) shall give a tax refund or deduct the relevant amount from the amount of tax payable, by the end of the relevant month.

(7) Upon making a refund or deduction under paragraph (6), the head of a tax office shall inform the Ulsan Metropolitan City Mayor of the data prescribed by Ordinance of the Ministry of Economy and Finance by the 10th of the following month, and the Ulsan Metropolitan City Mayor shall refund the amount of automobile tax on driving of an automobile to the relevant credit card company by 20th of the month following the date the application for refund is filed under paragraph (5).

(8) The amount of tax refund under Article 111-4 (3) of the Act shall be collected by the head of a tax office having jurisdiction over the address of a person falling under any of the subparagraphs of Article 111-4 (3) of the Act: Provided, That the amount of tax refund with respect to driving of an automobile shall be collected by the Ulsan Metropolitan City Mayor.

(9) The Minister of Foreign Affairs, the Commissioner of the National Tax Service, the Ulsan Metropolitan City Mayor, and a credit card company shall immediately notify each other in any of the following cases; and the credit card company shall suspend the function of an oil purchase card in cases falling under subparagraph 1 or 2: <Amended on Mar. 23, 2013>

1. Where a person who has been issued an oil purchase card becomes ineligible for refund;

2. Where a person ineligible for refund uses an oil purchase card by having it issued or by acquiring it;

3. Where a person eligible for refund uses oil purchased with an oil purchase card for any purpose, other than the fuel of the relevant automobile.

(10) Every credit card company shall explain in detail disadvantages the credit card holder may suffer where the card is fraudulently issued or wrongfully used when issuing an oil purchase card to a person eligible for refund.

(11) Except otherwise provided for in this Decree, filing applications for, and issuance of oil purchase cards shall be governed by the provisions of the Specialized Credit Finance Business Act stipulating applications for and issuance of credit cards and debit cards.

(12) The Commissioner of the National Tax Service may determine necessary matters concerning the use, etc. of oil purchase cards in consultation with the Minister of Foreign Affairs. <Amended on Mar. 23, 2013>

[This Article Newly Inserted on Feb. 15, 2013]

Article 112-6(Institutions Submitting Data for Management of Tax-Free Petroleum and Kinds of Data) #

(1)"Institutions, organizations, etc. prescribed by Presidential Decree" in the fore part of Article 113-2 (2) of the Act means any of the following institutions, organizations, etc.:

1. Central government agencies referred to in Article 6 of the National Finance Act (including agencies to which the duties of the central government agencies are delegated or entrusted);

2. Agricultural cooperatives and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act;

3. Forestry cooperatives and the National Federation of Forestry Cooperatives established under the Forestry Cooperatives Act;

4. Fisheries cooperatives and the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act;

5. The Korea Shipping Association established under the Korea Shipping Association Act;

6. Persons exempt from taxes on petroleum products or eligible for tax refunds or deductions under the Individual Consumption Tax Act or the Traffic, Energy and Environment Tax Act.

(2) "Information or data prescribed by Presidential Decree" in the former part of Article 113-2 (2) of the Act means any of the following information or data: <Amended on Feb. 5, 2016; Feb. 15, 2022; Feb. 29, 2024>

1. Details of tax-free petroleum purchase cards or delivery orders issued under Article 106-2 (4) of the Act;

2. Details of certificates of supply of tax-free petroleum issued under Article 22 of the Regulations on Special Cases concerning Application of Zero Rate of, or Exemption from, Value Added Tax on Materials and Petroleum Products for Agriculture, Livestock Industry, Forestry, and Fisheries;

3. Details of certificates of supply issued under Articles 20 (3) 3 and 34 (4) 4 of the Enforcement Decree of the Individual Consumption Tax Act and Articles 17 (3) 2 and 24 (2) 2 of the Enforcement Decree of the Traffic, Energy and Environment Tax Act;

4. Details of certificates of loading of petroleum products used for vessels in international navigation or deep-sea fishery vessels issued under subparagraph 4 of Article 4 of the Act on Special Cases concerning the Refund of Customs Duties Levied on Raw Materials for Export;

5. Details of exposure and regulation on the facts, etc. of receiving supply of petroleum products falling under Article 113-2 (1) of the Act (hereafter referred to as"tax-free petroleum, etc." in this Article) in an unjust manner or using, transferring or selling them for purposes other than the relevant use;

6. Other information or materials prescribed by Ordinance of the Ministry of Economy and Finance, which are necessary for the establishment and operation of the computer system under Article 113-2 (1) of the Act, such as verification of transaction details of, and entitlement to, duty-free oil, etc.

(3) Each head of an institution or organization in receipt of a request to submit data shall furnish the quarterly data to the Commissioner of the National Tax Service through the Home Tax Service Network by the end of the month following each quarter; Provided, That the Commissioner of the National Tax Service may otherwise determine a deadline for submission of data, considering the frequency of the relevant data production, timing for utilizing them, etc.

(4) Other necessary detailed matters, such as the forms and procedure for submission of data, shall be prescribed by the Commissioner of the National Tax Service.

[This Article Newly Inserted on Feb. 15, 2013]

[Moved from Article 112-5 <Feb. 3, 2015>]

Article 112-7(Reduction or Exemption of Traffic, Energy and Environment Tax on Diesel for Coastal Cargo Ships) #

(1) In order for a taxpayer under Article 3 of the Transportation, Energy and Environment Tax Act (hereafter in this Article referred to as"taxpayer") to receive a refund of the reduced tax amount of transportation, energy and environment tax pursuant to Article 111-5 (2) of the Act or to have the refund deducted from the payable or collectible tax amount, the taxpayer shall submit an application in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the competent tax office by the tenth of the following month, stating the quantity of diesel fuel supplied to the Korea Shipping Association established pursuant to the Korea Shipping Association Act (hereafter in this Article referred to as"Korea Shipping Association") each month, the details of petroleum supply, and the refundable tax amount.

(2) Upon receipt of an application for refund under paragraph (1), the head of the tax office shall refund to the taxpayer the reduced tax amount of transportation, energy and environment tax and education tax thereon by the 25th day of the month.

(3) When the head of the tax office refunds the reduced tax amount to the taxpayer pursuant to paragraph (2), he/she shall notify the Mayor of Ulsan Metropolitan City by the tenth day of the month following the month in which the tax amount is refunded of the data prescribed by Ordinance of the Ministry of Economy and Finance for the refund of the reduced tax amount of motor vehicle tax.

(4) Upon receipt of notice under paragraph (3), the Mayor of Ulsan Metropolitan City shall refund the reduced tax amount of motor vehicle tax for the operation of a motor vehicle to the taxpayer by the 20th day of the month following the month in which the application for refund was filed pursuant to paragraph (1).

(5) The reduced tax amount and penalty tax under Article 111-5 (3) and (4) of the Act (hereinafter referred to as"reduced tax amount, etc.") shall be collected as follows:

1. The reduced tax amount, etc. of transportation, energy and environment tax and the education tax thereon for diesel: To be collected by the competent head of the competent tax office according to practices of national tax collection;

2. The reduced tax amount, etc. of motor vehicle tax for diesel: To be collected by the person liable for special collection of motor vehicle tax under Article 137 (1) of the Local Tax Act (hereinafter referred to as the"person liable for special collection of motor vehicle tax") according to practices of local tax collection.

(6) If the Korea Shipping Association becomes aware that diesel for which a reduction, refund or deduction was granted pursuant to Article 111-5 (1) or (2) of the Act has been used for any purpose other than coastal cargo transportation services under Article 24 (1) of the Marine Transportation Act, it shall immediately stop the supply or require the use of such diesel to be immediately stopped, and shall notify the head of the competent Regional Office of Oceans and Fisheries, the head of the competent tax office, and the person liable for special collection of motor vehicle tax of the fact without delay.

(7) The Korea Shipping Association shall report the supplied quantity of diesel for which a tax reduction, refund, or deduction was granted during the immediately preceding month to the Minister of Oceans and Fisheries by the tenth day of each month.

(8) The Korea Shipping Association shall submit a statement of the supplied quantity of diesel for which a tax reduction, refund, or deduction was granted during the immediately preceding year to the Commissioner of the National Tax Service in the form prescribed by Ordinance of the Ministry of Economy and Finance by March 31, each year.

(9) Except as provided for in paragraphs (1) through (8), the Minister of Oceans and Fisheries may, in consultation with the Minister of Economy and Finance, determine matters necessary for the proper supply and management of diesel for which a tax reduction, refund, or deduction is granted.

[This Article Newly Inserted on Feb. 17, 2021]

Article 113(Exemption from Liquor Tax on Goods Sold to Military Personnel) #

(1)"Military personnel, military civilian employees, and awardees of the order of military merit Taegeuk or Ulji, who are prescribed by Presidential Decree" in Article 114 (1) of the Act means the following persons: <Amended on Feb. 19, 2005; Feb. 18, 2010; Nov. 29, 2016; Feb. 11, 2020>

1. Military personnel or military civilian employees shall be persons prescribed by the Military Personnel Management Act or the Act on the Management of Civilian Personnel in the Military Service, military cadets of the preliminary military service under military training by enlistment in the army, and persons called up for military force mobilization training or military training under the Military Service Act;

2. Persons who received the order of military merit Taegeuk or Ulji shall be persons who were awarded with the order of military merit Taegeuk or Ulji and receive costs of living allowances under Article 14 of the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State.

(2) Goods exempt from liquor tax under Article 114 of the Act are as follows. In such cases, with respect to the enlistees (including appointed staff sergeants who are not volunteers), military academy students, cadet officers, or cadet deputy officers under the Military Personnel Management Act, military cadets of the preliminary military service under military training by enlistment in the army, and persons called up for military force mobilization training or military training under the Military Service Act, such goods shall be limited to subparagraph 3, which is consumed on the premises: <Amended on Jan. 10, 2000; Dec. 29, 2000; Mar. 27, 2001; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Nov. 29, 2016; Jan. 5, 2021>

1. Deleted; <Feb. 9, 2006>

2. Deleted; <Feb. 9, 2006>

3. Alcoholic liquors;

4. Deleted; <Jan. 10, 2000>

5. Deleted; <Jan. 10, 2000>

6. Deleted; <Jan. 10, 2000>

7. Deleted; <Jan. 10, 2000>

8. Deleted; <Jan. 10, 2000>

9. Deleted. <Jan. 10, 2000>

10. Deleted; <Jan. 10, 2000>

11. Deleted; <Jan. 10, 2000>

12. Deleted; <Jan. 10, 2000>

13. Deleted; <Jan. 10, 2000>

14. Deleted. <Jan. 10, 2000>

(3) Article 20 of the Enforcement Decree of the Liquor Tax Act shall apply mutatis mutandis to the exemption of liquor tax under Article 114 of the Act. In such cases, where goods are returned from a store or delivery point to the factory due to quality defects, or are confirmed by the head of the competent tax office as having been destroyed or lost due to a natural disaster or other unavoidable reasons, such goods may be shipped out with the exemption of liquor tax on the quantity equivalent thereto. <Amended on Feb. 10, 2000; Feb. 19, 2005; Feb. 9, 2006; Feb. 17, 2021>

(4) Where any of the following events occurs in relation to goods exempted from liquor tax under Article 114 (1) of the Act, the liquor tax exempted shall be collected from the following relevant person: <Amended on Feb. 9, 2006>

1. Where a person has sold or delivered the goods to any person other than a tax-exempt person (excluding the goods delivered to a person who can be identified as a family member of a tax-exempt person), the person who has sold or delivered such goods;

2. Where a person has transferred the tax-free goods purchased by a tax-exempt person to a third person within the period set by the Minister of National Defense, the person who has transferred such tax-free goods;

3. Where a person has concluded a contract for purchase of goods in excess of the maximum tax-free quantity determined under Article 114 (2) of the Act, and ships out such goods without paying any tax, the person who has concluded such contract;

4. Where a person has shipped out goods in excess of the quantity stated in a contract for supply of tax-free goods without paying any tax, the person who has shipped out such goods;

5. Where a person has delivered tax-free goods at any place other than the place for delivery of tax-free goods prescribed by the Commissioner of the National Tax Service, the person who has delivered such tax-free goods.

(5) Upon the conclusion of a contract for supply of tax-free goods or upon the occurrence of any event specified under paragraph (4), the Minister of National Defense shall notify the Commissioner of the National Tax Service of the facts without delay.

(6) Deleted. <Feb. 9, 2006>

(7) The Commissioner of the National Tax Service may prescribe the procedures for performing the tax-exemption affairs and the conditions necessary for regulatory control pursuant to Article 114 (5) of the Act.

[Title Amended on Feb. 9, 2006]

Article 115(Exemption from Securities Trading Tax) #

(1)"Person prescribed by Presidential Decree" in the main clause of Article 117 (1) 2-5 and 3 of the Act means an investment trader defined in Article 8 (2) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as"market maker"), which meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance and has entered into an agreement for market making (hereafter in this Article, referred to as"market making agreement") pursuant to the Securities Market Business Regulations established under Article 393 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as"Securities Market Business Regulations") and the Derivatives Market Business Regulations established under Article 393 (2) of that Act (hereafter in this Article, referred to as"Derivatives Market Business Regulations"), with the Korea Exchange that is deemed to have obtained permission for a stock exchange under Article 15 (1) of the Addenda to the Financial Investment Services and Capital Markets Act (Act No. 11845) (hereafter in this Article, referred to as the"Korea Exchange"). <Newly Inserted on Feb. 3, 2015; Feb. 5, 2016>

(2)"Where a person transfers any of the following stocks, as prescribed by Presidential Decree" in the main clause of Article 117 (1) 2-5 of the Act means where a person transfers stocks through the account only for trading stocks consisting of the stock index that constitutes the underlying asset of stock derivatives or the underlying asset of stock-index derivatives (hereafter in this Article, referred to as"stocks for hedging"), subject to the relevant market making agreement, as stock futures or stock options (hereafter in this Article, referred to as"stock derivatives") or stock-index futures or stock-index options (hereafter in this Article, referred to as"stock-index derivatives"), as defined in the Derivatives Market Business Regulations. <Newly Inserted on Feb. 3, 2015; Feb. 5, 2016>

(3)"Derivatives prescribed by Presidential Decree…in consideration of trading volume, market capitalization, turnover rate, etc." in the main clause, with the exception of the items, of Article 117 (1) 2-5 of the Act means derivatives other than those falling under any of the following: <Newly Inserted on Feb. 17, 2021>

1. In cases of stock futures or stock index futures under paragraph (2): Derivatives that meet any of the following items in terms of trading volume and trading volume ratio during the period of one year (hereafter in this Article referred to as"liquidity assessment period") from September 30 of the year immediately preceding the taxable year in which the market maker intends to conclude a market-making contract under paragraph (1) in a derivatives market defined in Article 8-2 (4) 2 of the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as"derivatives market"): Provided, That each stock futures product shall be considered as a single product for each stock of the underlying assets:

(a) Derivatives whose trading volume ratio against the total trading volume of stock futures and stock-index futures is higher than the ratio prescribed by Ordinance of the Ministry of Economy and Finance.

(b) Derivatives whose trading volume is not less than the amount prescribed by Ordinance of the Ministry of Economy and Finance.

2. In cases of stock options and stock-index options under paragraph (2): Derivatives whose trading volume and the trading volume ratio during the liquidity assessment period in the derivatives market fall under any of the following items: Provided, That each stock option product shall be considered as a single product for each stock of the underlying assets:

(a) Derivatives whose trading volume ratio against the total trading volume of stock futures and stock-index options is not less than the ratio prescribed by Ordinance of the Ministry of Economy and Finance;

(b) Derivatives whose trading volume is not less than the amount prescribed by Ordinance of the Ministry of Economy and Finance.

(4)"Cases prescribed by Presidential Decree, such as where a person transfers stock certificates to hedge risks that may be caused by the fluctuation of prices of derivatives" in the proviso of the provisions, with the exception of the items, of Article 117 (1) 2-5 of the Act means the transfer of stocks subject to hedging transactions as prescribed by Ordinance of the Ministry of Economy and Finance in order to hedge the risk of price fluctuation of stock derivatives and stock-index derivatives arising in the course of trading stock derivatives and stock-index derivatives under a market-making contract. In such cases, the Korea Exchange shall notify the market maker of the ratio prescribed by Ordinance of the Ministry of Economy and Finance to calculate the trading volume of stocks subject to hedging transactions in proportion to the trading volume of stock derivatives and stock-index derivatives every trading day as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 3, 2015; Feb. 5, 2016; Feb. 17, 2021>

(5)"Stocks prescribed by Presidential Decree in consideration of trading volume, market capitalization, turnover rate, etc." in Article 117 (1) 3 of the Act means stocks other than the following stocks: <Newly Inserted on Feb. 17, 2021>

1. Stocks whose total market capitalization as at the end of the liquidity assessment period is not less than the amount prescribed by Ordinance of the Ministry of Economy and Finance;

2. Stocks whose turnover rate prescribed by the Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as"turnover rate") during the liquidity assessment period is not lower than the rate prescribed by the Ordinance of the Ministry of Economy and Finance.

(6) The Korea Exchange shall notify the Minister of Economy and Finance and the Commissioner of the National Tax Service of the trading volume and trading volume ratio of each derivatives product under paragraph (3) and the market capitalization and turnover rate of each stock under paragraph (5) by not later than January 10 of the taxable year in which it intends to conclude a market-making contract to make a market. <Newly Inserted on Feb. 17, 2021>

(7) Where a market maker transfers stocks for hedging pursuant to paragraph (4), it shall file a statement of the transaction of stocks for hedging in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"statement of hedging transactions") with the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as the"Korea Securities Depository"). <Newly Inserted on Feb. 3, 2015; Feb. 5, 2016; Feb. 17, 2021>

(8)"Where a person . . . <omitted> . . . transfers stocks, as prescribed by Presidential Decree" in Article 117 (1) 3 of the Act means where a person transfers stocks defined in the Securities Market Business Regulations through the account only for trading stocks subject to the relevant market making agreement, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 3, 2015; Feb. 5, 2015; Feb. 17, 2021>

(9) The Korea Exchange shall identify transactions eligible for exemption from securities trading tax under paragraph (8) in a list of transactions of stocks subject to market-making and give notice thereof to the relevant market maker and the Korea Securities Depository each trading day, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 5, 2015; Feb. 17, 2021>

(10) Where a market maker transfers stocks pursuant to paragraph (8), it shall file a statement of market making transactions in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as"statement of market making transactions") with the Korea Securities Depository. <Newly Inserted on Feb. 5, 2015; Feb. 17, 2021>

(11)"Derivatives prescribed by Presidential Decree" in Article 117 (1) 5 of the Act means the following (hereafter in this Article, referred to as"futures for arbitrage trading"): <Newly Inserted on Feb. 7, 2017; Feb. 17, 2021>

1. Stock futures;

2. KOSPI 200 futures and Mini KOSPI 200 futures;

3. KOSDAQ 150 futures;

4. Synthetic futures prescribed by Ordinance of the Ministry of Economy and Finance, combining options based on underlying assets identical with the futures referred to in subparagraphs 1 through 3.

(12) To be eligible under Article 117 (1) 5 of the Act, the agency in overall charge of postal services defined in subparagraph 2 of Article 2 of the Act on Special Cases concerning the Management of Postal Services (hereafter in this Article, referred to as"agency in overall charge of postal services") or a corporation responsible for the management and investment of a fund created pursuant to any Act specified in attached Table 2 of the National Finance Act (hereafter in this Article, referred to as"fund managing entity"), shall open an account only for arbitrage trading prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"account only for arbitrage trading") through a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as"financial investment business entity"). <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

(13)"The agency . . . <Omitted> . . . transfers stocks, as prescribed by Presidential Decree" in Article 117 (1) 5 of the Act means cases where the agency in overall charge of postal services or a fund managing entity transfers stocks meeting each of the following requirements: Provided, That, if a transfer fails to meet the requirement prescribed in subparagraph 4, the sale of stocks that meet the ratio specified in the same subparagraph shall be deemed to meet said requirement: <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

1. The agency in overall charge of postal services or a fund managing entity shall transfer stocks through an account only for arbitrage trading;

2. If stocks are purchased, the relevant purchase agreement and the agreement for the sale of futures for arbitrage trading shall be made on the same trading date;

3. If stocks are sold, the relevant sale agreement and the agreement for the purchase of futures for arbitrage trading (including settlement at maturity on the last trading date of the sale agreement) shall be made on the same trading date;

4. The amount of transfer of stocks sold under subparagraph 1 shall not exceed 103/100 of the clearing amount of the purchase agreement of futures for arbitrage trading under subparagraph 3 (including the amount of settlement at maturity on the last trading date of the sale agreement);

5. Where futures for arbitrage trading specified under paragraph (11) (excluding futures based on underlying assets of individual stocks) and stocks are sold, the aggregate of the ratio (which shall not exceed the ratio of the market capitalization of the issue to the index based on underlying assets of the futures for arbitrage trading) of the market capitalization of each issue of the sold stocks shall be at least 95/100.

(14) For the purposes of paragraph (13) 2, if stocks have been purchased but an agreement for the sale of futures for arbitrage trading is not made, the agency in overall charge of postal services or a fund managing entity shall transfer the relevant stocks to other account until the date of purchase: Provided, That excluded herefrom shall be where stocks are purchased to reflect any change in issues consisting of a stock index, which is the underlying asset of futures for arbitrage trading. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

(15) The Korea Exchange shall identify transactions that meet the requirements prescribed under paragraph (13) (excluding the requirement prescribed for in paragraph (13) in a list of transactions of the agency in overall charge of postal services or a fund managing entity and shall give notice thereof to the financial investment business entity with which the account only for arbitrage trading is opened and the Korea Securities Depository each trading date in the manner prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

(16) When the agency in overall charge of postal services or a fund managing entity transfers stocks under paragraph (13), it shall file a statement of arbitrage trading in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as"statement of arbitrage trading") to the Korea Securities Depository through the financial investment business entity. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

(17)"Company prescribed by Presidential Decree" in Article 117 (1) 23 of the Act means any of the following companies: <Newly Inserted on Feb. 3, 2015; Oct. 23, 2015; Feb. 7, 2017; Feb. 17, 2021>

1. A company showing signs of insolvency defined in subparagraph 5 of Article 2 of the Corporate Restructuring Promotion Act;

2. A company that has filed an application to commence rehabilitation proceedings with the court under Article 34 or 35 of the Debtor Rehabilitation and Bankruptcy Act;

3. A company that has filed for bankruptcy with the court under Article 294 or 295 of the Debtor Rehabilitation and Bankruptcy Act;

4. A company that intends to implement restructuring or financial restructuring under Article 249-22 (1) 5 of the Financial Investment Services and Capital Markets Act.

(18) A person who wishes to be eligible under Article 117 (1) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return on securities transactions tax. In such cases, a person who wishes to be eligible under Article 117 (1) 2-5 of the Act shall additionally submit a statement of hedging transactions received from the market maker; a person who wishes to be eligible under Article 117 (1) 3 of the Act shall additionally submit a statement of market-making transactions received from the market maker; and a person who wishes to be eligible under Article 117 (1) 5 of the Act shall additionally submit a statement of arbitrage trading received from the agency in overall charge of postal services or the fund managing entity. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021>

(19) The methods for calculating the clearing amount of a purchase agreement under paragraph (13) 4 and the ratio of market capitalization under paragraph (13) 5, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 7, 2017; Feb. 17, 2021>

[This Article Wholly Amended on Oct. 30, 1999]

Article 115-3(Standards for Reduction or Exemption of Customs Duties for Overseas Korean Enterprises on their Return to Korea) #

(1)"Capital goods prescribed by Presidential Decree" in the main clause of Article 118-2 (1) of the Act, with the exception of its subparagraphs, means goods satisfying each of the following requirements that: <Amended on Mar. 23, 2013; Feb. 21, 2014>

1. Such capital goods (referring to capital goods defined in Article 2 (1) 9 of the Foreign Investment Promotion Act; hereafter in this Article, the same shall apply) shall be required by a person who wishes to be granted a reduction or exemption of customs duties under Article 118-2 (1) of the Act for direct use in a business commenced or a place of business newly established or expanded in the Republic of Korea, and confirmed by the Minister of Trade, Industry and Energy;

2. Such capital goods shall be declared as imported under the Customs Act, within five years (or six years where the Minister of Trade, Industry and Energy confirms that the process for approving the establishment of a factory is delayed or other extenuating circumstances exist) from the date on which a person who wishes to be granted a reduction or exemption of customs duties under Article 118-2 (1) of the Act has been selected by the Minister of Trade, Industry and Energy as an enterprise returning to the Republic of Korea, eligible for assistance under Article 7 of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation.

(2) Deleted. <Feb. 12, 2019>

(3) The following shall apply to the payment of the customs duties reduced or exempted under Article 118-2 (3) of the Act:

1. In cases falling under Article 118-2 (3) 1 of the Act: Customs duties reduced or exempted under Article 118-2 (1) of the Act for three years retroactively from the date the relevant person cannot operate his/her business continuously, such as the date of closure;

2. In cases falling under Article 118-2 (3) 2 of the Act: Customs duties reduced or exempted under Article 118-2 (1) of the Act;

3. In cases falling under Article 118-2 (3) 3 of the Act: Customs duties reduced or exempted for the relevant capital goods.

(4)"As prescribed by Presidential Decree" in Article 118-2 (3) 2 of the Act means the following cases: <Amended on Mar. 23, 2013; Feb. 21, 2014>

1. Where the Minister of Trade, Industry and Energy revokes the selection of an enterprise returning to the Republic of Korea, eligible for assistance, due to any cause other than those prescribed in Article 118-2 (3) 1 of the Act;

2. Where a person, who relocates his/her place of business to the Republic of Korea under Article 104-24 (1) 1 of the Act with a customs duties reduction or exemption as prescribed in Article 118-2 (1) of the Act, fails to meet the requirements prescribed in Article 104-21 (1) 1 or 2;

3. Where the requirements prescribed under Article 118-2 (1) of the Act are not met.

(5) Article 100 (2) of the Customs Act shall apply mutatis mutandis to calculating the additional tax to be imposed pursuant to the subparagraphs of paragraph (3).

(6) Article 112 of the Enforcement Decree of the Customs Act shall apply mutatis mutandis to filing applications for reduction or exemption under Article 118-2 (4) of the Act, and other necessary documents, matters to be stated, etc. shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(7) Upon revoking the selection of an enterprise returning to the Republic of Korea, eligible for assistance under Article 7 of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation pursuant to Article 8 of that Act, the Minister of Trade, Industry and Energy shall immediately notify the Commissioner of Korea Customs Service of such revocation. <Amended on Mar. 23, 2013; Feb. 21, 2014; Feb. 7, 2017>

[This Article Newly Inserted on Feb. 15, 2013]

[Moved from Article 115-2 <Feb. 13, 2018>]

Article 116-2(Standards for Tax Reduction or Exemption) #

(1) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 1 of the Act shall meet each of the following requirements: <Amended on Feb. 7, 2017>

1. Factory facilities (referring to a place of business in cases of any business activities other than manufacturing activities according to the Korea Standard Industrial Classification; hereafter in this Chapter, the same shall apply) shall be established or operated to engage in a business that requires the technologies provided for in paragraph (2);

2. The amount of the foreign investment shall be at least the amount prescribed by Ordinance of the Ministry of Economy and Finance, taking into account the characteristics, etc. of the new growth engine industry.

(2)"Technologies prescribed by Presidential Decree" in Article 121-2 (1) 1 of the Act means new growth and source technologies specified in attached Table 7 and technologies prescribed by Ordinance of the Ministry of Economy and Finance as technologies for materials, manufacturing processes, etc. directly related thereto (hereafter in this Chapter referred to as"technologies for the new growth engine industry"). <Amended on Feb. 7, 2017; Feb. 11, 2020>

(3) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2 of the Act means any foreign investment made to establish any of the following new facilities within foreign investment zones designated under Article 18 (1) 2 of the Foreign Investment Promotion Act: <Amended on Jan. 10, 2000; Dec. 31, 2001; Dec. 30, 2002; Dec. 30, 2003; Jan. 5, 2005; Feb. 19, 2005; Mar. 8, 2005; Feb. 22, 2008; Feb. 4, 2009; Sep. 9, 2009; Dec. 14, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 15, 2013; Sep. 11, 2014; Feb. 3, 2015; Feb. 7, 2017; Mar. 29, 2017; Jan. 5, 2021>

1. Where a foreign investment of at least 30 million U.S. dollars is made to establish a new facility to engage in any of the following business activities:

(a) Manufacturing activities;

(b) Computer programming, system integration, and management services;

(c) Data processing, hosting (referring to services of rental, operation, etc. of servers), and other related service activities;

2. Where a foreign investment of at least 20 million U.S. dollars is made to establish a new facility to engage in any of the following business activities:

(a) A tourist hotel business, a floating tourist hotel business, and a Korean traditional hotel business defined in Article 2 (1) 2 (a) through (c) of the Enforcement Decree of the Tourism Promotion Act;

(b) A specialized resort business and a general resort business defined in Article 2 (1) 3 (a) and (b) of the Enforcement Decree of the Tourism Promotion Act, and a general amusement complex business defined in Article 2 (1) 5 (a) of the same Decree;

(c) International convention facilities defined in subparagraph 3 of Article 2 of the International Conference Industry Promotion Act;

(d) A resort condominium business defined in Article 3 (1) 2 (b) of the Tourism Promotion Act;

(e) Youth training facilities defined in subparagraph 1 of Article 10 of the Youth Activity Promotion Act;

3. Where a foreign investment of at least 10 million U.S. dollars is made to establish a new facility to engage in any of the following businesses or projects:

(a) A combined logistics terminal business defined in subparagraph 4 of Article 2 of the Act on the Development and Management of Logistics Facilities;

(b) A business creating and operating a joint collection and delivery center defined in subparagraph 15 of Article 2 of the Distribution Industry Development Act;

(c) A business operating a harbor facility defined in subparagraph 5 of Article 2 of the Harbor Act, and a logistics business operated within a harbor hinterland complex defined in subparagraph 7 of that Article;

(d) A business operating an airport facility defined in subparagraph 7 of Article 2 of the Airport Facilities Act, and a logistics business operated within an airport zone defined in subparagraph 4 of that Article;

(e) A project creating revertible facilities defined in subparagraph 3 of Article 2 of the Act on Public-Private Partnerships in Infrastructure, among the public-private partnership projects defined in subparagraph 5 of Article 2 of that Act;

4. Where a research facility is newly established or extended to engage in research and development activities for the business provided for in Article 121-2 (1) 1 of the Act (hereafter in this subparagraph, referred to as"business"), and:

(a) The amount of the foreign investment shall be at least two million U.S. dollars;

(b) The number of regular researchers with at least a master’s degree in the field relating to the business, who have at least three years’ research experience, shall be at least 10;

5. Where a business is engaged in by at least two foreign-capital-invested companies located in the same foreign investment zone designated under Article 18 (1) 2 of the Foreign Investment Promotion Act, and:

(a) The amount of the foreign investment shall be at least 30 million U.S. dollars;

(b) Facilities to engage in any of the businesses referred to in subparagraphs 1 through 4 shall be newly established.

(4) A former free export zone deemed a foreign investment zone under Article 5 (3) of the Addenda to the Government Organization Act (Act No. 5982), shall be deemed a foreign investment zone designated under Article 18 (1) 2 of the Foreign Investment Promotion Act; and Articles 121-2 through 121-7 of the Act shall apply to the factory facilities established in such zone, notwithstanding paragraph (3). <Newly Inserted on Dec. 29, 2000; Feb. 19, 2005>

(5) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-2 or 2-8 of the Act means any foreign investment made to establish any of the following new facilities within the free economic zones defined in subparagraph 1 of Article 2 of the Special Act on Designation and Management of Free Economic Zones, or the Saemangeum project area designated under Article 2 of the Special Act on Promotion and Support for Saemangeum Project (hereafter in this Chapter, referred to as "Saemangeum project area"): <Newly Inserted on Dec. 30, 2003; Jan. 5, 2005; Feb. 19, 2005; Feb. 9, 2006; Feb. 22, 2008; Jul. 30, 2009; Dec. 30, 2010; Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Sep. 11, 2014; Feb. 3, 2015; Feb. 7, 2017; Feb. 29, 2024>

1. Where a foreign investment of at least ten million U.S. dollars is made to establish a new factory facility to engage in manufacturing activities;

2. Where a foreign investment of at least ten million U.S. dollars is made to establish a new facility to engage in any of the business activities specified under paragraph (3) 2;

3. Where a foreign investment of at least five million U.S. dollars is made to establish a new facility to engage in any of the business activities specified in paragraph (3) 3 (a) through (d);

4. Where a foreign investment of at least five million U.S. dollars is made to establish a new medical institution pursuant to Article 23 (1) of the Special Act on Designation and Management of Free Economic Zones or Article 62 (1) of the Special Act on Promotion and Support for Saemangeum Project;

5. Where a research facility is newly established or extended to engage in research and development activities for the business provided for in Article 121-2 (1) 1 of the Act (hereafter in this subparagraph, referred to as"business"), and:

(a) The amount of the foreign investment shall be at least one million U.S. dollars;

(b) The number of regular researchers with at least a master’s degree in the field relating to the business, who have at least three years’ research experience, shall be at least ten persons;

6. Where a foreign investment of at least ten million U.S. dollars is made to establish a new facility to engage in any of the following business activities:

(a) Engineering services;

(b) Telecommunications services;

(d) Information service activities;

(e) Other scientific and technical services;

(f) Motion picture, video products, and broadcasting programmes production; motion picture, video, and broadcasting programs production-related services; sound-recording studios; and publishing of music and other audio;

(g) Game software development and supply;

(h) Operation of public performance facilities; operation of public performance companies; and other creative and arts-related services.

(6) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-3 or 2-9 of the Act means any foreign investment meeting either of the following criteria made in a project that conducts planning, financing, designing, construction, marketing, lease, sale in units, etc. in a package, to develop the free economic zone in accordance with the free economic zone development plan established under Article 6 of the Special Act on Designation and Management of Free Economic Zones, or to develop the Saemangeum project area in accordance with the master plan established under Article 6 of the Special Act on Promotion and Support for Saemangeum Project: <Newly Inserted on Dec. 30, 2003; Jan. 5, 2005; Feb. 19, 2005; Jul. 30, 2009; Dec. 30, 2010; Feb. 21, 2014; Sep. 11, 2014; Feb. 3, 2015>

1. The amount of the foreign investment shall be at least 30 million U.S. Dollars;

2. The foreign investment ratio shall be at least 50/100, and the total cost for the development of the free economic zone or Saemangeum project area shall be at least 500 million U.S. dollars.

(7) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-4 of the Act means any foreign investment meeting either of the following requirements made in a project that conducts planning, financing, designing, construction, marketing, lease, sale in units, etc. in a package, to develop the Jeju investment promotion zone designated under Article 162 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City: <Newly Inserted on Dec. 30, 2003; Jan. 5, 2005; Feb. 19, 2005; Jun. 29, 2006; Dec. 30, 2010; Jan. 22, 2016>

1. The amount of the foreign investment shall be at least ten million U.S. dollars;

2. The foreign investment ratio shall be at least 50/100, and the total cost for the development of the Jeju investment promotion zone shall be at least 100 million U.S. dollars.

(8) The income accrued to the implementer of the free economic zone development project or the Saemangeum project area development project referred to in paragraph (6), the implementer of the Jeju investment promotion zone development project referred to in paragraph (7), or the implementer of the enterprise city development project referred to in paragraph (18) from engaging in any of the business activities eligible for tax reductions or exemptions under Article 121-2 (2) of the Act shall be calculated by multiplying the amount referred to in subparagraph 1, by the ratio of the amount referred to in subparagraph 2 to the amount referred to in subparagraph 3: <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008; Feb. 21, 2014>

1. Gross incomes accrued by implementing the free economic zone development project, the Saemangeum project area development project, the Jeju investment promotion zone development project, or the enterprise city development zone development project during the relevant taxable year;

2. Aggregate of the revenue amount received by transferring the facilities within the free economic zone, the Saemangeum project area, the Jeju investment promotion zone, or the enterprise city development zone (referring to the new facilities established by the development project, and including land appurtenant to the new facilities stipulated by Ordinance of the Ministry of Economy and Finance, which is traded concurrently with such facilities; hereafter in this subparagraph, the same shall apply) to foreigners (including foreign-capital invested companies), and of the rent revenue received by leasing them during the relevant taxable year;

3. Aggregate of the revenue amount received by transferring the facilities in the free economic zone, the Saemangeum project area, the Jeju investment promotion zone, or the enterprise city development zone, and of the rent revenue received by leasing them during the relevant taxable year.

(9)"Business prescribed by Presidential Decree" in Article 121-2 (1) 3 of the Act means: <Newly Inserted on Jan. 10, 2000; Jun. 22, 2004; Feb. 19, 2005; Jun. 26, 2007; Feb. 18, 2010; Feb. 2, 2012>

1. A business (limited to manufacturing activities) engaged in by a company located in a free trade zone as prescribed in Article 10 (1) 2 of the Act on Designation and Management of Free Trade Zones;

2. A business engaged in by a company located in a free trade zone as prescribed in Article 10 (1) 5 of the Act on Designation and Management of Free Trade Zones.

(10) A foreign investment eligible for the reduction of, or exemption from corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 3 of the Act means any foreign investment made to establish a new factory facility meeting either of the following criteria: <Newly Inserted on Jan. 10, 2000; Dec. 29, 2000; Dec. 30, 2003; Jun. 22, 2004; Jan. 5, 2005; Dec. 30, 2010>

1. The business provided for in paragraph (9) 1: The amount of the foreign investment shall be at least ten million U.S. dollars;

2. The business provided for in paragraph (9) 2: The amount of the foreign investment shall be at least five million U.S. dollars.

(11) For the purposes of Article 121-2 (11) of the Act, the equivalent to the holding ratio of stocks, etc., or the equivalent to a loan shall be calculated as follows: <Amended on Feb. 15, 2013; Feb. 5, 2016>

1. In cases falling under Article 121-2 (11) 1 of the Act, the amount calculated by multiplying the amount of foreign investments made by a foreign corporation, etc., by the ratio of the foreign corporation's stocks directly or indirectly held by Korean nationals, etc. (the ratio shall be deemed 5/100, if it is less than 5/100). In such cases, the direct or indirect holding ratio of stocks, etc. shall be calculated as at the date the liability to pay the relevant tax, which is eligible for tax reduction or exemption, arises as prescribed in Articles 121-2 through 121-4 of the Act;

2. In cases falling under Article 121-2 (11) 2 of the Act, the equivalent to the amount of a loan provided to a foreign investor by any of the persons specified in Article 121-2 (11) 2 of the Act.

(12) For the purposes of paragraph (11) 1, the indirect holding ratio of stocks, etc. shall be calculated as follows: <Newly Inserted on Dec. 29, 2000; Dec. 30, 2003; Feb. 15, 2013>

1. Where a Korean national, etc. owns at least 50/100 of the voting stocks of a corporation that is a stockholder or an investor of a foreign corporation, etc. (hereafter in this Article, referred to as"stockholding corporation"), the ratio of the voting stocks of the foreign corporation, etc., which are owned by the stockholding corporation, to the total number of the voting stocks issued by such foreign corporation, etc. (hereafter in this Article, referred to as"stockholding ratio of the stockholding corporation"), shall be deemed the indirect holding ratio of the Korean national, etc. against the relevant foreign corporation, etc.;

2. Where a Korean national, etc. owns less than 50/100 of the voting stocks of the stockholding corporation of the foreign corporation, etc., the ratio calculated by multiplying said holding ratio by the stockholding ratio of the stockholding corporation, shall be deemed the indirect holding ratio of the Korean national, etc. against the relevant foreign corporation, etc.;

3. For the purposes of subparagraphs 1 and 2, where stockholding corporations are at least two, the ratio aggregating the ratios calculated by each stockholding corporation under subparagraphs 1 and 2, shall be deemed the indirect holding ratio of the Korean national, etc. against the relevant foreign corporation;

4. The methods for calculation provided for in subparagraphs 1 through 3 shall apply mutatis mutandis to where at least one corporation is intervened between the stockholding corporations of the foreign corporation, etc. and a Korean national, etc., and where these corporations are linked through the stock holding relationship.

(13)"Countries or regions prescribed by Presidential Decree" in Article 121-2 (11) 3 of the Act means countries or regions listed in attached Table 13. <Amended on Feb. 21. 2014>

(14)"Foreign investment ratio calculated as prescribed by Presidential Decree" in the latter part of Article 121-2 (2) of the Act, with the exception of its subparagraphs, means the foreign investment ratio calculated under Article 5 (3) of the Foreign Investment Promotion Act: Provided, That, where a foreign investor commenced a foreign investment by December 31, 2002 in a domestic corporation newly established by an investment made in accordance with the approved corporate restructuring plan of the creditor financial institution of a domestic corporation (hereafter in this paragraph, referred to as"newly-established corporation"), and completed the payment of an object of the investment by said date, and if the preferred stocks are issued following a debt-for-equity swap of the newly-established corporation (limited to the debt-for-equity swap made by December 31, 2002), the higher of the following ratios shall be the foreign investment ratio in that newly-established corporation: <Newly Inserted on Dec. 31, 2001; Feb. 19, 2005; Feb. 18, 2010; Feb. 7, 2017>

1. The foreign investment ratio calculated under Article 5 (3) of the Foreign Investment Promotion Act, including the preferred stocks;

2. The foreign investment ratio calculated under Article 5 (3) of the Foreign Investment Promotion Act, excluding the preferred stocks.

(15)"Foreign investments made by a method prescribed by Presidential Decree, such as acquisition of business" in the main clause, with the exception of the subparagraphs, of Article 121-2 (12) of the Act, means general or partial succession to the rights and obligations related to the relevant business. <Newly Inserted on Dec. 31, 2001; Feb. 18, 2010; Feb. 15, 2013; Feb. 15, 2022>

(16) A foreign investment eligible for the reduction of, or exemption from, corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-5 of the Act means any of the following foreign investments made to establish a new facility in any foreign investment zone designated under Article 18 (1) 1 of the Foreign Investment Promotion Act: <Newly Inserted on Feb. 19, 2005; Dec. 30, 2010>

1. Where a foreign investment of at least ten million U.S. dollars is made to establish a new factory facility to engage in manufacturing activities;

2. Where a foreign investment of at least five million U.S. dollars is made to establish a new facility to engage in any of the business activities specified in paragraph (3) 3 (a) through (c).

(17) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-6 of the Act means an investment of at least ten million U.S. dollars (referring to at least two million U.S. dollars in cases falling under subparagraph 2; and at least five million U.S. dollars five million in cases falling under subparagraph 3) made to establish a new facility to engage in any of the following business activities within an enterprise city development zone defined in subparagraph 2 of Article 2 of the Special Act on the Development of Enterprise Cities (hereafter in this Article, referred to as"enterprise city development zone"); and the income accrued from engaging in any of the business activities eligible for tax reductions and exemptions under Article 121-2 (2) of the Act shall be limited to the income directly accrued from the new facility established in the enterprise city development zone: <Newly Inserted on Feb. 19, 2005; Feb. 22, 2008; Feb. 4, 2009; Dec. 30, 2010; Feb. 2, 2012; Feb. 13, 2018>

1. Manufacturing activities;

2. Research and development activities;

3. Any of the business activities specified in paragraph (3) 3 (a) through (c);

4. Any of the business activities specified under paragraph (5) 6;

5. Any of the business activities specified in Article 116-15 (1) 1 (a) through (e) and 2 (b) through (e);

6. Deleted. <Feb. 2, 2012>

7. Deleted. <Feb. 2, 2012>

8. Deleted. <Feb. 2, 2012>

9. Deleted. <Feb. 2, 2012>

10. Deleted. <Feb. 2, 2012>

(18) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2-7 of the Act means any of the following foreign investments made in a project to develop an enterprise city development zone in accordance with the relevant enterprise city development plan approved under Article 11 of the Special Act on the Development of Enterprise Cities and: <Newly Inserted on Feb. 19, 2005; Dec. 30, 2010>

1. The amount of the foreign investment shall be at least 30 million U.S. Dollars;

2. The foreign investment ratio shall be at least 50/100, and the total cost for the development of the enterprise city development zone shall be at least 500 million U.S. dollars.

(19) A foreign investment eligible for the reduction of, or exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2 (a) or (b) of the Act means any foreign investment made to establish a new facility within a free economic zone defined in subparagraph 1 of Article 2 of the Special Act on Designation and Management of Free Economic Zones, or the Saemangeum project area, which shall meet any of the requirements provided for in paragraph (3) 1, 2, 3 (a) through (d), and 4. <Newly Inserted on Feb. 4, 2009; Jul. 30, 2009; Dec. 30, 2010; Feb. 21, 2014; Sep. 11, 2014; Feb. 3, 2015>

(20) A foreign investment eligible for the reduction of, or the exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2 (c) of the Act means any foreign investment made to establish a new facility within the Jeju high-tech science and technology complex designated under Article 161 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City, which meets any of the requirements provided for in paragraph (3) 1, 2, 3 (a) through (d), and 4, and which falls under any subparagraph of Article 116-14 (1). <Newly Inserted on Feb. 4, 2009; Dec. 30, 2010; Feb. 21, 2014; Jan. 22, 2016>

(21) A foreign investment eligible for the reduction of, or the exemption from, the corporate tax, income tax, acquisition tax, and property tax pursuant to Article 121-2 (1) 2 (d) of the Act means any foreign investment made to establish a new facility within the Jeju Investment Promotion Zone designated under Article 162 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City, which meets any of the requirements provided for in paragraph (3) 1, 2, 3 (a) through (d) and 4, and which falls under any subparagraph of Article 116-15 (1). <Newly Inserted on Feb. 4, 2009; Dec. 30, 2010; Feb. 21, 2014; Jan. 22, 2016>

(22)"Cumulative foreign investments prescribed by Presidential Decree" in Article 121-2 (14) 1 (a) of the Act means foreign investments defined in Article 2 (1) 4 of the Foreign Investment Promotion Act (excluding any foreign investment referred to in Article 121-2 (9) and (11) of the Act and Article 2 (1) 4 (b) of the Foreign Investment Promotion Act), which is the capital (referring to the amount calculated by aggregating the paid-in capital in excess of par value and gains on capital reduction and subtracting the discount on capital stocks and losses from capital reduction according to the Korea Financial Accounting Standards: hereinafter referred to as"cumulative foreign investments") paid in the relevant foreign-capital invested company by the end of the relevant taxable year during the period of reduction or exemption under Article 121-2 (2) and (12) 1 of the Act after a decision on reduction or exemption under Article 121-2 (8) of the Act is made. <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012>

(23) The amount of the income tax or corporate tax to be paid under Article 121-2 (16) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive years after the end of the taxable year in which tax reduction or exemption is granted, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010>

The aggregate of amounts of tax reduced or exempted under Article 121-2 (14) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - (the number of full-time employees of the relevant foreign-capital-invested company in the taxable year in which the number of full-time employees has decreased × ten million won)

(24) Article 23 (5), (7), (8), and (10) through (12) shall apply mutatis mutandis to the scope of full-time employees and the method for calculating the number of full-time employees under Article 121-2 (17) of the Act. <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012; Feb. 3, 2015>

(25)"Income prescribed by Presidential Decree" in the former part of Article 121-2 (2) of the Act, with the exception of its subparagraphs, means the income that accrues from the business provided for in Article 121-2 (1) 1 of the Act (hereafter in this paragraph, referred to as"income eligible for tax reduction or exemption"): Provided, That, if the income eligible for tax reduction or exemption during the period of reduction or exemption under Article 121-2 (2) and (12) 1 of the Act is at least 80/100 of the aggregate of the income eligible for tax reduction or exemption and the income that has accrued by engaging in a business directly related to the business eligible for tax reduction or exemption, the aggregate of the income eligible for tax reduction or exemption for the relevant taxable year and the income that has accrued by engaging in a business directly related to the business eligible for tax reduction or exemption, shall be deemed income eligible for tax reduction or exemption. <Newly Inserted on Feb. 7, 2017>

[This Article Newly Inserted on May 24, 1999]

Article 116-3(Decision on Reduction or Exemption of Corporate Tax) #

(1) The Minister of Economy and Finance shall, upon receipt of an application for tax reduction or exemption or an application for the revision to the tax reduction or exemption under Article 121-2 (6) of the Act, examine whether the relevant application meets the standards for tax reduction and exemption under Article 116-2, make a decision on whether to grant the reduction or exemption or whether to make any revision to the reduction or exemption within 20 days, and notify the applicant thereof. <Amended on Feb. 29, 2008>

(2) Notwithstanding paragraph (1), the Minister of Economy and Finance shall, when he/she intends to determine a business under Article 121-2 (1) 1 of the Act as the one ineligible for reduction or exemption upon receiving an application under Article 121-2 (6) of the Act, give a preliminary notice of such determination within 20 days from the application date, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 28, 2007; Feb. 29, 2008>

(3) A person who receives the preliminary notice of determination under paragraph (2) may file a request with the Minister of Economy and Finance, in writing, for review on the properness of the determination so notified within 20 days from the date on which the notice is delivered, with supporting materials attached thereto. <Newly Inserted on Feb. 28, 2007; Feb. 29, 2008>

(4) The Minister of Economy and Finance shall make a decision on whether to grant the reduction or exemption or whether to make any revision to the reduction or exemption within 20 days from the date on which the request under paragraph (3) is delivered, and shall notify the applicant of the result thereof. <Newly Inserted on Feb. 28, 2007; Feb. 29, 2008>

(5) The Minister of Economy and Finance may, where deemed inevitably requiring a long period for making a decision on whether to grant the reduction or exemption or whether to make any revision to the reduction or exemption under paragraph (1), (2) or (4), extend the said review period within 20 days. In such cases, he/she shall notify the applicant of the relevant causes and review period. <Amended on Feb. 28, 2007; Feb. 29, 2008>

(6) The Minister of Economy and Finance shall, where he/she has made a decision on whether to grant the reduction or exemption or whether to make any revision to the reduction or exemption under paragraph (1) or (4), notify the Minister of the Interior and Safety, the Commissioner of the National Tax Service, the Commissioner of Korea Customs Service, and the head of local government having jurisdiction over the relevant factory facilities, of the fact thereof. <Amended on Feb. 28, 2007; Feb. 29, 2008; Feb. 11. 2020>

(7) Paragraphs (1) through (6) shall apply mutatis mutandis to a request for prior confirmation on whether it is eligible for the tax reduction or exemption under Article 121-2 (7) of the Act. <Amended on Feb. 28, 2007>

[This Article Newly Inserted on May 24, 1999]

Article 116-4(Reporting on Commencement of Business) #

(1) A foreign-capital-invested company determined to be eligible for tax reductions or exemptions under Article 121-2 (8) of the Act prior to the commencement date of its business (referring to the commencement date of business under Article 8 (1) of the Value-Added Tax Act; hereafter in this Chapter, the same shall apply), shall report on the commencement of business to the head of a tax office having jurisdiction over the place of its business within 20 days from the commencement date of business. <Amended on Feb. 19, 2005; Jun. 28, 2013>

(2) The head of a tax office in receipt of a report under paragraph (1) shall verify whether the relevant foreign-capital-invested company commences its business on such date.

(3) The date a foreign-capital-invested company determined to be eligible for tax reductions or exemptions prior to the commencement date of its business but has failed to report under paragraph (1), commences its business, or the date a foreign-capital-invested company, which is determined to be eligible for tax reductions or exemptions after the commencement date of its business, commences its business, shall be investigated and verified by the head of the tax office having jurisdiction over the place of its business.

(4) Upon having verified the commencement date of the business of a foreign-capital-invested company under paragraphs (2) and (3), the head of a tax office shall, without delay, give notice thereof to a foreign-capital-invested enterprise and the head of the local government having jurisdiction over the place of such business.

(5) When a foreign-capital-invested company determined to be eligible for tax reductions or exemptions under Article 121-2 (1) 1 of the Act, files its tax return for the taxable year during which it obtains a tax reduction or exemption, it shall submit a statement on investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of the relevant business. <Newly Inserted on Feb. 21, 2014>

[This Article Newly Inserted on May 24, 1999]

Article 116-5(Exemption from Customs Duties) #

(1) Capital goods the customs duty, individual consumption tax and value-added tax of which shall be reduced as prescribed in Article 121-3 (1) of the Act shall be those used directly for the business of which corporate tax, income tax, acquisition tax, or property tax is reduced or exempted under Article 121-2 of the Act or of which acquisition tax or property tax is reduced or exempted under Article 78-3 of the Act on Restriction on Special Cases concerning Local Taxation, and for which an import declaration under the Customs Act is completed within five years (six years where an import declaration cannot be completed within such period due to delay in approval for the establishment of factory and other unavoidable reasons, and approval is obtained from the Minister of Economy and Finance after applying for extension before such period expires) from the date on which a report under Article 5 of the Foreign Investment Promotion Act is made. <Amended on Feb. 19, 2005; Dec. 31, 2007; Feb. 29, 2008; Feb. 18, 2010; Feb. 11, 2020>

(2)"Capital goods prescribed by Presidential Decree" in Article 121-3 (2) of the Act means, from among the capital goods falling under any subparagraph of Article 121-3 (1) of the Act, what are directly used for the projects for which corporate tax, income tax, acquisition tax, or property tax is reduced or exempted under Article 121-2 of the Act or for which acquisition tax or property tax is reduced or exempted under Article 78-3 of the Act on Restriction on Special Cases concerning Local Taxation, and whose import declaration under the Customs Act has been completed within five years (six years where an import declaration cannot be completed within such period due to delay in approval for the establishment of factory and other unavoidable causes, and approval is obtained from the Minister of Economy and Finance after applying for extension before such period expires) from the date on which the report under Article 5 of the Foreign Investment Promotion Act has been made. <Newly Inserted on Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008; Feb. 18, 2010; Feb. 11, 2020>

(3) The capital goods eligible for exemption from customs duty, individual consumption tax and value-added tax as prescribed in Article 121-3 (1) 1 of the Act shall be the capital goods imported by a foreign-invested enterprise within the extent of the means of foreign payment or domestic payment that has been invested by a foreign investor. <Newly Inserted on Feb. 4, 2009>

(4) The ceiling of exemption from customs duty, individual consumption tax and value-added tax prescribed in Article 121-3 (1) 1 of the Act shall be calculated on the basis of the currency selected by the foreign-invested enterprise (hereafter referred to as"standard currency" in this Article) when it imports capital goods eligible for exemption for the first time after they are determined whether they are eligible for the reduction or exemption under Article 121-2 (8) of the Act. In such cases, where the foreign- invested enterprise imports capital goods with a currency other than the standard currency, the amount of capital goods for exemption from customs duty, individual consumption tax and value-added tax shall be the amount converted into standard currency in accordance with the calculated exchange rate between the standard currency and the currency with which the price of capital goods has been paid by utilizing the exchange rate determined by the Commissioner of Korea Customs Service as prescribed in Article 18 of the Customs Act when the capital goods eligible for exemption are imported. <Newly Inserted on Feb. 4, 2009>

[This Article Newly Inserted on May 24, 1999]

Article 116-6(Tax Reduction or Exemption for Capital Increase) #

(1) In determining whether to grant a tax reduction or exemption for a capital increase under Article 121-4 (1) of the Act, if the relevant foreign-capital-invested company files an application for tax reduction or exemption by increasing its capital within five years after making the paid-in capital reduction (referring to substantial reduction of its assets due to the paid-in retirement of stocks or equity shares, or the refund, etc. of decreased capital amount), the Minister of Economy and Finance shall determine a tax reduction or exemption only for the foreign investment ratio against the portion of net increase than before its capital reduction. <Amended on Feb. 29, 2008>

(2)"Criteria prescribed by Presidential Decree" in the proviso of Article 121-4 (1) of the Act means increasing an investment in a business for which tax reduction is granted as prescribed in Article 121-2 of the Act. <Amended on Feb. 18, 2010>

(3) Where a foreign-capital-invested company regarding which a decision has been made to grant a tax reduction and exemption for the portion of its capital increase under Article 121-4 (1) of the Act, makes a paid-in capital decrease within seven years after it has made such capital increase, the foreign-capital-invested company shall be deemed to have decreased its capital in a reverse order, starting with the portion of its capital increase made immediately prior to the relevant paid-in capital decrease (excluding any capital increase made in the form of issuing shares through the capitalization of the reserve and revaluation reserves as prescribed in Article 5 (2) 2 of the Foreign Investment Promotion Act, and other reserves under other statutes or regulations) for the purposes of calculating the amount of tax to be reduced or exempted. <Newly Inserted on Feb. 19, 2005; Feb. 7, 2017>

(4)"Circumstances prescribed by Presidential Decree" in Article 121-4 (4) of the Act means circumstances that meet each of the following conditions: <Newly Inserted on Feb. 2, 2012; Feb. 21, 2014>

1. Where a foreign-capital-invested company obtained a tax reduction or exemption for any business specified under Article 121-2 (1) of the Act prior to capital increase (hereafter in this Article, referred to as"business eligible for tax reduction or exemption prior to capital increase") and the period of tax reduction or exemption has ended, and a decision shall have been made to grant the foreign-capital-invested company a tax reduction or exemption for any business specified under Article 121-2 (1) of the Act through capital increase under Article 121-4 (1) of the Act (hereafter in this Article, referred to as"business eligible for tax reduction or exemption for capital increase");

2. Where fixed assets for the business eligible for tax reduction or exemption prior to capital increase for which the period of tax reduction or exemption has ended under Article 121-2 of the Act, are continuously used for the business eligible for tax reduction or exemption for capital increase, and the ratio of the value of the fixed assets for the business eligible for tax reduction or exemption prior to capital increase for which the period of tax reduction or exemption has ended, which are continuously used for the business eligible for tax reduction or exemption for capital increase, in the total value of the fixed assets for the business eligible for tax reduction or exemption for capital increase, shall be at least 30/100 as at the date the registration for change of capital increase is made.

(5) For the purpose of applying a tax reduction or exemption to capital increase under Article 121-4 (1) of the Act, the account of the business eligible for tax reduction or exemption for the relevant capital increase shall be kept separately from the account of other businesses pursuant to Article 143 of the Act, and the foreign investment ratio referred to in Article 116-2 (14) shall be calculated based on the business eligible for tax reduction or exemption for the relevant capital increase. <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012; Feb. 21, 2014>

(6) For the purpose of applying a tax reduction or exemption to capital increase pursuant to Article 121-4 (1) of the Act, cumulative foreign investments referred to in Article 116-2 (22) shall be calculated separately for the initial business eligible for tax reduction or exemption, and for the business eligible for tax reduction or exemption for the relevant capital increase: Provided, That this shall not apply to the cumulative foreign investments subject to zero reduction and exemption rate upon the expiration of the period of reduction or exemption although a decision on reduction or exemption is made: <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012; Feb. 21, 2014>

1. Deleted; <Feb. 21, 2014>

2. Deleted. <Feb. 21, 2014>

(7) For the purpose of applying a tax reduction or exemption to capital increase pursuant to Article 121-4 (1) of the Act, the number of full-time employees referred to in Article 116-2 (24) shall be calculated by classifying into the number of full-time employees at the place of the initial business eligible for tax reduction or exemption and that of the place of business eligible for tax reduction or exemption for the relevant capital increase: Provided, That this shall not apply to the number of full-time employees at the place of business subject to zero reduction and exemption rate upon the expiration of the period of reduction or exemption although a decision on reduction or exemption is made: <Newly Inserted on Dec. 30, 2010; Feb. 2, 2012; Feb. 21, 2014>

1. Deleted; <Feb. 21, 2014>

2. Deleted. <Feb. 21, 2014>

[This Article Newly Inserted on May 24, 1999]

Article 116-7(Additional Collection of Corporate Tax) #

(1)"Amount of tax calculated as prescribed by Presidential Decree" in Article 121-5 (1) of the Act means the following amount of tax: <Amended on Feb. 9, 2006; Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013>

1. In cases under Article 121-5 (1) 1 and 5 of the Act: The amount of tax reduced or exempted within five years retrospectively from the date of revocation or closure;

2. In cases under Article 121-5 (1) 2 of the Act: The amount of tax reduced or exempted within five years retrospectively from the date it falls short of the standards for tax reduction and exemption (referring to the requirements for a business eligible for tax reduction or exemption, minimum requirements for foreign investments, requirements for the number of employees at ordinary times, etc. provided for in Article 116-2 (1), (3), (5) through (7), (9), (10), and (16) through (21));

3. In cases under Article 121-5 (1) 3 of the Act: The amount of tax reduced or exempted within five years retrospectively from expiration of a period set for corrective orders;

4. In cases under Article 121-5 (1) 4 of the Act: The amount of tax calculated by multiplying the amount of tax reduced or exempted for five years retrospectively from the date stocks, etc. are transferred by the percentage of transferred stocks, etc. in the stocks, etc. owned by the foreign investor as at the time of tax reduction or exemption (limited to where the stocks, etc. are transferred during the period for reduction or exemption under Article 121-2 (2) or (12) of the Act);

5. In cases under Article 121-5 (1) 6 of the Act: The amount of tax reduced or exempted within five years (or three years in cases it fails to meet the standards for tax reduction and exemption concerning employment) retrospectively from the fifth year (or third year in cases it fails to meet the standards for tax reduction and exemption concerning employment) after foreign investment was reported.

(2) Deleted. <Feb. 15, 2013>

(3)"Additional amount equivalent to interest calculated as prescribed by Presidential Decree" in Article 121-5 (1) of the Act means the amount calculated by multiplying the period referred to in subparagraph 1 and the rate referred to in subparagraph 2, by the amount of tax reduced or exempted under paragraph (1): <Newly Inserted on Feb. 9, 2006; Feb. 18, 2010; Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the date the tax return of the taxable year during which the tax is reduced or exempted, is filed, until the date the tax return of the taxable year in which the grounds provided for in Article 121-5 of the Act arise;

2. The rate specified in Article 11-2 (9) 2.

(4) The amount of tax specified in paragraph (1) means that reduced or exempted from the income generated in the taxable year falling on the fifth anniversary retrospectively from the relevant basic date and in the taxable years thereafter. <Newly Inserted on Feb. 15, 2013>

(5) Where any grounds specified in Article 121-5 (1) of the Act, arise simultaneously, the grounds due to which the amount of tax is the greater of that specified in paragraph (1), shall be applied, and where they occur in succession, they shall be applied sequentially in the order of occurrence from the one which has first occurred up to the limit of the amount of tax reduced or exempted. <Newly Inserted on Feb. 15, 2013>

[This Article Newly Inserted on May 24, 1999]

Article 116-8(Additional Collection of Customs Duties) #

(1) The additional collection of customs duties, individual consumption tax, and value-added tax under Article 121-5 (2) of the Act shall be made according to the following applicable standards: <Amended on Dec. 29, 2000; Feb. 19, 2005; Dec. 31, 2007; Feb. 4, 2009; Feb. 18, 2010; Feb. 15, 2013>

1. In cases under Article 121-5 (2) 1 or 4 of the Act: The amount of tax reduced or exempted within three years (five years for the individual consumption tax and value-added tax) retroactively from the date of revocation or closure shall be additionally collected;

2. In cases under Article 121-5 (2) 2 of the Act: The amount of tax reduced or exempted for capital goods used for any purposes other than the declared one or disposed of, which have been reported within three years (five years for the individual consumption tax and value-added tax) from the date of accepting an import declaration under the Customs Act shall be additionally collected;

3. In cases under Article 121-5 (2) 3 of the Act: The amount of tax reduced or exempted or capital goods where a foreign investor transfers the stocks, etc. owned under the Act within three years from the exemption date of the customs duties, etc. shall be additionally collected on the capital goods exceeding the limit of the investment amount remaining after the transfer, etc. of the stocks, etc. (the order of additional collection shall begin with the tax amount reduced or exempted on the day closer to the date of the transfer of the stocks);

4. In cases under Article 121-5 (2) 5 of the Act: The amount of tax reduced or exempted within five years (three years where it fails to meet the standards for tax reduction and exemption concerning employment) retroactively from the date on which five years (three years where it fails to meet the standards for tax reduction and exemption concerning employment) elapse after foreign investment was reported, shall be additionally collected.

(2) Article 100 (2) of the Customs Act shall apply mutatis mutandis to the calculation of customs duties to be collected additionally under paragraph (1). <Amended on Feb. 15, 2013>

(3) Deleted. <Feb. 15, 2013>

[This Article Newly Inserted on May 24, 1999]

Article 116-10(Exemption from Additional Tax Collection) #

(1) In any case provided for in Article 121-5 (5) 1 or 3 through 5 of the Act, no tax prescribed in Article 121-5 (1) through (3) of the Act shall be additionally collected pursuant to Article 121-5 (5) of the Act; and no tax prescribed in Article 121-5 (2) of the Act shall be additionally collected in any case provided for in Article 121-5 (5) 2 of the Act. <Amended on Sep. 11, 2014; Feb. 3, 2015>

(2)"Which is prescribed by Presidential Decree" in Article 121-5 (5) 5 of the Act means any of the following cases: <Amended on Dec. 29, 2000; Dec. 30, 2003; Feb. 9, 2006; Feb. 22, 2008; Feb. 29, 2008; Feb. 18, 2010; Sep. 11, 2014; Feb. 3, 2015; May 10, 2016; Feb. 7, 2017>

1. Where a foreign investor who has invested in a business that requires a technology for the new growth engine industry referred to in Article 121-2 (1) 1 of the Act, transfers his/her business eligible for tax reduction or exemption or retained stocks, etc. to a Korean national or Korean corporation, and the Minister of Economy and Finance confirms that such transfer does not hinder the relevant enterprise from manufacturing products or providing services by engaging in the business that requires the technology for the new growth engine industry independently in the Republic of Korea;

2. Where a foreign investor transfers retained stocks, etc. to a Korean national or Korean corporation pursuant to other statutes or regulations or government policies and such transfer is confirmed by the Minister of Economy and Finance;

3. Where a ground for additionally collecting taxes arises as prescribed in Article 121-5 (1) through (3) of the Act after the implementer of a free economic zone development project completes the development project;

4. Where a ground for additionally collecting taxes arises as prescribed in Article 121-5 (1) through (3) of the Act after the implementer of a Jeju investment promotion zone development project completes the development project;

5. Where a ground for additionally collecting taxes arises as prescribed in Article 121-5 (1) through (3) of the Act after the implementer of an enterprise city development project completes the development project;

6. Where a ground for additionally collecting taxes arises as prescribed in Article 121-5 (1) through (3) of the Act after the implementer of a development project of the Saemangeum project area completes the development project of the Saemangeum project area;

7. Where a foreign investor transfers retained stocks, etc. to a Korean national or Korean corporation, and the Korean national or Korean corporation subsequently re-transfers the stocks, etc. to another foreign investor within seven days, and the Minister of Economy and Finance confirms that such transfer causes no hindrance in continuing the original business.

(3) A person who intends to obtain confirmation under paragraph (2) 1, 2, and 7, shall file an application for confirming whether the person is eligible for exemption from additional tax collection, along with documents evidencing the grounds for exemption from additional tax collection, with the Minister of Economy and Finance, within two months from the date of transfer of the business eligible for tax reduction or exemption, stocks, or equity shares. <Newly Inserted on Feb. 9, 2006; Feb. 22, 2008; Feb. 29, 2008; Sep. 11, 2014; May 10, 2016>

(4) Upon receipt of an application for confirming whether an applicant is eligible for exemption from additional tax collection under paragraph (3), the Minister of Economy and Finance shall examine whether the applicant is eligible for exemption from additional tax collection, in consultation with the competent Minister, and shall notify the applicant of the decision within 30 days from the filing date of the application: Provided, That the Minister of Economy and Finance may extend the processing period by up to 30 days in extenuating circumstances, and shall notify the applicant of the reasons for the extension and the extended processing period in such cases. <Amended on Sep. 11, 2014>

(5) Upon confirming whether a person is eligible for exemption from additional tax collection under paragraph (4), the Minister of Economy and Finance shall notify the Minister of the Interior and Safety, the Commissioner of the National Tax Service, the Commissioner of Korea Customs Service, and the head of the local government having jurisdiction over the place of business of the relevant foreign investment enterprise thereof. <Newly Inserted on Feb. 9, 2006; Feb. 29, 2008; Sep. 11, 2014; Feb. 11, 2020>

[This Article Newly Inserted on May 24, 1999]

[Title Amended on Feb. 9, 2006]

Article 116-11(Notification of Causes for Additional Collection of Taxes) #

(1) Where the Minister of Economy and Finance, the Minister of Trade, Industry and Energy, the head of a tax office, the head of a customs office, the head of a local government, the president & CEO of the Korea Trade-Investment Promotion Agency, or the head of a foreign exchange bank entrusted with the authority of the Minister of Trade, Industry and Energy pursuant to Article 40 (2) of the Enforcement Decree of the Foreign Investment Promotion Act becomes aware of the fact that any cause for additionally collecting taxes under Article 121-5 (1) through (3) of the Act has occurred, he/she shall notify the relevant authority for the additional collection thereof without delay. <Amended on Feb. 19, 2005; Feb. 29, 2008; Mar. 23, 2013>

(2) Where the Minister of Economy and Finance, the Minister of Trade, Industry and Energy, the head of a tax office, the head of a customs office, the head of a local government, the president & CEO of the Korea Trade-Investment Promotion Agency, or the head of a foreign exchange bank entrusted with the authority of the Minister of Trade, Industry and Energy pursuant to Article 40 (2) of the Enforcement Decree of the Foreign Investment Promotion Act has notified the occurrence of a cause for additional collection under paragraph (1) or has additionally collected taxes under Article 121-5 (1) through (3) of the Act, he/she shall notify or report the relevant fact to the Minister of Economy and Finance and the Minister of the Interior and Safety without delay. <Amended on Feb. 19, 2005; Feb. 29, 2008; Mar. 23, 2013; Feb. 11, 2020>

(3) The date of business closure of a foreign-capital invested company under Article 121-5 (1) 5, (2) 4 and (3) 4 of the Act shall be the earlier date between the date of business closure or the date of cancellation of a registration under Article 8 (6) or (7) of the Value-Added Tax Act. <Amended on Feb. 19, 2005; Feb. 15, 2013; Jun. 28, 2013>

(4) Upon having verified the date of business closure of a foreign-capital invested company, the head of a tax office shall report it to the Minister of Economy and Finance and the Minister of Trade, Industry and Energy and shall, without delay, notify it to the head of an agency entrusted with the post management of the foreign-capital invested company pursuant to Article 40 (2) of the Enforcement Decree of the Foreign Investment Promotion Act, and the head of the customs office and the head of the local government having jurisdiction over the business place of such foreign-capital invested company. <Amended on Feb. 19, 2005; Feb. 29, 2008; Mar. 23, 2013>

(5) For the purpose of Article 121-5 (6) of the Act, no tax reduction or exemption under Articles 121-2 through 121-4 of the Act shall apply to the relevant taxable year including the period from the commencement date of the relevant taxable year to the date on which the relevant cause has occurred and the remaining period for reduction or exemption, and the same shall also apply where the standards for tax reduction and exemption provided for in Article 121-2 (1) of the Act, with the exception of its subparagraphs, are met or the corrective order issued under Article 28 (5) of the Foreign Investment Promotion Act is fulfilled during the remaining period for reduction or exemption from the date on which the relevant cause has occurred. <Newly Inserted on Feb. 15, 2013>

[This Article Newly Inserted on May 24, 1999]

Article 116-13(Entrustment of Authority) #

(1) The Minister of Economy and Finance may entrust his/her authority to receive applications for tax reduction or exemption, applications for modification of tax reduction or exemption, or requests for prior verification under Articles 121-2 and 121-4 of the Act and authority to take the procedures for making decisions on reduction or exemption, modification of reduction or exemption, or whether a person is eligible for reduction or exemption, to the president & CEO of the Korea Trade-Investment Promotion Agency and the heads of foreign exchange banks pursuant to Article 40 (2) of the Enforcement Decree of the Foreign Investment Promotion Act. In such cases, the Minister of Economy and Finance shall designate and publicly notify institutions entrusted with such authority. <Newly Inserted on Feb. 15, 2013; Feb. 5, 2016>

(2) With respect to the foreign investment in free trade zones, the Minister of Economy and Finance shall entrust his/her authority to receive applications for tax reductions or exemptions, applications for modification of tax reductions or exemptions, or requests for prior verification, and to determine tax reductions or exemptions, to modify tax reductions or exemptions, or to determine whether an applicant is eligible for tax reductions or exemptions, and to notify thereof under Articles 121-2 and 121-4 of the Act to the authorized administrator. <Newly Inserted on Dec. 31, 1999; Dec. 29, 2000; Jun. 22, 2004; Feb. 29, 2008>

(3) The competent Ministers, authorized administrators, etc. entrusted with authority as prescribed in paragraphs (1) and (2) shall notify the Minister of Economy and Finance of the details of the performed entrusted affairs; and where the president & CEO of the Korea Trade-Investment Promotion Agency or the head of a foreign exchange bank receives an application for tax reductions or exemptions, an application for modification to tax reductions or exemptions, or a request for prior verification under paragraph (1), he/she shall, without delay, forward it to the Minister of Economy and Finance. <Amended on Dec. 31, 1999; Jun. 22, 2004; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013>

(4) The Minister of Economy and Finance may set further details necessary for performing the entrusted affairs under paragraphs (1) and (2). <Amended on Dec. 31, 1999; Feb. 29, 2008; Feb. 18, 2010; Feb. 15, 2013>

[This Article Newly Inserted on May 24, 1999]

Article 116-14(Reduction or Exemption of Corporate Tax for Enterprises that Occupy Jeju Science Park) #

(1)"Businesses prescribed by Presidential Decree, such as biotech industry or information and communications industry" in Article 121-8 (1) of the Act means the businesses in any of the following industries: <Amended on Feb. 19, 2005; Feb. 29, 2008; Aug. 18, 2009; Feb. 18, 2010; Feb. 2, 2012; Mar. 23, 2013; Jun. 21, 2016; Nov. 20, 2020>

2. The information and communications industry defined in subparagraph 2 of Article 2 of the Information and Communications Technology Industry Promotion Act;

3. Industries that provide information and communications services defined in Article 2 (1) 2 of the Act on Promotion of Information and Communications Network Utilization and Information Protection;

4. Industries related to advanced technology and products publicly notified by the Minister of Trade, Industry and Energy pursuant to Article 5 (1) of the Industrial Development Act.

(2)"Cumulative investments prescribed by Presidential Decree" in Article 121-8 (2) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of corporate tax or income tax is granted under Article 121-8 (1) of the Act. <Newly Inserted on Dec. 30, 2010>

(3) The amount of the income tax or corporate tax to be paid under Article 121-8 (4) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive years after the end of the taxable year in which tax reduction or exemption is granted, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing a tax base of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 28, 2023> The aggregate of amounts of tax reduced or exempted under Article 121-8 (2) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and a service business referred to in Article 121-8 (2) 2 of the Act)]

〔별표·서식 이미지 — 상단 '원문 보기'에서 확인〕</img>

(4) For the purposes of Article 121-8 (2) and (4) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and of full-time youth employees and the method for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 28, 2023>

(5) A person who wishes to be granted a reduction or exemption of corporate tax or income tax as prescribed in Article 121-8 (1) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 29, 2008; Dec. 30, 2010>

(6)"Service business prescribed by Presidential Decree" in the proviso of Article 121-8 (2) 2 of the Act means the service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019>

(7)"Tax amount calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 121-8 (6) of the Act means a tax amount in either of the following cases: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 121-8 (6) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 121-8 (6) 2 of the Act: A tax amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

[This Article Newly Inserted on Apr. 20, 2002]

Article 116-15(Reduction or Exemption of Corporate Tax for Enterprises that Occupy Jeju Investment Promotion Zone or Jeju Free Trade Zone) #

(1) An investment eligible for the reduction of, or exemption from, the corporate tax or income tax under Article 121-9 (1) 1 of the Act shall be any of the following investments: <Amended on Jan. 22, 2016; Feb. 17, 2021; Feb. 15, 2022; Feb. 29, 2024>

1. An investment of at least 20 million U.S. dollars made to establish a new facility in order to engage in any of the following businesses:

(a) Tourist hotel business, floating tourist hotel business, or Korea traditional hotel business defined in Article 2 (1) 2 of the Enforcement Decree of the Tourism Promotion Act: Provided, That the casino business referred to in Article 3 (1) 5 of the Tourism Promotion Act and the business operating a bonded store referred to in Article 196 of the Customs Act shall be excluded herefrom;

(b) Specialized resort business, general resort business, tourist excursion ship business, or tourist theater business defined in Article 2 (1) 3 of the Enforcement Decree of the Tourism Promotion Act: Provided, That the resort condominium business referred to in Article 3 (1) 2 (b) of the Tourism Promotion Act and the business operating the driving range referred to in Article 10 (1) 1 of the Installation and Utilization of Sports Facilities Act, of the specialized resort business and the general resort business, shall be excluded herefrom;

(c) International conference facility business defined in Article 2 (1) 4 of the Enforcement Decree of the Tourism Promotion Act;

(d) General amusement facilities defined in Article 2 (1) 5 of the Enforcement Decree of the Tourism Promotion Act;

(e) Tourist restaurant business defined in Article 2 (1) 6 of the Enforcement Decree of the Tourism Promotion Act;

(f) Marina business defined in subparagraph 5 of Article 2 of the Act on the Development and Management of Marinas;

2. An investment of at least five million U.S. dollars made to establish a new facility in order to engage in any of the following businesses:

(a) The cultural industry defined in subparagraph 1 of Article 2 of the Framework Act on the Promotion of Cultural Industries;

(b) A business operating welfare facilities for elderly persons defined in Article 31 of the Welfare of Senior Citizens Act;

(c) A business operating juvenile training facilities defined in subparagraph 1 of Article 10 of the Youth Activity Promotion Act;

(d) A tramway business defined in subparagraph 7 of Article 2 of the Tramway Transportation Act;

(e) A business generating electric power utilizing new and renewable energy defined in subparagraphs 1 and 2 of Article 2 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy;

(f) A self-regulating school defined in Article 216 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City, an international high school defined in Article 217 of that Act, or a foreign educational institution defined in Article 220 of that Act, or an international school defined in Article 223 of that Act;

(g) A foreign medical institution defined in Article 307 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City, or a medical institution established under Article 33 of the Medical Service Act (excluding medical clinics, dental clinics, oriental medical clinics, and midwifery clinics);

(h) An educational institute defined in subparagraph 10 (b) of attached Table 1 to the Enforcement Decree of the Building Act (including training institutes and other similar institutes);

(i) An industry that utilizes advanced technology defined in Article 5 of the Industrial Development Act;

(j) A business researching and developing technology for health and medical service defined in Article 2 (1) 1 of the Health and Medical Service Technology Promotion Act or a research and development service business providing assistance in research and development of technology for health and medical service by providing technical information or consulting service or by conducting tests, analyses, etc.;

(k) Food manufacturing and beverage manufacturing operated in factories in accordance with the Industrial Cluster Development and Factory Establishment Act.

(l) A cosmetics manufacturing business under the Cosmetics Act;

(m) A research and development business for any of the following businesses:

(i) An industry utilizing advanced technology pursuant to Article 5 of the Industrial Development Act;

(ii) A cosmetics manufacturing business under the Cosmetics Act;

(iii) A food manufacturing business;

(iv) A beverage manufacturing business.

(2) An investment eligible for the reduction of, or exemption from, the corporate tax or income tax under Article 121-9 (1) 2 of the Act shall be either of the following: <Amended on Dec. 30, 2003; Jan. 5, 2005; Feb. 19, 2005; Jun. 26, 2007; Dec. 30, 2010; Jan. 22, 2016; Feb. 5, 2016; Feb. 12, 2019>

1. Where the total project cost is at least ten million U.S. dollars; the number of full-time employees newly hired by the enterprise that occupies the free trade zone is at least 100 persons; and a new facility is established to engage in the business specified in Article 10 (1) 1 of the Act on Designation and Management of Free Trade Zones;

2. Where the total project cost is at least five million U.S. dollars; and a new facility is established to engage in the business specified in Article 10 (1) 5 of the Act on Designation and Management of Free Trade Zones.

(3) An investment eligible for the reduction of, or exemption from, the corporate tax and income tax as prescribed in Article 121-9 (1) 3 of the Act means an investment in a development project, the total cost of which is at least 100 billion won. <Newly Inserted on Feb. 4, 2009; Dec. 30, 2010; Jan. 22, 2016>

(4)"Cumulative investments prescribed by Presidential Decree" in Article 121-9 (4) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of corporate tax or income tax is granted under Article 121-9 (2) of the Act. <Newly Inserted on Dec. 30, 2010>

(5)"Service business prescribed by Presidential Decree" in Article 121-9 (4) 2 of the Act means a service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022>

(6) The amount of the income tax or corporate tax to be paid under Article 121-9 (6) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive years after the end of the taxable year in which tax reduction or exemption is granted, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax base of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023> The aggregate of amounts of tax reduced or exempted under Article 121-9 (4) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and a service business referred to in Article 121-9 (4) 2 of the Act)]

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(7) For the purposes of Article 121-9 (4) and (6) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and of full-time youth employees and the method for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

(8) A person who wishes to be granted a reduction or exemption of corporate tax or income tax under Article 121-9 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 29, 2008; Dec. 30, 2010; Feb. 15, 2022>

[This Article Newly Inserted on Apr. 20, 2002]

Article 116-18(Notification, etc. of Causes for Additional Collection of Taxes) #

(1) When the Minister of Trade, Industry and Energy, the Minister of Land, Infrastructure and Transport, the head of a tax office, the head of a customs office, or the head of a local government becomes aware of the fact that any cause for additional collection of taxes provided for in Article 121-12 (1) of the Act has arisen, he/she shall notify the relevant authority for additional collection thereof, without delay. <Amended on Feb. 29, 2008; Mar. 23, 2013; Jan. 22, 2016>

(2) When the head of a tax office, the head of a customs house, and the head of a local government has additionally collected taxes under Article 121-12 (1) of the Act, he/she shall notify the Jeju Special Self-Governing Province Governor thereof, without delay. <Amended on Feb. 29, 2008; Mar. 23, 2013; Jan. 22, 2016>

(3) The date on which a company located in the Jeju investment promotion zone or Jeju free trade zone closes its business under Article 121-12 (1) 3 of the Act shall be the date of business closure reported under Article 8 (6) of the Value-Added Tax Act. <Amended on Feb. 19, 2005; Jun. 28, 2013>

(4) Upon having verified the date of business closure of a company located in the Jeju investment promotion zone or Jeju free trade zone, the head of a tax office shall notify the head of the customs office and the head of the local government having jurisdiction over the place of business of the company thereof, without delay. <Amended on Jan. 22, 2016>

[This Article Newly Inserted on Apr. 20, 2002]

Articles 116-19 (Special Cases concerning Indirect Taxes on Goods of Bonded Stores Installed on Passway Entering into Korea) (1) Where an entrepreneur directly supplies goods manufactured and processed at his/her place of manufacture (hereafter in this Article, referred to as"domestic tax-free goods") to a bonded store referred to in the proviso of Article 196 (1) 1 and Article 196 (2) of the Customs Act (hereafter in this Article, referred to as"bonded store"), he/she shall be granted an exemption (in the case of value-added tax, referring to the application of zero tax rate; hereafter in this Article, the same shall apply) from the value-added tax and liquor tax on such goods under Article 121-14 (3) of the Act. <Amended on Feb. 17, 2021>

(2) A person who wishes to be granted an exemption from value-added tax under paragraph (1) shall record the supply results of domestic tax-free goods in the relevant period of return, in a statement on the results of supply to bonded stores in the form prescribed by the Commissioner of the National Tax Service, and shall submit such statement to the head of the tax office having jurisdiction over the place of business after obtaining confirmation from the person who has received a license under the proviso of Article 176-2 (1) of the Customs Act (hereafter in this Article, referred to as"bonded store operator"), when he/she files a return on tax base and the amount of tax payable or the amount of tax refundable under Articles 48 and 49 of the Value-Added Tax Act.

(3) A person who wishes to granted an exemption from liquor tax under paragraph (1) shall file an application for approval of tax exemption on the relevant liquor with the head of the competent tax office, applying mutatis mutandisArticle 20 (1) and (2) of the Enforcement Decree of the Liquor Tax Act. <Amended on Feb. 17, 2021>

(4) Upon carrying the liquor, value-added tax and liquor tax on which are exempted under paragraph (1), into a bonded store, the bonded store operator shall submit a report of carry-in of the liquor in the form prescribed by the Commissioner of the National Tax Service to the head of the competent tax office within five days from the carry-in date.

(5) Where any goods exempted from value-added tax or liquor tax under Article 121-14 (1) and (2) of the Act falls under any of the following cases, the head of the competent tax office shall collect the exempted value-added tax or liquor tax from the person who has conducted the relevant act: <Amended on Feb. 17, 2021>

1. Where the relevant person purchases the goods under another person's name at a bonded store;

2. Where a bonded store operator illegally distributes the goods;

3. Where a person entering into Korea sells the goods that he/she has purchased;

4. Where any person purchases the goods from a person entering into Korea (limited to cases where the person entering into Korea referred to in subparagraph 3, who has sold the goods, is a foreigner residing in a foreign country).

[This Article Newly Inserted on Feb. 12, 2019]

[Title Amended on Feb. 17, 2021]

Article 116-21(Reduction or Exemption of Corporate Tax for Start-Up Enterprises in Enterprise City Development Zones) #

(1) An investment eligible for the reduction of, or exemption from, the corporate tax or income tax under Article 121-17 (1) 1, 3, 5, 8, or 9 of the Act means an investment for establishing a new facility in compliance with the standards for the investment amount and for the number of full-time employees in subparagraph 1 to operate a business referred to in any subparagraph of Article 116-2 (17) in the area referred to in any item of subparagraph 2: <Amended on Feb. 28, 2023; Feb. 29, 2024>

1. Standards for the investment amount and the standards for the number of full-time employees:

(a) In cases of a business falling under Article 116-2 (17) 1, 4, or 5: The investment amount shall be at least two billion won, and the number of full-time employees shall be at least 30 persons;

(b) In cases of a business falling under Article 116-2 (17) 2: The investment amount shall be at least 500 million won, and the number of full-time employees shall be at least ten persons;

(c) In cases of a business falling under Article 116-2 (17) 3: The investment amount shall be at least one billion won, and the number of full-time employees shall be at least 15 persons;

2. Investment area:

(a) An enterprise city development zone defined in subparagraph 2 of Article 2 of the Special Act on the Development of Enterprise Cities (hereafter in this Article referred to as"enterprise city development zone");

(b) A regional development project zone designated under Article 11 of the Regional Development Assistance Act (limited to the regional development projects designated under Article 7 (1) 1 of that Act; hereafter in this Article referred to as"regional development project zone") or a regional promotion area designated under Article 67 of that Act (hereafter in this Article referred to as"regional promotion area");

(c) The scope approved and publicly notified under Article 11 (5) and (8) of the Special Act on Support for Areas Adjacent to Districts Granted to the United States Armed Forces in Korea and Article 12 of the Enforcement Decree of that Act (hereafter in this Article referred to as"scope of projects for development of areas, etc. adjacent to a granted district"), among areas within undeveloped areas defined in subparagraph 5 of Article 2 of the Regional Development Assistance Act;

(d) The special marine exposition district designated and publicly notified under Article 15 (1) of the Special Act on the Commemoration of and Follow-Up on the Expo 2012 Yeosu Korea (hereafter in this Article referred to as"special marine exposition district");

(e) The Saemangeum investment promotion district designated pursuant to Article 11-5 of the Special Act on Promotion and Support for Saemangeum Project (hereafter in this Article referred to as"Saemangeum investment promotion district’).

(f) Special economic zones for peace designated pursuant to Article 8 of the Act on the Designation and Operation of Special Economic Zones for Peace (hereinafter referred to as "Special Economic Zones for Peace").

(2) An investment eligible for the reduction of, or exemption from, the corporate tax or income tax under Article 121-17 (1) 2, 4, 6, 7, or 10 of the Act means any investment made in a project for developing an enterprise city development zone in accordance with the relevant enterprise city development plan formulated under Article 11 of the Special Act on the Development of Enterprise Cities or in any of the following projects, total development cost of which is at least 50 billion won: <Amended on Feb. 18, 2010; Dec. 30, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 7, 2017; Feb. 12, 2019; Feb. 17, 2021; Feb. 29, 2024>

1. A regional development project executed by a project implementer designated under Article 19 of the Regional Development Assistance Act to develop a regional development project zone or a regional promotion area;

2. A project executed by a project implementer designated under Article 10 (1) of the Special Act on Support for Areas Adjacent to Districts Granted to the United States Armed Forces in Korea pursuant to paragraph (2) of that Article in an undeveloped area defined in subparagraph 5 of Article 2 of the Regional Development Assistance Act;

3. A development project executed by a project implementer designated under Article 18 (1) of the Special Act on the Commemoration of and Follow-Up on the Expo 2012 Yeosu Korea to develop the special marine exposition district;

4. The Saemangeum Project executed by a project implementer designated under Article 8 (1) of the Special Act on Promotion of the Saemangeum Project.

5. A development project for a special economic zone for peace that is implemented by a development project implementer designated pursuant to Article 15 of the Act on the Designation and Operation of Special Peace Economic Zones.

(3) Income eligible for tax reduction or exemption for the business activities conducted by an enterprise that starts its business or establishes a new place of business in an enterprise city development zone, a regional development project zone, a regional promotion area, the scope of project for development of areas, etc. adjacent to a granted district, a special marine exposition district, the Saemangeum investment promotion district, or special economic zone for peace referred to in Article 121-17 (1) 1, 3, 5, 8, or 9 of the Act means the income directly accruing from the facilities in which the enterprise has made investments in the relevant area, in order to conduct the business eligible for tax reduction or exemption under paragraph (1). <Amended on Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 12, 2019; Feb. 28, 2023; Feb. 29, 2024>

(4)"Cumulative investments prescribed by Presidential Decree" in Article 121-17 (4) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of corporate tax or income tax is granted under Article 121-17 (2) of the Act. <Newly Inserted on Dec. 30, 2010>

(5) The amount of the income tax or corporate tax to be paid under Article 121-17 (6) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for the two consecutive years after the taxable year in which the tax reduction or exemption is granted ends, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 28, 2023>

The aggregate of amounts of tax reduced or exempted under Article 121-17 (4) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee or a service business referred to in Article 121-17 (4) 2 of the Act is applicable)]

(6) For the purposes of Article 121-17 (4) and (6) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and of full-time youth employees and the method for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 28, 2023>

(7) A person who wishes to be granted a reduction or exemption of corporate tax or income tax under Article 121-17 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the competent tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 29, 2008; Dec. 30, 2010>

(8)"Service business prescribed by Presidential Decree" in Article 121-17 (4) 2 of the Act means the service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019>

(9)"Zone prescribed by Presidential Decree" in Article 121-17 (1) 3 of the Act means the scope of project for development of areas, etc. adjacent to a granted district. <Newly Inserted on Feb. 12, 2019>

(10) The tax reduction or exemption under paragraph (1) shall not apply to taxable years in which an enterprise eligible under that paragraph fails to meet the criteria for the number of persons to be employed under the same subparagraph. <Newly Inserted on Feb. 12, 2019>

[This Article Newly Inserted on Feb. 19, 2005]

[Title Amended on Feb. 18, 2010]

Article 116-24(Notification, etc. of Causes for Additional Collection of Taxes) #

(1) When the Minister of Land, Infrastructure and Transport, and the head of a local government becomes aware of the fact that any of the causes for additionally collecting taxes under Article 121-19 (1) of the Act has occurred, he/she shall, without delay, notify the head of the competent tax office thereof. <Amended on Feb. 29, 2008; Mar. 23, 2013>

(2) The date of permanent closure of business reported under Article 8 (6) of the Value-Added Tax Act shall be deemed the date of permanent closure of the business or place of business of an enterprise that started up a business or established a place of business in an enterprise city development zone, a regional development project zone, a regional promotion area, the special marine exhibition district, or the scope of projects for development of areas adjacent to a granted district, Saemangeum Investment Promotion Zone, and peace economic zone, etc. defined under Article 121-19 (1) 4, 5, 6, 8, 10, or 12 of the Act (hereafter referred to as "start-up business, etc." in this Article). <Amended on Feb. 18, 2010; Feb. 15, 2013; Jun. 28, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 17, 2021; Feb. 29, 2024>

(3) Income eligible for tax reduction or exemption for the business activities engaged in by an enterprise that starts its business or establishes a new place of business in an enterprise city development zone, a regional development project zone, a regional promotion area, a special marine exposition district, the scope of project for development of areas, etc. adjacent to a granted district, the Saemangeum investment promotion district, or special peace economic zone referred to in Article 121-17 (1) 1, 3, 5, 8, or 9 of the Act means the income directly accruing from the facilities in which the enterprise has made investments in the relevant area, in order to engage in the business eligible for tax reduction or exemption under paragraph (1). <Amended on Feb. 18, 2010; Feb. 15, 2013; Feb. 3, 2015; Feb. 5, 2016; Feb. 12, 2019; Feb. 28, 2023; Feb. 29, 2024>

[This Article Newly Inserted on Feb. 19, 2005]

Article 116-25(Reduction or Exemption of Corporate Tax for Enterprises that Occupy Investment Promotion Zone in Asian Cultural Hub City) #

(1) An investment eligible for the reduction of, or exemption from, the corporate tax or income tax under Article 121-20 (1) of the Act means any of the following investments: <Amended on Feb. 7, 2017>

1. An investment of at least 500 million won made to establish a new facility in order to engage in any of the following business activities:

(a) Publishing activities;

(b) Business producing or distributing video or audio record products (excluding business operating rooms for viewing video products);

(d) Computer programming, system integration, and management services;

(e) Information service activities (excluding news agency activities);

(f) Advertising;

(g) Specialized design services;

(h) Exhibition, convention, and trade fair organization agencies;

(i) Creative and arts-related services (excluding individual artists);

2. An investment of at least three billion won made to establish a new facility in order to engage in any of the following business activities:

(a) Business operating a tourist accommodation business, tourist-use facility business (excluding where the driving range referred to in Article 10 (1) 1 of the Installation and Utilization of Sports Facilities Act is established and provided to tourists for use), international conference business, recreation facility business, or tourist convenience facility business referred to in Article 3 (1) of the Tourism Promotion Act;

(b) Business operating a juvenile training facility referred to in subparagraph 1 of Article 10 of the Youth Activity Promotion Act;

(c) Business operating an educational institute (including a training institute and other similar institutes) referred to in subparagraph 10 (b) of attached Table 1 to the Enforcement Decree of the Building Act.

(2)"Cumulative investments prescribed by Presidential Decree" in Article 121-20 (4) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of corporate tax or income tax is granted under Article 121-20 (2) of the Act. <Newly Inserted on Dec. 30, 2010>

(3)"Service business prescribed by Presidential Decree" in Article 121-20 (4) 2 of the Act means the service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022>

(4) The amount of the income tax or corporate tax to be paid under Article 121-20 (6) of the Act shall be calculated by the following formula (where the amount is a negative figure, it shall be deemed nil; if the number of full-time employees has decreased for the two consecutive years after the taxable year in which tax reduction or exemption is granted ends, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Newly Inserted on Dec. 30, 2010; Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023> The aggregate of amounts of tax reduced or exempted under Article 121-20 (4) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee or a service business referred to in Article 121-20 (4) 2 of the Act)]

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(5) For the purposes of Article 121-20 (4) and (6) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scope of full-time employees and of full-time youth employees and the method for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

(6) The amount of the corporate tax and income tax to be additionally collected pursuant to Article 121-20 (8) of the Act shall be the full amount of tax reduced or exempted. <Newly Inserted on Dec. 30, 2010; Feb. 15, 2022>

(7)"Tax amount calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 121-20 (10) of the Act means a tax amount in either of the following cases: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 121-20 (10) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 121-20 (10) 2 of the Act: A tax amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

(8) Any person who intends to apply for a reduction or exemption of corporate tax or income tax pursuant to Article 121-20 (11) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Dec. 30, 2010; Feb. 15, 2022>

[This Article Newly Inserted on Apr. 21, 2009]

Article 116-26(Reduction or Exemption of Corporate Tax for Enterprises Incorporated in Financial Hubs) #

(1)"Requirements prescribed by Presidential Decree" in Article 121-21 (1) of the Act means that the investment made by the relevant enterprise is at least two billion won; and the number of full-time employees working at the place of business located in the relevant zone is at least ten. <Amended on Feb. 12, 2019>

(2) Income accruing from the business eligible for tax reduction or exemption conducted at a place of business located in a financial hub referred to in Article 121-21 (2) of the Act means the income directly accruing from the place of business that has invested in such zone to engage in the business eligible for tax reduction or exemption under Article 121-21 (1) of the Act.

(3)"Cumulative investments prescribed by Presidential Decree" in Article 121-21 (4) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of corporate tax or income tax is granted under Article 121-21 (2) of the Act.

(4)"Service business prescribed by Presidential Decree" in Article 121-21 (4) 2 of the Act means the service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022>

(5) The amount of the income tax or corporate tax to be paid under Article 121-21 (6) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for the two consecutive years after the taxable year in which a tax reduction or exemption is granted ends, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

The aggregate of amounts of tax reduced or exempted under Article 121-21 (4) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee or a service business referred to in Article 121-21 (4) 2 of the Act)]

(6) For the purposes of Article 121-21 (4) and (6) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scopes of full-time employees and of full-time youth employees, and the methods for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 15, 2022; Feb. 28, 2023>

(7) The amount of the corporate tax or income tax to be additionally collected pursuant to Article 121-21 (8) of the Act shall be the full amount of tax reduced or exempted. <Amended on Feb. 15, 2022>

(8) Where the Financial Services Commission, the Minister of Land, Infrastructure and Transport, and the head of a local government becomes aware that a ground for additionally collecting taxes has arisen as prescribed in Article 121-21 (8) of the Act, he/she shall without delay notify the head of the competent tax office thereof. <Amended on Mar. 23, 2013; Feb. 15, 2022>

(9) Upon ascertaining the date of permanent closure of the business or place of business of an enterprise, etc. incorporated in a financial hub, the head of a tax office shall without delay notify the head of the local government having jurisdiction over the place of business of the relevant enterprise thereof. <Amended on Feb. 15, 2022>

(10)"Tax amount calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 121-21 (10) of the Act means a tax amount in either of the following cases: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 121-21 (10) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 121-21 (10) 2 of the Act: A tax amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

(11) A person who intends to apply for a reduction or exemption of corporate tax or income tax pursuant to Article 121-21 (11) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on Dec. 30, 2010]

Article 116-27(Reduction or Exemption of Corporate Tax for Enterprises that Occupy High-Tech Medical Complexes and National Food Clusters) #

(1)"Business prescribed by Presidential Decree" in Article 121-22 (1) 1 of the Act means any business related to the health and medical service technology defined in Article 2 (1) 1 of the Health and Medical Service Technology Promotion Act. <Amended on Feb. 11. 2020>

(2)"Cumulative investments prescribed by Presidential Decree" in Article 121-22 (1) 2 of the Act means the food industry defined in subparagraph 8 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry and businesses related to the industry. <Newly Inserted on Feb. 11, 2020>

(3)"Cumulative investments prescribed by Presidential Decree" in Article 121-22 (3) 1 of the Act means the aggregate of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable years in which a reduction or exemption of income tax or corporate tax is granted under Article 121-22 (2) of the Act. <Amended on Feb. 11. 2020>

(4)"Service business prescribed by Presidential Decree" in Article 121-22 (3) 2 of the Act means the service business referred to in Article 23 (4). <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022>

(5) The amount of the income tax or corporate tax to be paid under Article 121-22 (5) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for three consecutive years after the taxable year in which a tax reduction or exemption is granted ends, such amount to be paid in the third taxable year means an amount less the total amount paid in the first and second taxable years; and where the number of full-time employees has decreased for two consecutive years, such amount to be paid in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Amended on Feb. 21, 2014; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023>

The aggregate of amounts of tax reduced or exempted under Article 121-22 (3) 2 of the Act within three taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [Number of full-time employees of the place of business eligible for tax reduction or exemption in the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employees or a service business referred to in Article 121-22 (3) 2 of the Act)]

(6) For the purposes of Article 121-22 (3) and (5) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scopes of full-time employees and of full-time youth employees, and the methods for calculating the number of full-time employees and the number of full-time youth employees. <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023>

(7)"Tax amount calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 121-22 (7) of the Act means a tax amount in either of the following cases: <Newly Inserted on Feb. 15, 2022>

1. In cases of Article 121-22 (7) 1 of the Act: A tax amount by with the tax was reduced or exempted within three years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 121-22 (7) 2 of the Act: A tax amount by which the tax was reduced or exempted retroactively within five years from the date of relocation.

(8) A person who intends to apply for a reduction or exemption of income tax or corporate tax pursuant to Article 121-22 (8) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended on Feb. 11, 2020; Feb. 15, 2022>

[This Article Newly Inserted by Act No. Feb. 2, 2012]

[Title Amended on Feb. 11, 2020]

Article 116-28(Special Taxation for Split of National Agricultural Cooperative Federation) #

(1) Where an all-inclusive share swap under Article 360-2 of the Commercial Act takes place as prescribed in Article 121-23 (4) of the Act between the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act (hereafter referred to as the"National Agricultural Cooperative Federation" in this Article) and the NongHyup Agrobusiness Group referred to in Article 121-23 (3) of the Act, the amount by which taxation is re-deferred shall be equal to the advanced depreciation provisions recognized in the stocks acquired by the split under Article 121-23 (1) of the Act.

(2)"Business prescribed by Presidential Decree" in Article 121-23 (5) of the Act means any of the following: <Amended on Jun. 27, 2017>

1. Business for assistance and guidance, among the businesses specified in Article 134 (1) 2 (b) and (c), and 3 (b) of the Agricultural Cooperatives Act;

2. Business for funding necessary to promote financial programs under Article 161-4 (1) 6 of the Agricultural Cooperatives Act;

3. Business for assistance and guidance, among the businesses specified in subparagraph 3 of attached Table 4 of the Enforcement Decree of theAgricultural Cooperatives Act.

(3)"Amount of dividends to be paid to its members under Article 68 of the Agricultural Cooperatives Act" in Article 121-23 (7) of the Act means the sum of the following amounts: <Amended on Feb. 17, 2021>

1. The amount distributed by the National Agricultural Cooperative Federation to its members as dividends during the business year immediately following the relevant business year by applying mutatis mutandisArticle 68 of the Agricultural Cooperatives Act pursuant to Article 161 of that Act;

2. The amount calculated by subtracting the sum of the amounts recognized in the statement of tax adjustment as the reserve for proper purpose business under Article 121-23 (6) of the Act during the period from the business year in which March 2, 2012 falls to the business year immediately preceding the relevant business year, from the sum of amounts distributed to its members as dividends during the period from the business year that begins on or after March 2, 2012 to the relevant business year by applying mutatis mutandisArticle 68 of the Agricultural Cooperatives Act pursuant to Article 161 of that Act (if the amount is negative, it shall be deemed zero).

[This Article Wholly Amended on Feb. 3, 2015]

Article 116-29(Special Taxation for Division of National Federation of Fisheries Cooperatives) #

(1) For the purposes of Article 121-25 (1) of the Act, the case deemed a division that satisfies the requirements prescribed in Article 47 (1) of the Corporate Tax Act shall be where the National Federation of Fisheries Cooperatives incorporated under the Fisheries Cooperatives Act (hereafter in this Article, referred to as the"National Federation of Fisheries Cooperatives") separates its credit business and incorporates the SuHyup Bank pursuant to Article 141-4 (1) of the Fisheries Cooperatives Act.

(2)"Funds prescribed by Presidential Decree" in Article 121-25 (2) and (5) 2 of the Act means the funds the Korea Deposit Insurance Corporation incorporated under Article 3 of the Depositor Protection Act has invested in the National Federation of Fisheries Cooperatives pursuant to Article 153 of the Fisheries Cooperatives Act.

(3)"Business prescribed by Presidential Decree" in Article 121-25 (3) of the Act means the following business affairs:

1. Business affairs that a cooperative defined in subparagraph 4 of Article 2 of the Fisheries Cooperatives Act (hereinafter referred to as"cooperative"), entrusts to the Suhyup Bank pursuant to Article 141-9 (1) 4 of that Act;

2. Business affairs related to the entrusted operation and management of the computer system of the cooperatives among the business affairs referred to in Article 141-9 (1) 7 of the Fisheries Cooperatives Act.

(4) The corporations that use"fisheries cooperative" in their titles pursuant to Article 121-25 (4) 2 of the Act, mean the corporations that use"fisheries cooperative" in their titles pursuant to Article 162-2 (1) of the Fisheries Cooperatives Act.

(5)"Amount prescribed by Presidential Decree" in Article 121-25 (5) 1 of the Act means the amount that the National Federation of Fisheries Cooperatives distributes to its members in the business year immediately following the relevant business year by applying mutatis mutandisArticle 71 of the Fisheries Cooperatives Act pursuant to Article 168 of that Act.

(6) The royalties that a corporation pays for the use of the title to which Article 52 of the Corporate Tax Act shall not apply pursuant to Article 121-25 (6) of the Act means the royalties that a corporation pays for the use of"fisheries cooperative" in its title pursuant to Article 162-2 (1) of the Fisheries Cooperatives Act.

(7) Services using the title exempt from value-added tax under Article 121-25 (7) of the Act means those for which the National Federation of Fisheries Cooperatives permits the use of"fisheries cooperative" pursuant to Article 162-2 (1) of the Fisheries Cooperatives Act.

(8) The computer-related services exempt from value-added tax under Article 121-25 (8) 1 of the Act, are as follows:

1. Services the Suhyup Bank provides to establish an information network referred to in Article 138 (1) 1 (d) of the Fisheries Cooperatives Act, as entrusted by the National Federation of Fisheries Cooperatives pursuant to Article 141-9 (1) 4 of the Fisheries Cooperatives Act;

2. Services the Suhyup Bank provides to each cooperative for the entrusted operation and management of the computer system referred to in Article 141-9 (1) 7 of the Fisheries Cooperatives Act.

(9) The computer-related services exempt from value-added tax under Article 121-25 (8) 2 of the Act, mean the services the Suhyup Bank provides to the National Federation of Fisheries Cooperatives for the entrusted operation and management of the computer system referred to in Article 141-9 (1) 7 of the Fisheries Cooperatives Act.

[This Article Newly Inserted on Dec. 1, 2016]

[Previous Article 116-29 moved to Article 116-30 <Dec. 1, 2016>]

Article 116-30(Special Taxation for Assets Sold by Domestic Corporations for Repayment of Financial Debts and Investment) #

(1)"Business restructuring plan in the form prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 121-26 (1) of the Act means a plan approved by the head of the competent Ministry (hereafter in this Article referred to as"authority to approve business reorganization plans") under Article 10 of that Act, which shall include the following information pursuant to Article 9 (2) of the Special Act On The Corporate Revitalization (hereafter in this Article referred to as"business restructuring plan"). <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. The total amount and details of the amounts specified in paragraph (8) as those to be repaid through the transfer of assets (hereafter in this Article referred to as"debts owed to financial creditors");

2. The total amount and details of the assets to be invested through the transfer of assets (referring to the investment under Article 121-26 (1) 2 of the Act; hereafter in this Article, the same shall apply);

3. A plan for repayment of debts owed to financial creditors under subparagraph 1 or an investment plan under subparagraph 2;

4. Details of the assets to transferred and a transfer plan.

(2)"Amount prescribed by Presidential Decree . . . exceeding the deficit prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 121-26 (1) of the Act means the amount calculated according to the following formula (hereafter in this Article referred to as"gains on transfer"): <Newly Inserted on Feb. 15, 2022>

Capital gains = (A ? B) × (D + E)/C

A: Capital gains under Article 121-26 (1) of the Act

B: Deficit under Article 13 (1) 1 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which assets are transferred (hereafter in this Article referred to as"carried-over deficit). In such cases, if a domestic corporation first offsets its carried-over deficit with the value of assets received without consideration or the decrease in debts as a result of the exemption or extinguishment of obligations, the deficit shall be the amount remaining after subtracting the offset amount from the carried-over deficit.

C: Transfer value of the assets transferred under Article 121-26 (1) of the Act (hereafter in this Article referred to as"transfer value")

D: The planned repayment amount of debts stated in the statement (plan) of repayment of debts and investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, out of the transfer value

E: The planned investment amount stated in the statement (plan) of repayment of debts and investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, out of the transfer value

(3)"Date prescribed by Presidential Decree" in Article 121-26 (1) 1 of the Act means the date a domestic corporation receives an installment (the down payment shall be deemed included in the first installment). <Amended on Feb. 15, 2022>

(4)"Unavoidable causes prescribed by Presidential Decree" in Article 121-26 (1) 1 of the Act means where it is impossible to repay a debt due to a situation in which a financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act (hereafter in this Article, referred to as"financial creditor") is unable to receive the repayment of the debt (hereafter in this Article, referred to as"amount of debts paid"). <Amended on Feb. 13, 2018; Feb. 15, 2022>

(5)"Deadline prescribed by Presidential Decree" in Article 121-26 (1) 1 of the Act means the following relevant deadline: <Amended on Feb. 15, 2022>

1. Where the unavoidable causes provided for in paragraph (4) arise and the date such causes terminate comes three months later than the date the relevant assets are transferred (hereafter in this Article, referred to as"date assets are transferred"), the date following the date the relevant causes terminate;

2. In any case other than subparagraph 1, the date three months lapse from the date assets are transferred.

(6)"Deadline prescribed by Presidential Decree" in Article 121-26 (1) 2 of the Act means the first anniversary of the asset transfer date. <Amended on Feb. 15, 2022>

(7) For the purposes of Article 121-26 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the asset transfer date: Provided, That the date provided for in paragraph (3) shall apply to a transfer under long-term installment terms. <Amended on Feb. 15, 2022>

(8) For the purposes of Article 121-26 (1) and (2) of the Act, the scope of debts shall be limited to those specified in the business restructuring plan, which shall include the details of debts and a repayment plan through the transfer of assets and shall include the following: <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. Business-related loans from any financial creditor;

2. Interest on the loans referred to in subparagraph 1;

3. Corporate bonds issued by the relevant domestic corporation to raise funds, which are purchased or guaranteed by the financial creditors;

4. Commercial paper issued by the relevant domestic corporation to raise funds, which is purchased by the financial creditors.

(9) Where an amount not included in gross income shall be included in gross income in accordance with the former part of the provisions, with the exception of its subparagraphs, of Article 121-26 (2) of the Act, the amount calculated by the following formula shall be included in gross income: <Amended on Feb. 15, 2022>

1. In cases falling under Article 121-26 (2) 1 of the Act: The amount calculated by the following formula:

Amount included in gross income = [A × B/(B + C) × (B ? D)/B] + [A × C/(B + C) × (C ? E)/C]

A: Capital gains

B: Planned repayment amount of debts

C: Planned investment amount

D: Actually repaid amount of debts out of the transfer value

E: Capital gains out of actually invested amount

2. In cases falling under Article 121-26 (2) 2 of the Act: The amount calculated by the following formula:

Amount included in gross income = A × B/(B + C) × D/B × E)

A: Capital gains

B: Planned repayment amount of debts

C: Planned investment amount

D: Actually repaid amount of debts out of the transfer value

E: Debt equity ratio minus standard debt equity ratio to standard debt equity ratio (if this ratio exceeds 1, it shall be deemed 1)

3. In cases falling under Article 121-26 (2) 3 of the Act:

The amount calculated by the following formula: Amount included in gross income = A × C/(B + C) × D/C × E/D

A: Capital gains

B: Planned repayment amount of debts

C: Planned investment amount

D: Actually repaid amount of debts out of the transfer value

E: Acquisition value of assets disposed of under Article 121- 26 (2) 3 of the Act

4. In cases falling under Article 121-26 (2) 4 or 5 of the Act: The remaining amount not included in gross income, out of capital gains.

(10) The additional amount equivalent to the interest, which shall be paid in addition to corporate tax in accordance with the latter part of Article 121-26 (2) of the Act, with the exception of its subparagraphs, means the difference in corporate tax incurred by excluding the amount calculated under any subparagraph of paragraph (9) from gross income for the business year in which assets are transferred, multiplied by the period of subparagraph 1 and the ratio of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the end of the business year in which assets are transferred, until the end of the business year in which the amount calculated under any subparagraph of paragraph (9) is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(11) For the purposes of paragraph (9) (excluding paragraph (9) 4: hereafter in this paragraph, the same shall apply) and paragraph (10), if an amount not included partially or fully in gross income in accordance with Article 121-26 (1) of the Act is included later in gross income (hereafter in this Article, referred to as"amount already included in gross income") before including the amount calculated under paragraph (9) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (9); and the additional amount equivalent to the interest referred to in paragraph (10) shall be calculated based on the period until the business year in which such amount is included in gross income. <Amended on Feb. 15, 2022>

(12) For the purposes of Article 121-26 (2) 2 and 3 of the Act, the relevant period shall be calculated, deeming that the period from the asset transfer date until the end of the relevant business year is one year. <Amended on Feb. 15, 2022>

(13) For the purposes of Article 121-26 (2) 2 of the Act, the debt equity ratio shall be calculated by dividing the liabilities prescribed by Ordinance of the Ministry of Economy and Finance (if the date assets are transferred and the date debts are repaid, fall in different business years, and the debt equity ratio for the business year in which assets are transferred is calculated, the amount of debts payable shall be subtracted from the liabilities; hereafter in this Article, referred to as"liabilities") as at the end of each business year, by the equity capital on the statement of financial position (its amount shall be calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, and it refers to the paid-in capital calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, if the equity capital is less than the paid-in capital; hereafter in this Article, referred to as"equity capital"). Foreign-currency denominated assets and liabilities in such cases shall be valued, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Jan. 5, 2021>

(14) For the purposes of Article 121-26 (2) 2 of the Act, the standard debt ratio shall be the ratio of subparagraph 1 minus the ratio of subparagraph 2. In such cases, foreign-currency denominated assets and liabilities shall be valued, as prescribed by Ordinance of the Ministry of Economy and Finance: <Amended on Feb. 15, 2022>

1. The ratio calculated by dividing liabilities as at the end of the business year (hereafter in this Article, referred to as"record date for calculation of the standard debt equity ratio") immediately preceding the business year in which a business restructuring plan is first approved, by the equity capital as at the record date for calculation of the standard debt equity ratio. If liabilities and equity capital are valued and confirmed by the person authorized to approve the business restructuring plan to establish a business restructuring plan as of a specific day during the period from the record date for calculation of the standard debt ratio to the date before the date the business restructuring plan is first approved, such liabilities and equity capital may be used for calculation in such cases;

2. The ratio calculated by dividing the amount of debts paid (or the planned repayment amount of debts if the date assets are transferred and the date debts are repaid, fall in different business years, and the standard debt equity ratio for the business year in which assets are transferred is calculated) by the equity capital referred to in subparagraph 1.

(15)"Business restructuring plan jointly formulated by two or more domestic corporations, as prescribed by Presidential Decree" in Article 121-26 (2) 2 of the Act means a business restructuring plan approved by the authority to approve business restructuring plans upon receipt of a joint application from two or more enterprises under Article 9 (4) of the Special Act On The Corporate Revitalization: Provided, That this shall not apply to a joint application filed by corporations affiliated to each other. <Newly Inserted on Feb. 15, 2022>

(16)"Corporation prescribed by Presidential Decree, such as a merging corporation" in the main clause of Article 121-26 (2) 4 of the Act means a corporation that succeeds to the relevant business in the manner prescribed in subparagraph 2 (a) of Article 2 of the Special Act on the Corporate Revitalization through a merger, division, or such in accordance with a business restructuring plan. <Amended on Feb. 15, 2022>

(17)"Unavoidable causes prescribed by Presidential Decree, such as bankruptcy" in the proviso of Article 121-26 (2) 4 of the Act means the following cases: <Amended on Feb. 15, 2022>

1. Where bankruptcy is declared;

2. Where a business is closed due to a natural disaster or any other similar event.

(18)"Causes prescribed by Presidential Decree" in Article 121-26 (2) 5 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization. <Amended on Feb. 15, 2022>

(19) A domestic corporation whose business restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved business restructuring plan"), shall submit the business restructuring plan and a report on performance of the business restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, subject to confirmation of the person authorized to approval business restructuring plans by the following relevant deadline: <Amended on Feb. 13, 2018; Feb. 15, 2022>

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which assets are transferred;

(b) The business year (limited to where the date assets are transferred and the date debts are repaid or the date an investment is made fall in different business years) in which debts owed to financial creditors are repaid (hereafter in this Article referred to as"date debts are repaid") or in which assets are acquired by an investment under the business restructuring plan (hereafter in this Article referred to as"date an investment is made");

(d) Four business years following the business year in which an investment is made.

(20) A domestic corporation that wishes to be eligible under Article 121-26 (1) of the Act shall submit a statement of capital gains and a statement of adjustment for inclusion in gross income in installments, and a statement (plan) of repayment of debts and investment, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which assets are transferred: Provided, That it shall submit a statement (plan) of repayment of debts and investment, along with its tax return for the business year in which debts are repaid, if the date assets are transferred and the date debts are repaid or the date an investment is made fall in different business years. <Amended on Feb. 15, 2022>

[This Article Newly Inserted on May 10, 2016]

[Title Amended on Feb. 15, 2022]

[Moved from Article 116-29; previous Article 116-30 moved to Article 116-31 <Dec. 1, 2016>]

Article 116-31(Special Taxation for Assumption and Payment of Debts) #

(1) The assumption and payment of debts under Article 121-27 (1) of the Act (hereafter in this Article, referred to as"assumption and payment of debts"), shall be limited to debts assumed or paid in lump sum solely by a stockholder or jointly by stockholders, etc. referred to in paragraph (1) of that Article (hereafter in this Article, referred to as"stockholders, etc.") under a single agreement.

(2) For the purposes of Article 121-27 (1) through (5) of the Act, the scope of debts shall be limited to those specified in the business restructuring plan referred to in paragraph (3), which shall contain the details of debts and the plan for assumption and payment of debts by stockholders, etc. and shall include the amounts referred to in the subparagraphs of Article 116-30 (8) (hereafter in this Article, referred to as"debts to financial creditors"). <Amended on Dec. 1, 2016; Feb. 13, 2018>

(3)"Business restructuring plan prescribed by Presidential Decree" in Article 121-27 (1) of the Act means a plan (hereafter in this Article, referred to as"business restructuring plan") that contains the following matters and the matters provided for in the subparagraphs of Article 9 (2) of the Special Act on the Corporate Revitalization and is approved by the head of the competent Ministry under Article 10 of that Act (hereafter in this Article, referred to as"person authorized to approve business restructuring plans"): <Amended on Feb. 13, 2018>

1. The total amount and details of debts to financial creditors, which stockholders, etc. shall assume and pay;

2. A plan for assumption and payment of debts by stockholders, etc.;

3. A plan for transfer of stocks or equity shares owned by the persons specified in Article 121-27 (1) of the Act and paragraph (4) 1 and 2 of this Article (hereafter in this Article, referred to as"controlling stockholder, etc.").

(4) The controlling stockholder or investor and related persons to such controlling stockholder or investor referred to in Article 121-27 (1) of the Act, are as follows:

1. The controlling stockholder, etc. provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;

2. Related parties provided for in Article 43 (8) of the Enforcement Decree of the Corporate Tax Act.

(5)"Related persons prescribed by Presidential Decree" in Article 121-27 (1) and (3) 3 of the Act means persons who have the relationship specified in any subparagraph of Article 2 (5) of the Enforcement Decree of the Corporate Tax Act with the relevant domestic corporation or the controlling stockholder, etc. <Amended on Feb. 12, 2019>

(6)"Amount prescribed by Presidential Decree" in Article 121-27 (1) of the Act means the amount of debts assumed and paid by the relevant stockholder, etc. in accordance with Article 121-27 (1) of the Act (hereafter in this Article, referred to as"amount of debts assumed and paid"), out of debts that the corporation subject to transfer provided for in Article 121-27 (2) of the Act (hereafter in this Article, referred to as"corporation subject to transfer") owes to financial creditors. <Amended on Feb. 13, 2018>

(7)"Amount that exceeds the deficit prescribed by Presidential Decree" in Article 121-27 (2) of the Act means the amount (hereafter in this Article, referred to as"reduced amount of debts") calculated by subtracting losses provided for in Article 16 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as"carried-forward losses") from the amount of debts assumed and paid. If the corporation subject to transfer covers carried-forward losses first with the value of assets it has acquired without consideration or with the reduced amount of debts (excluding the amount of debts assumed or paid) due to debt relief or acquittance in such cases, the covered amount shall be subtracted from the carried-forward losses. <Amended on Feb. 12, 2019>

(8) Where an amount that the corporation subject to transfer has not included in its gross income, shall be included in its gross income in accordance with the former part of Article 121-27 (3) of the Act, with the exception of its subparagraphs, the amount shall be calculated as follows:

1. In cases falling under Article 121-27 (3) 1 of the Act: The amount calculated by the following formula:

Amount of debts reduced × Debt equity ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one);

2. In cases falling under any provision of Article 121-27 (3) 2 through 4 of the Act: The remaining amount not included in gross income out of the amount of debts reduced.

(9) The amount of tax that shall be paid in addition to corporate tax under the latter part of Article 121-27 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows:

1. In cases falling under Article 121-27 (3) 1 of the Act: The amount calculated by the following formula:

2. In cases falling under any provision of Article 121-27 (3) 2 through 4 of the Act: Difference in corporate tax, incurred by including the amount of debts assumed and paid in deductible expenses for the business year in which such amount of debts assumed and paid is included in deductible expenses.

(10) The additional amount equivalent to interest, which shall be paid in addition to corporate tax in accordance with the latter part of Article 121-27 (3) of the Act, with the exception of its subparagraphs, means the aggregate of the following amounts: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The amount calculated by multiplying the difference in corporate tax, incurred by excluding the amount that shall be included in gross income under paragraph (8) for the business year in which debts are assumed and paid from gross income, by the period of item (a) and the ratio of item (b);

(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the amount that shall be included in gross income under paragraph (8) is included in gross income;

(b) The rate specified in Article 11-2 (9) 2;

2. The amount of the tax that shall be paid under paragraph (9), multiplied by the period of items (a) and the rate of item (b):

(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the tax that shall be paid under paragraph (9) is paid;

(b) The rate specified in Article 11-2 (9) 2;

(11) For the purposes of Article 121-27 (3) 1 of the Act, the three-year period shall be calculated, deeming that the period from the date of assumption and payment of debts, until the end of the relevant business year, is one year.

(12) Article 116-30 (13) and (14) shall apply mutatis mutandis to calculating the debt ratio and the standard debt equity ratio referred to in Article 121-27 (3) 1 of the Act. In such cases,"amount of debts paid" shall be construed as"total amount of debts assumed and paid." <Amended on Dec. 1, 2016>

(13)"Corporation prescribed by Presidential Decree, such as a merging corporation" in the main clause of Article 121-27 (3) 2 of the Act means a corporation that succeeds to the relevant business in the manner prescribed in subparagraph 2 (a) of Article 2 of the Special Act on the Corporate Revitalization through a merger, division, or such in accordance with a business restructuring plan.

(14)"Unavoidable causes prescribed by Presidential Decree, such as bankruptcy" in the proviso of Article 121-27 (3) 2 of the Act means the following cases:

1. Where bankruptcy is declared;

2. Where a business is discontinued due to a natural disaster or any other similar event.

(15)"Causes prescribed by Presidential Decree" in Article 121-27 (3) 4 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization.

(16) In cases of a transfer and acquisition of a corporation under Article 121-27 (4) of the Act, if the relevant stock transfer agreement contains provisions concerning due diligence on assets, the shortfall in assets of the corporation subject to transfer shall be limited to the shortfall as at the date of stock transfer, as corrected and reflected in accounts after having confirmed by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the corporation subject to transfer. <Amended on Jan. 5, 2021>

(17)"Related persons prescribed by Presidential Decree" in the proviso of Article 121-27 (5) of the Act means the persons who have the relationship specified in any subparagraph of Article 2-2 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act with the stockholder, etc. who has assumed and paid debts.

(23) A domestic corporation whose business restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved business restructuring plan"), shall submit the business restructuring plan and a report on performance of the business restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, subject to confirmation of the person authorized to approval business restructuring plans, by the following relevant deadline:

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which debts are assumed and paid;

(b) The business year in which stocks, etc. are transferred under Article 121-27 (1) of the Act (limited to where the business year is different from the business year referred to in item (a));

(c) Three business years following the business year in which stocks, etc. are transferred under Article 121-27 (1) of the Act.

(19) A stockholder, etc. who wishes to be eligible under Article 121-27 (1) of the Act shall submit a plan for transfer/acquisition of a corporation, a statement of debts assumed and paid, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the stockholder, etc. assumes and pays debts.

(20) A domestic corporation that wishes to be eligible under Article 121-27 (2) of the Act shall submit a plan for transfer/acquisition of a corporation, a statement of debts assumed and paid, and a statement of adjustment for inclusion in gross income in installments, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which its debts are assumed and paid.

[This Article Newly Inserted on May 10, 2016]

[Moved from Article 116-30; previous Article 116-31 moved to Article 116-32 <Dec. 1, 2016>]

Article 116-32(Special Taxation for Corporate Tax following Transfer of Assets of Stockholders) #

(1) The conveyance of an asset as a gift under Article 121-28 (1) of the Act, with the exception of its subparagraphs, shall be limited to an asset donated solely or jointly by a stockholder or an investor referred to in Article 121-28 (1) of the Act (hereafter in this Article, referred to as"stockholder, etc.") at once under a single agreement.

(2)"Amount that exceeds the deficit prescribed by Presidential Decree" in Article 121-28 (1) of the Act, with the exception of its subparagraphs, means the amount (hereafter in this Article, referred to as"gains from donated assets") calculated by subtracting the losses provided for in Article 16 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as"carried-forward losses") from the assets value conveyed as a gift under Article 121-28 (1) of the Act. If the relevant domestic corporation covers carried-forward losses first with the value of assets it has acquired without consideration and with the reduced amount of debts due to debt relief or acquittance (excluding the assets value conveyed as a gift under Article 121-28 (1) of the Act) in such cases, the cover amount shall be subtracted from the carried-forward losses. <Amended on Feb. 12, 2019>

(3)"Business restructuring plan prescribed by Presidential Decree" in Article 121-28 (1) 1 of the Act means a plan (hereafter in this Article, referred to as"business restructuring plan") that includes the following matters and the matters provided for in under Article 9 (2) of the Special Act on the Corporate Revitalization and is approved by the head of the competent Ministry under Article 10 of that Act (hereafter in this Article, referred to as"person authorized to approve business restructuring plans"):

1. A plan for the transfer or donation of assets by stockholders, etc.;

2. The total amount and details of debts to be paid through the transfer or donation of assets under subparagraph 1;

3. A plan for repayment of debts referred to in subparagraph 2.

(4)"Deadline prescribed by Presidential Decree" in Article 121-28 (1) 2 of the Act means the following relevant deadline:

1. Where the cause provided for in paragraph (7) arise and the date such cause terminates comes three months later than the date a corporation receives money or transfers an asset (hereafter in this Article, referred to as"date an asset is transferred"), the date following the date such cause terminates;

2. In any case other than subparagraph 1, the date three months lapse from the date a corporation receives money or transfers an asset.

(5)"Date prescribed by Presidential Decree" in Article 121-28 (1) 2 of the Act means the date a corporation receives an installment (the down payment shall be deemed included in the first installment)

(6)"Financial creditor prescribed by Presidential Decree" in Article 121-28 (1) 2 of the Act means any financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act (hereafter in this Article, referred to as"financial creditor"). <Amended on Feb. 13, 2018>

(7)"Inevitable cause prescribed by Presidential Decree" in Article 121-28 (1) 2 of the Act means where it is impossible to repay a debt due to a situation in which a financial creditor is unable to receive the repayment of the debt. <Amended on Feb. 13, 2018>

(8) The debts paid under Article 121-28 (1) 2 of the Act shall be limited those specified in the business restructuring plan that contains the details of the debts and a repayment plan through donation of assets by stockholders, etc. and mean the amounts referred to in the subparagraphs of Article 116-30 (8). <Amended on Dec. 1, 2016; Feb. 13, 2018>

(9)"Amount prescribed by Presidential Decree" in Article 121-28 (2) of the Act means the book value of assets donated by stockholders, etc. (hereafter in this Article, referred to as"amount of donated assets").

(10) For the purposes of Article 121-28 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the time when an asset is transferred: Provided, That the date provided for in paragraph (5) shall apply to a transfer under long-term installment terms.

(11)"Amount equivalent to the donated amount prescribed by Presidential Decree" in Article 121-28 (3) of the Act, with the exception of its subparagraphs, means the amount calculated by the following formula (hereafter in this Article, referred to as"amount equivalent to capital gains"):

Capital gains on transfer of an asset under Article 121-28 (3) of the Act × [Amount donated under Article 121-28 (1) of the Act, out of the transfer value of the asset ÷ (Transfer value of the asset - Amount of special rural development tax paid by the relevant corporation under the Act on Special Rural Development Tax for the capital gains on transfer of the asset under Article 121-28 (3) of the Act)]

(12) Where an amount that the corporation that accepted an asset donated under the former part of Article 121-28 (4) of the Act, with the exception of its subparagraphs, has not included in its gross income, shall be included in its gross income, the amount calculated by either of the following formulas shall be included in its gross income:

1. In cases falling under Article 121-28 (4) 1 of the Act: The amount calculated by the following formula:

Gains from the donated asset × [Value of the asset donated under Article 121-28 (1) of the Act (referring to the transfer value in cases of any asset other than money; hereafter in this Article, referred to as"value of the transferred asset") - Amount used to repay debts, out of the value of the transferred asset] ÷ Value of the transferred asset

2. In cases falling under Article 121-28 (4) 2 of the Act: The amount calculated by the following formula:

Gains from the donated asset × Debt ratio less standard debt equity ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)

3. In cases falling under Article 121-28 (4) 3 or 4 of the Act: The remaining amount not included in gross income, out of gains from the donated asset

(13) The amount of tax that shall be paid in addition to the corporate tax under the latter part of Article 121-28 (4), with the exception of its subparagraphs, of the Act, out of the tax reduction or exemption granted to a stockholder, etc. under Article 121-28 (2) of the Act shall be calculated by the following formulas:

1. In cases falling under Article 121-28 (4) 1 of the Act: Difference in corporate tax, incurred by including the amount calculated by the following formula in deductible expenses for the business year in which the stockholder, etc. has included the amount of donated assets in deductible expenses:

Amount of the donated asset × (Value of the transferred asset - Amount used to repay debts, out of the value of the transferred asset) ÷ Value of the transferred asset

2. In cases falling under Article 121-28 (4) 2 of the Act: The amount calculated by the following formula:

3. In cases falling under Article 121-28 (4) 3 or 4 of the Act: Difference in corporate tax, incurred by including the amount of the donated asset in deductible expenses for the business year in which the amount of the donated asset is included in deductible expenses

(14) The amount of tax that shall be paid in addition to the corporate tax under the latter part of Article 121-28 (4) of the Act, with the exception of its subparagraphs, out of the tax reduction or exemption granted to a stockholders, etc. under Article 121-28 (3) of the Act shall be calculated by the following formulas: <Amended on Feb. 15, 2022>

1. Where the stockholder, etc. is a resident: The amount calculated by the following formulas:

(a) In cases falling under Article 121-28 (4) 1 of the Act: Difference in capital gains tax or financial investment income tax incurred by including the amount calculated by the following formula for the taxable period, for which capital gains tax or financial investment income tax on the equivalent to capital gains was not paid, in the calculation of the equivalent to capital gains:

Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ Value of the transferred asset

(b) In cases falling under Article 121-28 (4) 2 of the Act: The amount calculated by the following formula:

(c) In cases falling under Article 121-28 (4) 3 or 4 of the Act: The full amount of unpaid capital gains tax or financial investment income tax on the equivalent to capital gains;

2. Where the stockholder, etc. is a domestic corporation: The amount calculated by the following formulas:

(a) In cases falling under Article 121-28 (4) 1 of the Act: The difference in corporate tax incurred by excluding the amount calculated by the following formula from gross income for the business year in which the equivalent to capital gains is not included in gross income:

Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ Value of the transferred asset

(b) In cases falling under Article 121-28 (4) 2 of the Act: The amount calculated by the following formula:

(c) In cases falling under Article 121-28 (4) 3 or 4 of the Act: Difference in corporate tax incurred by excluding the equivalent to capital gains from gross income for the business year in which the equivalent to capital gains was not included in gross income

(15) The additional amount equivalent to interest, which shall be paid in addition to corporate tax under the latter part of Article 121-28 (4) of the Act, with the exception of its subparagraphs, shall be the aggregate of the following: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The amount calculated by multiplying the difference in corporate tax incurred by excluding the amount calculated under paragraph (12) from gross income for the business year in which a corporation receives an asset donated under Article 121-28 (1) of the Act (hereafter in this Article, referred to as"date the asset is donated") by the period of item (a) and the ratio of item (b):

(a) The period from the day following the end of the business year in which the asset is donated, until the end of the business year in which the amount calculated under paragraph (12) is included in gross income;

(b) The rate specified in Article 11-2 (9) 2;

2. The amount of tax calculated under paragraph (13) or (14), multiplied by the period of item (a) and the ratio of item (b):

(a) The period from the day following the end of the business year in which the amount of tax calculated under paragraph (13) or (14) was not paid, until the end of the business year in which the amount of tax under paragraph (13) or (14) is paid;

(b) The rate specified in Article 11-2 (9) 2;

(16) For the purposes of Article 121-28 (4) 2 of the Act, the three-year period shall be counted, deeming that the period from the date debts are repaid (hereafter in this Article, referred to as"date debts are repaid"), until the end of the relevant business year, is one year, if debts are paid during the business year.

(17) Article 116-30 (13) and (14) shall apply mutatis mutandis to calculating the debt ratio and the standard debt equity ratio referred to in Article 121-28 (4) 2 of the Act. In such cases,"amount of debts repaid" shall be construed as"amount used to repay debts out of the value of the transferred asset." <Amended on Dec. 1, 2016>

(18)"Corporation prescribed by Presidential Decree, such as a merging corporation" in the main clause of Article 121-28 (4) 3 of the Act means a corporation that succeeds to the relevant business in the manner prescribed in subparagraph 2 (a) of Article 2 of the Special Act on the Corporate Revitalization through a merger, division, or such in accordance with a business restructuring plan.

(19)"Unavoidable causes prescribed by Presidential Decree, such as bankruptcy" in the proviso of Article 121-28 (4) 3 of the Act means the following cases:

1. Where bankruptcy is declared;

2. Where a business is discontinued due to a natural disaster or any other similar event.

(20)"Causes prescribed by Presidential Decree" in Article 121-28 (4) 4 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization.

(21) For the purposes of paragraph (12) (excluding paragraph (12) 3; hereafter in this paragraph, the same shall apply) and paragraph (15) 1, if an amount not included partially or fully in gross income in accordance with Article 121-28 (1) of the Act, is included later in gross income (hereafter in this Article, referred to as"amount already included in gross income") before including the amount calculated under paragraph (12) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (12). The additional amount equivalent to interest referred to in paragraph (15) 1 shall be calculated based on the period until the business year in which the amount already included in gross income is included in gross income.

(22)"Related persons prescribed by Presidential Decree" in the proviso of Article 121-28 (5) of the Act means the persons who have the relationship specified in any subparagraph of Article 2-2 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act with a stockholder, etc. that has conveyed an asset as a gift.

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which the asset is donated;

(b) The business year in which debts are repaid (limited to where the date the asset is donated and the date debts are repaid, fall in different business years);

(24) A domestic corporation that wishes to be eligible under Article 121-28 (1) of the Act shall submit a statement of an asset received as a gift, a statement of debts paid (or payable), and a statement of adjustment for inclusion in gross income in installments, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which the asset is donated: Provided, That it shall also submit a statement of debts paid when it files its tax return for the business year in which debts are repaid, if the date the asset is donated and the date debts are repaid, fall in different business years.

(25) A stockholder, etc. who wishes to be eligible under Article 121-28 (2) of the Act shall submit an agreement on the donation of an asset, a statement of debts paid (or payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the asset is donated.

(26) A stockholder, etc. who wishes to be eligible under Article 121-28 (3) of the Act shall submit an agreement on the sale and purchase of an asset, an agreement on donation, and a statement of debts paid (payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the asset is donated under that paragraph.

[This Article Newly Inserted on May 10, 2016]

[Moved from Article 116-31; previous Article 116-32 moved to Article 116-33 <Dec. 1, 2016>]

Article 116-33(Special Taxation for Gains from Debt Relief of Corporations Implementing Business Restructuring Plans) #

(1)"Business restructuring plan prescribed by Presidential Decree" in Article 121-29 (1) of the Act means a plan (hereafter in this Article, referred to as"business restructuring plan") that contains the matters provided for in the subparagraphs of Article 9 (2) of the Special Act on the Corporate Revitalization and the details of debt relief and is approved by the head of the competent Ministry under Article 10 of that Act (hereafter in this Article, referred to as"person authorized to approve business restructuring plans").

(2)"Amount that exceeds the deficit prescribed by Presidential Decree" in Article 121-29 (1) of the Act means the amount (hereafter in this Article, referred to as"reduced amount of debts") calculated by subtracting losses provided for in Article 16 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as"carried-forward losses") from the amount of debts from which financial creditors relieve a corporation under Article 121-29 (1) of the Act. If the corporation covers carried-forward losses first with the value of an asset it has received without consideration and with the reduced amount of debts due to debt relief or acquittance (excluding the equivalent to debts from which financial creditor relieve the corporation under Article 121-29 (1) of the Act) in such cases, the covered amount shall be subtracted from the carried-forward losses. <Amended on Feb. 13, 2018; Feb. 12, 2019>

(3) The additional amount equivalent to interest, which shall be paid in addition to corporate tax in accordance with the latter part of Article 121-29 (2) of the Act, with the exception of its subparagraphs, means the amount calculated by multiplying the difference in corporate tax incurred by excluding the amount that shall be included in gross income under Article 121-29 (2) of the Act from gross income for the business year in which the corporation is relieved from debts by the period of subparagraph 1 and the ratio of subparagraph 2: <Amended on Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the end of the business year in which the corporation is relieved from debts, until the end of the business year in which the amount that shall be included in gross income under Article 121-29 (2) of the Act in gross income is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(4)"Corporation prescribed by Presidential Decree, such as the merging corporation" in the main clause of Article 121-29 (2) 1 of the Act means a corporation that succeeds to the relevant business in the manner prescribed in subparagraph 2 (a) of Article 2 of the Special Act on the Corporate Revitalization through a merger, division, or such in accordance with a business restructuring plan.

(5)"Extenuating circumstances prescribed by Presidential Decree, such as bankruptcy" in the proviso of Article 121-29 (2) 1 of the Act means the following cases:

1. Where bankruptcy is declared;

2. Where a business is discontinued due to a natural disaster or any other similar event.

(6)"Grounds prescribed by Presidential Decree" in Article 121-29 (2) 2 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization.

(7) A domestic corporation whose business restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved business restructuring plan"), shall submit the business restructuring plan and a report on performance of the business restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, subject to confirmation of the person authorized to approval business restructuring plans, by the following relevant deadline:

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the business year in which the corporation is relieved from debts.

(8) A domestic corporation and a financial creditor that wish to be eligible under Article 121-29 (1) or (3) of the Act shall submit a statement of relieved debts prepared for each corporation relieved from debts, in the form prescribed by Ordinance of the Ministry of Economy and Finance, respectively, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which the corporation is relieved from debts. <Amended on Feb. 7, 2017; Feb. 13, 2018>

[This Article Newly Inserted on May 10, 2016]

[Moved from Article 116-32; previous Article 116-33 moved to Article 116-34 <Dec. 1, 2016>]

Article 116-34(Special Taxation for Exchange of Stocks between Enterprises) #

(1)"Controlling stockholder or investor of a domestic corporation or a related person to such stockholder or investor" in Article 121-30 (1) of the Act, with the exception of its subparagraphs, means:

1. The controlling stockholder, etc. provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;

2. Related parties provided for in Article 43 (8) of the Enforcement Decree of the Corporate Tax Act.

(2)"Business restructuring plan prescribed by Presidential Decree" in Article 121-30 (1) of the Act, with the exception of its subparagraphs, means a plan approved (hereafter in this Article, referred to as"business restructuring plan") by the head of the competent authority under Article 10 of the Special Act on the Corporate Revitalization (hereafter in this Article, referred to as"person authorized to approve the business restructuring plan"), which includes a plan for transfer and acquisition of stocks or equity shares (hereafter in this Article, referred to as"stocks, etc.") held by the persons referred to in Article 121-30 (1) of the Act, with the exception of its subparagraphs, and paragraph (1) of this Article (hereafter in this Article, referred to as"controlling stockholder, etc.") and the matters provided for in Article 9 (2) of that Act.

(3)"Related persons prescribed by Presidential Decree" in Article 121-30 (1) of the Act, with the exception of its subparagraphs, means the persons [excluding other affiliated companies that belong to the same enterprise group (referring to an enterprise group under the Monopoly Regulation and Fair Trade Act)] who have any of the relationships provided for in Article 2 (5) 1 through 6 of the Enforcement Decree of the Corporate Tax Act with the corporation subject to exchange defined in Article 121-30 (1) of the Act (hereafter in this Article, referred to as"exchanged corporation"). <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022>

(4) In the transfer and acquisition of stocks, etc. under Article 121-30 (1) of the Act, stocks, etc. of the transferred corporation for exchange defined in that paragraph, with the exception of its subparagraphs, (hereafter in this Article, referred to as"transferred corporation for exchange"), shall be distributed in proportion to the holding ratio of stocks, etc. of the relevant corporation among the controlling stockholder, etc. who transfers stocks, etc. of the transferred corporation for exchange.

(5) Pursuant to Article 121-30 (1) of the Act, a controller stockholder, etc. may be allowed to defer financial investment income tax or corporate tax as follows: <Amended on Feb. 15, 2022>

1. If the controlling stockholder, etc. is a resident, it may pay financial investment income tax, deeming that the amount calculated by the following formula is the acquisition value, when it disposes of stocks, etc. of the transferred corporation for exchange, which it has acquired without paying financial investment income tax at the time of transferring stocks, etc. under Article 121-30 (1) of the Act:

Acquisition value of the transferred stocks, etc. out of the stocks, etc. of the transferred corporation for exchange, which it has acquired under Article 121-30 (1) of the Act - [Gains accrued from transfer of stocks, etc. under Article 121-30 (1) of the Act (referring to the income provided for in Article 94 (1) 3 of the Income Tax Act; hereafter in this Article, referred to as"tax-deferred income") × (Number of transferred stocks, etc. of the transferred corporation for exchange ÷ Number of acquired stocks, etc. of the transferred corporation for exchange)]

2. If the controlling stockholder, etc. is a domestic corporation, it may be allowed to defer capital gains tax or corporate tax as follows:

(a) Capital gains accruing from transfer of stocks, etc. under Article 121-30 (1) of the Act shall be the market price at the time of transfer of the stocks, etc. (referring to the market price provided for in Article 52 (2) of the Corporate Tax Act) minus the book value as at the date preceding the date of transfer (the capital gains shall not exceed the value of acquired stocks, etc. of the transferred corporation for exchange; hereafter in this Article, referred to as"tax-deferred amount"); and such capital gains shall be recognized as the advanced depreciation provision for the acquired stocks, etc. of the transferred corporation for exchange;

(b) The advanced depreciation provision recognized under item (a) shall be included in gross income for the business year in which the acquired stocks, etc. of the transferred corporation for exchange are transferred, inherited, or donated (if stocks, etc. have been acquired in any manner other than the acquisition as provided for in Article 121-30 (1) of the Act, the stocks, etc. acquired under that paragraph shall be deemed first transferred, inherited, or donated; hereafter in this Article, referred to as"disposal"). Where stocks, etc. are disposed of partially, the amount calculated by the following formula shall be included in gross income:

(6) The shortfall in assets referred to in Article 121-30 (2) of the Act shall be limited to the shortfall as at the date of transfer/acquisition of stocks, etc., which is corrected and recorded in the account, upon confirmation by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the exchanged corporation, where an agreement on the stock exchange between the exchanged corporation and the transferred corporation for exchange contains provisions concerning asset due diligence. <Amended on Jan. 5, 2021>

(7) The additional amount equivalent to interest, which shall be paid in addition to financial investment income tax or corporate tax under the latter part of Article 121-30 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows: <Amended on Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022>

1. If the controlling stockholder, etc. is a resident: The amount of financial investment income tax not paid at the time of transferring stocks, etc. under Article 121-30 (1) of the Act, multiplied by the period of item (a) and the rate of item (b):

(a) The period from the day following the deadline for filing the preliminary return and payment of financial investment income tax on tax-deferred income at the time of transferring stocks, etc. under Article 121-30 (1) of the Act, until the date of payment of the relevant tax under subparagraphs of Article 121-30 (3) of the Act;

(b) The rate specified in Article 11-2 (9) 2;

(a) The period from the day following the end of the business year in which the tax-deferred amount was not included in gross income, until the end of the business year in which the tax-deferred amount is included in gross income upon the occurrence of any of the grounds specified in Article 121-30 (3) of the Act;

(b) The rate specified in Article 11-2 (9) 2;

(8) The types of business referred to in Article 121-30 (3) 1 of the Act shall be classified into the Groups under the Korea Standard Industrial Classification.

(9)"Causes prescribed by Presidential Decree" in Article 121-30 (3) 3 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization.

(10) The amount eligible for tax deferral under Article 121-30 (4) of the Act shall be the tax-deferred amount at the time of an investment in kind or a spin-off, which shall not exceed the equivalent to the value of acquired stocks, etc. of the transferred corporation for exchange under Article 121-30 (1) of the Act; and such amount shall be recognized as the advanced depreciation provision for the stocks, etc. of the transferred corporation for exchange and shall be included in gross income by applying mutatis mutandis paragraph (5) 2 (b).

(11) A domestic corporation whose business restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved business restructuring plan"), shall submit its business restructuring plan and a report on performance of its business restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, confirmed by the person authorized to approval the business restructuring plan, to the head of the tax office having jurisdiction over the place of tax payment, by the following relevant deadline:

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which the date of transfer/acquisition of stocks, etc. under Article 121-30 (1) of the Act falls;

(b) Three business years following the business year in which the date of transfer/acquisition of stocks, etc. under Article 121-30 (1) of the Act falls.

(12) A controlling stockholder, etc. who wishes to be eligible under Article 121-30 (1), (2), and (4) of the Act shall file an agreement on the exchange of enterprises and a statement of the transfer/acquisition of stocks, etc. and an application for tax deferral in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which the date of transfer/acquisition of stocks, etc. under that paragraph falls.

[This Article Newly Inserted on May 10, 2016]

[Moved from Article 116-33; previous Article 116-34 moved to Article 116-35 <Dec. 1, 2016>]

Article 116-35(Special Taxation for Transfer of Redundant Assets following Merger) #

(1)"Business restructuring plan prescribed by Presidential Decree" in the former part of Article 121-31 (1) of the Act means a plan (hereafter in this Article, referred to as"business restructuring plan") that contains the matters provided for in the subparagraphs of Article 9 (2) of the Special Act on the Corporate Revitalization and a merger plan of the corporations subject to the merger referred to in paragraph (2) of this Article, and is approved by the head of the competent Ministry under Article 10 of that Act (hereafter in this Article, referred to as"person authorized to approve business restructuring plans").

(2) The scope of redundant assets referred to in the former part of Article 121-31 (1) of the Act shall be limited to tangible fixed assets used directly for the business of the corporations subject to the merger (including the division and merger) for the same or similar purpose of use.

(3) For the purposes of Articles 80-2 (7) and 80-4 (8) of the Enforcement Decree of the Corporate Tax Act, the redundant assets provided for in paragraph (2) shall be excluded from fixed assets succeeded to from the merged corporation. <Amended on Feb. 7, 2017; Feb. 11, 2020>

(4) The amount excluded from gross income under the former part of Article 121-31 (1) of the Act shall be the aggregate of the amounts of subparagraphs 1 and 2: <Amended on Feb. 7, 2017; Feb. 12, 2019>

1. The amount calculated by subtracting the aggregate of the book value and the losses referred to in Article 13 (1) 1 of the Corporate Tax Act (hereafter in this Article, referred to as"carried-forward losses") as at the end of the business year immediately preceding the business year in which redundant assets are transferred, from the transfer value of the redundant assets. If the value of assets that the domestic corporation receives without consideration or a reduced amount of debts due to debt relief or acquittance first covers carried-forward losses in such cases, the amount shall be calculated by subtracting the cover amount from carried-forward losses;

2. In cases of redundant assets succeeded to from the merged corporation, the equivalent to gains on the valuation of the relevant assets upon the merger and the equivalent to gains on the valuation upon the division;

3. Deleted. <Feb. 7, 2017>

(5) Deleted. <Feb. 7, 2017>

(6) Where gains on the transfer are excluded from gross income under the former part of Article 121-31 (1) of the Act, with the exception of its subparagraphs, the amount that shall be included in gross income under the former part of Article 121-31 (2) of the Act means the full amount excluded from gross income: <Amended on Feb. 7, 2017>

1. Deleted. <Feb. 7, 2017>

2. Deleted. <Feb. 7, 2017>

(7) The additional amount equivalent to the interest, which shall be paid in addition to corporate tax pursuant to the latter part of Article 121-31 (2) of the Act, with the exception of its subparagraphs, shall the difference incurred in corporate tax by excluding the amount provided for in paragraph (6) from gross income for the business year in which gains on the transfer were excluded from gross income, multiplied by the period of subparagraph 1 and the ratio of subparagraph 2: <Amended on Feb. 7, 2017; Feb. 12, 2019; Feb. 15, 2022>

1. The period from the day following the end of the business year in which gains on the transfer were excluded from gross income, until the end of the business year in which the amount provided for in paragraph (6) is included in gross income;

2. The rate specified in Article 11-2 (9) 2.

(8)"Grounds prescribed by Presidential Decree" in Article 121-31 (2) 3 of the Act means where the approval of a business restructuring plan is revoked under Article 13 (1) of the Special Act on the Corporate Revitalization.

(9) A domestic corporation whose business restructuring plan is approved (hereafter in this Article, referred to as"domestic corporation with an approved business restructuring plan"), shall submit the business restructuring plan and a report on performance of the business restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, subject to confirmation of the person authorized to approval business restructuring plans, by the following relevant deadline:

1. The business restructuring plan: By the end of the business year in which its business restructuring plan is approved;

2. The report on performance of the business restructuring plan: By the deadline for filing the tax return for the following relevant business year:

(a) The business year in which the merger is registered;

(b) Three business years following the business year in which the merger is registered.

(10) A domestic corporation that wishes to be eligible under Article 121-31 (1) of the Act shall submit a statement of gains on the transfer and adjustment for inclusion in gross income in installments, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when filing its tax return for the business year in which redundant assets are transferred. <Amended on Feb. 7, 2017>

[This Article Newly Inserted on May 10, 2016]

[Moved from Article 116-34 <Dec. 1, 2016>]

Article 116-36(Reduction or Exemption of Corporate Tax for Enterprises Incorporated in Opportunity Development Special Zone) #

(1) "Manufacturing industry and other types of business prescribed by Presidential Decree" in Article 121-33 (1) 1 of the Act means the following types of business:

1. Manufacturing business (including business under Article 5 (6));

2. Waste collection, transportation, treatment and raw material recycling business;

3. Information and communications business: Provided, That the following services shall be excluded herefrom:

(a) Business operating rooms for viewing video products;

(b) Business providing news information;

4. A financial and insurance industry that provides financial services utilizing information and communication, in which any of the following activities is engaged as business:

(a) Electronic financial transactions defined in subparagraph 1 of Article 2 of the Electronic Financial Transactions Act;

(b) Crowdfunding brokerage service under Article 9 (27) of the Financial Investment Services and Capital Markets Act;

(c) Small-amount overseas remittance service under Article 15-2 (1) of the Enforcement Decree of the Foreign Exchange Transactions Act;

5. The research and development business, other science and technology service business, and engineering business;

6. The business of operating performance facilities, performing organizations, and other creative and arts-related services;

7. The business of generating electric power using new energy defined in subparagraph 1 of Article 2 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy or renewable energy defined in subparagraph 2 of that Article;

8. The combined logistics terminal business defined in subparagraph 4 of Article 2 of the Act on the Development and Management of Logistics Facilities;

9. The business of creating and operating a joint collection and delivery center defined in subparagraph 16 of Article 2 of the Distribution Industry Development Act;

10. The business of operating harbor facilities under subparagraph 5 of Article 2 of the Harbor Act, and the logistics industry operated in the hinterland complex under subparagraph 11 of the same Article;

11. The tourist hotel business, floating tourist hotel business, Korean traditional hotel business, family hotel business, small hotel business, and medical tourism hotel business under Article 2 (1) 2 (a) through (d), and (f) and (g) of the same subparagraph of the Enforcement Decree of the Tourism Promotion Act: Provided, that where a casino business under Article 3 (1) 5 of the Tourism Promotion Act or a bonded store under Article 196 of the Customs Act is operated together with the hotel business, the casino business or the bonded store business shall be excluded;

12. Specialized resort business, general resort business, tourist excursion ship business, or tourist theater business defined in Article 2 (1) 3 of the Enforcement Decree of the Tourism Promotion Act: Provided, That if a resort condominium business pursuant to Article 3 (1) 2 (b) of the Tourism Promotion Act or a golf course business pursuant to Article 10 (1) 1 of the Act on the Installation and Use of Sports Facilities is operated in conjunction with a specialized recreation business or general recreation business, the resort condominium business and golf course business shall be excluded herefrom;

13. International conference facility business defined in Article 2 (1) 4 (a) of the Enforcement Decree of the Tourism Promotion Act;

14. The business of general amusement facilities defined in Article 2 (1) 5 (a) of the Enforcement Decree of the Tourism Promotion Act;

15. Tourist restaurant business defined in Article 2 (1) 6 (d) of the Enforcement Decree of the Tourism Promotion Act;

16. Business operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons or business operating a vocational skill development training establishment under the National Lifelong Vocational Skills Development Act (limited to where the main business is vocational skill development training);

17. A business operating welfare facilities for senior citizens defined in Article 31 of the Welfare of Senior Citizens Act;

(2) "Income accruing from the business eligible for tax reduction or exemption" in Article 121-33 (2) of the Act means the income accruing from the place of business that has invested in a special economic development zone to operate the business eligible for tax reduction or exemption under paragraph (1) of that Article.

(3) "Cumulative investments prescribed by Presidential Decree" in Article 121-33 (3) 1 of the Act means the aggregate of the amount of investment in the business assets prescribed by Ordinance of the Ministry of Economy and Finance made until the relevant taxable year for which a reduction or exemption of corporate tax or income tax is granted under Article 99 (2) of the Act.

(4) "Service business prescribed by Presidential Decree" in Article 121-33 (3) 2 of the Act means the service business referred to in Article 23 (4).

(5) The amount of the income tax or corporate tax to be paid under Article 121-33 (5) of the Act shall be calculated by the following formula (if the amount is a negative figure, it shall be deemed nil; if the number of full-time employees decreased for the two consecutive years after the taxable year in which a tax reduction or exemption is granted ends, such amount to be paid in the second taxable year is an amount subtracting the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return for the taxable year in which the number of full-time employees decreased.

The total amount of tax reduced by applying Article 121-33 (3) 2 of the Act in the taxable year within 2 years immediately preceding the taxable year in which the number of full-time employees of the relevant company decreased - (Number of full-time workers at the place of business eligible for tax reduction or exemption in taxable year in which the number of full-time workers decreased x 15 million won (In the case of young full-time workers and service business under Article 121-33 (3) 2 of the Act, the amount shall be 20 million won))

(6) For the purposes of Article 121-33 (3) and (5) of the Act, Article 11-2 (6) and (7) shall apply mutatis mutandis to the scopes of full-time employees and of full-time youth employees, and the methods for calculating the number of full-time employees and the number of full-time youth employees. In such cases, "Article 12-2 (3) and (5)" in the provisions, with the exception of the subparagraphs, of paragraph (6) of the same Article and in the former part, with the exception of the subparagraphs, of paragraph (7) of the same Article shall be construed as "Article 121-33 (3) and (5) of the Act", respectively. <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022; Feb. 28, 2023>

(7) "Tax amount calculated as prescribed by Presidential Decree" in the former part of the provisions, with the exception of the subparagraphs, of Article 121-33 (8) of the Act means a tax amount in either of the following cases:

1. In cases of Article 121-33 (8) 1 of the Act: The amount of tax reduced or exempted within 3 years retroactively from the date of business closure or dissolution of the corporation;

2. In cases of Article 121-33 (8) 2 of the Act: The amount of tax reduced or exempted retroactively within 5 years from the date of relocation.

(8) A person who wishes to be granted a reduction or exemption of corporate tax or income tax pursuant to Article 121-33 (9) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, when filing a return on the tax base.

[This Article Newly Inserted on Feb. 29, 2024]

Article 116-37(Special Taxation on Enterprises Relocating to Special Opportunity Development Zone) #

(1) "Business real estate prescribed by Presidential Decree" in the provisions, with the exception of the subparagraphs, of Article 121-34 (1) of the Act means real estate used for the following purposes:

1. The head office of the company concerned;

2. Factory under Article 54 (1);

3. A company-affiliated research institute pursuant to Article 14-2 (1) of the Basic Research Promotion and Technology Development Support Act;

4. Sites and buildings of the data centers under Article 40 of the Framework Act on Intelligent Informatization.

(2) "Amount calculated as prescribed by Presidential Decree" in the provisions, with the exception of the the subparagraphs, Article 121-34 (1) of the Act means the amount calculated by multiplying the amount specified in subparagraph 1 by the rate specified in subparagraph 2 (hereafter referred to as "amount equivalent to capital gains" in this Article).

1. Any of the following amounts:

(a) Corporation: The amount obtained by deducting the total amount of losses carried forward under Article 13 (1) 1 of the Corporate Tax Act as of the end date of the business year immediately preceding the business year in which the date of transfer of the former business real estate is transferred, from the gains on the transfer of business real estate under the provisions, with the exception of the subparagraphs, of Article 121-34 (1) of the Act (hereafter referred to as "former business real estate" in this Article);

(b) Residents: Gains on the transfer of former business real estate;

2. The ratio of the acquisition value of the business real estate located in the special opportunity development zone (hereinafter referred to as "real estate for new business") out of the transfer value of the former business real estate for business (up to 100/100).

(3) In applying paragraph (2), if the new business real estate is not acquired by the end date of the taxable year in which the transfer date of the previous business real estate falls, the acquisition value of the new business real estate shall be the estimated value on the (planned) transfer statement under paragraph (8) (hereinafter referred to as "estimated acquisition value" in this Article).

(4) Where a corporation is subject to Article 121-34 (1) of the Act, the amount equivalent to the gains on transfer out of the acquisition value of the real estate for new business shall be included in the loss expenses as a temporary depreciation allowance or advanced depreciation provision according to the following classification:

1. Depreciable assets: Lump sum of temporary depreciation allowance;

2. Assets other than those referred to in subparagraph 1: Advanced depreciation provision;

(5) "Amount calculated as prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 121-34 (3) of the Act means an amount classified in following subparagraphs:

1. A corporation: The amount specified in any of the following items:

(a) Where a temporary depreciation allowance is recorded under paragraph (4) 1, the balance remaining after offsetting the depreciation expenses;

(b) Where it is appropriated as an advanced depreciation provision under paragraph (4) 2, the entire amount of the advanced depreciation provision;

2. A resident: The entire amount of unpaid capital gains tax;

(6) "Where it is deemed that a project has not been transferred, as prescribed by Presidential Decree" in Article 121-34 (3) 3 of the Act means the case where the value of the real estate for the new business that is disposed of, or not used for the relevant business, by a Korean national subject to the same paragraph (1) of that Article is not less than a half of the total value of the new business real estate.

(7) In applying Article 121-34 (1) of the Act, if the amount equivalent to capital gains calculated based on the estimated acquisition value is not included in the gross income or the taxation is deferred, an amount applied in excess of the amount calculated pursuant to paragraph (2) based on the actual acquisition value shall be included in the gross income of the taxable year in which the date of commencement of business by acquiring real estate for new business or shall be paid as capital gains tax. In such cases, the latter part of Article 33 (3) of the Act shall apply mutatis mutandis to the amount to be included in gross income or to be paid as capital gains tax.

(8) A corporation that intends to be eligible under Article 121-34 (1) 1 of the Act shall submit a detailed statement of proceeds from transfer, detailed statement of adjustment of divided inclusion in the gross income, and detailed statement of (scheduled) relocation, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing a tax base return for the business year in which the transfer date of the former business real estate falls.

(9) A resident who intends to be eligible for the deferment of taxation under Article 121-34 (1) 2 of the Act shall submit a written application for tax deferral and a detailed statement of (scheduled) relocation, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing a tax base return (including a provisional return) for the taxable year in which the transfer date of the former business real estate falls.

(10) Where a person commences business by acquiring the real estate for new business after the application of paragraph (3), he/she shall submit a report on the completion of transfer prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment when he files a tax base return for the taxable year to which the commencement date of such business belongs.

[This Article Newly Inserted on Feb. 29, 2024]

Article 116-38(Special Taxation on Investors in Special Opportunity Development Zone) #

(1) "Collective investment scheme in kind prescribed by Presidential Decree" in Article 121-35 (1) 1 of the Act means a collective investment scheme referred to any of the following subparagraphs:

1. A real estate investment company defined in subparagraph 1 of Article 2 of the Real Estate Investment Company Act;

3. Collective investment schemes under Article 9 (18) of the Financial Investment Services and Capital Markets Act.

(2) The term "investment target prescribed by Presidential Decree" in Article 121-35 (1) 2 of the Act means any of the following (hereafter referred to as "investment target asset" in this Article):

1. The real estate located in a special opportunity development zone or the right to use the relevant real estate, such as the surface right or lease right: Provided, that if all or part of the real estate is used for a purpose that is not suitable for investment by a collective investment organization pursuant to Article 121-35 (1) of the Act (hereafter referred to as "collective investment scheme for special opportunity development zone" in this Article), a purpose prescribed by Ordinance of the Ministry of Economy and Finance, the right to the whole real estate or the right to use it shall be excluded;

2. Real estate development projects under subparagraph 4 of Article 2 of the Real Estate Investment Company Act, which are implemented in a special opportunity development zone;

3. Assets related to infrastructure installed in special opportunity development zones, which fall under any of the following items:

(a) Real estate that can be defined as infrastructure under subparagraph 1 of Article 2 of the Act on Public-Private Partnerships in Infrastructure;

(b) Stocks, equity shares and bonds under Article 43 (1) 1 of the Act on Public-Private Partnerships in Infrastructure, and loan claims under subparagraph 2 of the same paragraph;

(c) Assets acquired from investment pursuant to Article 43 (1) 3 or 4 of the Act on Public-Private Partnerships in Infrastructure;

4. Bonds issued by an enterprise resident in a special opportunity development zone that falls under any of the following items (hereafter referred to as "resident enterprise" in this Article) for the purpose of operating a business in the special opportunity development zone, which is acquired on the issuance date:

(a) A small or medium-sized enterprise or middle-standing enterprise confirmed by the Minister of Trade, Industry and Energy as having started up a business or established a place of business, or planning to start up a business or establish a place of business, in a special opportunistic development zone pursuant to Article 121-33 (1) of the Act;

(b) Small and medium-sized enterprises or middle-standing enterprises confirmed by the Minister of Trade, Industry and Energy as having relocated or planning to relocate to a special opportunity development zone pursuant to Article 121-34 (1) of the Act;

5. Stocks issued by a resident enterprise for the purpose of operating a business in a special opportunity development zone and acquired by investing in any of the following methods:

(a) Payment with capital at the time of incorporation of a resident enterprise;

(b) Payment for the price of stocks newly issued for capital increase, where the relevant resident increases capital by issuing new stocks after its incorporation.

(3) "Proportion prescribed by Presidential Decree" in Article 121-35 (1) 2 of the Act means 60/100.

(4) The investment ratio prescribed in Article 121-35 (1) 2 of the Act shall be the annual average ratio of the value of the investment objects in total assets of a collective investment scheme for special opportunity development zone, which shall be calculated according to the following formula; In such cases, the period for determining the annual average ratio shall be the period of one year from the date of creation, establishment date, or business license (hereafter this paragraph referred to as "establishment date or the like") of the relevant collective investment scheme for special opportunity development zone. Annual average ratio + A + B A: Aggregate of daily investment ratio Investment ratio = Value of target investment assets/Total assets of the specific infrastructure fund B: Total number of days during each year from the establishment date or the like

Annual average ratio + A + B

A: The ratio of sum of daily investment ratios

* Investment ratio = Value of target investment assets / Total assets of the collective investment schemes of special opportunity development zones

B: Total number of days for every one year from the date of establishment, etc.

(5) Where a collective investment scheme for a special opportunity development zone invests in target investment assets through another collective investment scheme, the value of the investment object in the formula of paragraph (4) shall be calculated according to following formula:

Value of target investment assets = A+B

A: Value of target investment assets held by the collective investment schemes of special opportunity development zones

B: Value of equity securities or beneficiary certificates of other collective investment schemes held by the collective investment schemes of special opportunity development zones x (Value of target investment assets held by other collective investment schemes / Total assets of other collective investment schemes)

(6) In applying paragraphs (4) and (5), if the value of target investment assets is less than the principal of investment amounts, the value of the target investment assets shall be calculated according to the following formula:

Value of target investment assets = A+B

A: Investment principal of target investment assets held by the collective investment schemes of special opportunity development zones

B: Investment principal of equity securities or beneficiary certificates of other collective investment schemes held by the collective investment schemes of special opportunity development zones x (Value of target investment assets held by other collective investment schemes / Total assets of other collective investment schemes)

1. Three months from the establishment date of the collective investment scheme for special opportunity development zones;

2. Three months before the date of termination or dissolution of the collective investment scheme for special opportunity development zones;

3. Other periods prescribed by Ordinance of the Ministry of Economy and Finance, such as the delay period of real estate development projects.

(8) The specific requirements for a dedicated account under Article 121-35 (2) of the Act (hereafter in this Article referred to as "dedicated account") are as follows:

1. The name of the account shall be a dedicated account of the collective investment scheme for special opportunity development zones;

2. The contract period shall be at least one year.

(9) The interest income or dividend income paid to the exclusive account and the reinvested amount shall not be included in the payment limit under Article 121-35 (2) 2 of the Act.

(10) If a resident holding a dedicated account (hereinafter referred to as "account holder") withdraws any amount from the dedicated account, it shall be treated as a withdrawal from the amount other than the principal of investment amounts.

(11) "Investor's death, or emigration to a foreign country, or unavoidable circumstances prescribed by Presidential Decree" in Article 121-35 (4) of the Act means any of the following cases:

1. Where the account holder is dead or emigrates to a foreign country;

2. Where the event referred to in any subparagraph of Article 81 (6) occurs to the account holder within six months prior to the date of termination;

3. Where the collective investment scheme of a special opportunity development zone is dissolved.

(12) A resident who intends to terminate the contract for any of the reasons specified in paragraph (11) shall submit a report on the special reason for termination, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the financial companies, etc. that manage the dedicated accounts under Article 121-35 (4) of the Act.

[This Article Newly Inserted on Feb. 29, 2024]

Article 117-3(Deduction of Medical Expenses for Compliant Business Operators) #

(1) Deleted. <Feb. 2, 2012>

(2) Deleted. <Feb. 18, 2010>

(3) Deleted. <Feb. 11, 2020>

(4)"Requirements prescribed by Presidential Decree" in Article 122-3 (1) 4 of the Act means all of the requirements that: <Amended on Nov. 29, 2013>

1. The business operator has never defaulted on national taxes as of the end of a statutory deadline for tax return and payment in the relevant taxable period;

2. The business operator has never been punished for evading taxes for the last three years as of a statutory deadline for tax return and payment in the relevant taxable period;

3. None of the following shall apply to a business operator registered under the Value-Added Tax Act and the Income Tax Act for the last three years as of the expiration of a statutory deadline for tax return and payment in the relevant taxable period:

(a) Where he/she fails to issue a tax invoice or has issued a false tax invoice;

(b) Where he/she has submitted a false aggregate tax invoice by place of sales;

(c) Where he/she fails to receive a tax invoice, has received a false tax invoice, or has submitted a false aggregate tax invoice by place of purchase;

(d) Where he/she has issued or received a tax invoice or invoice without supplying goods and services;

(e) Where he/she has submitted a false aggregate tax invoice by place of sales and purchase without supplying goods and services, or has submitted a false tax invoice by place of sales and purchase;

4. The underreported income amount found by a tax investigation for three immediately preceding taxable periods as of the start of the relevant taxable period shall be less than 10/100 of the corrected income amount of the relevant taxable period.

(5) Deleted. <Feb. 29, 2024>

(6) Other matters necessary for the deduction of medical expenses, etc. for compliant business operators shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 29, 2008; Feb. 12, 2019>

[This Article Newly Inserted on Feb. 22, 2008]

[Title Amended on Feb. 18, 2010]

Article 117-4(Tax Credits for Increased Revenue of Business Operators of Copper Scrap) #

(1) Article 122-4 (1) 1 of the Act shall apply only to persons who have operated the relevant business for at least one year retrospectively from the end of the taxable year immediately preceding the taxable year in which the relevant business operator intends to be granted a tax credit.

(2) For the purposes of Article 122-4 (1) 1 of the Act, if the number of the months eligible for the special taxation for tax payment by a purchaser for the immediately preceding taxable year falls short of the taxable year of the relevant business operator, the aggregate of gross income and deductible expenses paid by the purchaser during the immediately preceding taxable year, shall be calculated by multiplying the aggregate of gross income and deductible expenses paid by the purchaser during the immediately preceding taxable year, by the number of months of the business operator's taxable year and then by dividing the aggregate by the number of months eligible for special taxation for tax payment. In such cases, the number of months shall be counted based on calendar months, but the number of days less than one month shall be deemed one month. <Newly Inserted on Feb. 5, 2016>

(3) Where the amount of tax credits is decreased as the aggregate of gross income and deductible expenses paid by a purchaser under Article 122-4 (1) of the Act is changed, or the tax base and amount of tax for the relevant taxable year is corrected, the amount of tax credits from income tax or corporate tax shall be recalculated pursuant to that paragraph. <Amended on Feb. 5, 2016>

(4) A person who intends to be granted a tax credit under Article 122-4 (1) of the Act shall file an application for tax credit for increased revenue, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance, and a statement on the amount of gross income and deductible expenses paid by a purchaser, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her final return of global income tax base or corporate tax return. <Amended on Feb. 5, 2016>

[This Article Newly Inserted on Nov. 29, 2013]

Article 121-2(Income Deduction for Amount Spent on Credit Cards) #

(1)"Those, the identity of holder of which is verifiable, as prescribed by Presidential Decree" in Article 126-2 (1) 4 of the Act means any of the following: <Newly Inserted on Feb. 28, 2007; Feb. 22, 2008; Feb. 18, 2010; Feb. 15, 2022>

1. A prepaid card, electronic money, or prepaid electronic means of payment issued, upon application, with its holder's name verifiable;

2. In cases of bearer prepaid cards, bearer prepaid electronic payment instruments, and bearer electronic money (hereafter in this paragraph referred to as"bearer prepaid cards, etc."), falling under any of the following:

(a) Bearer prepaid cards, etc. that the actual user registered his/her resident registration number or a bearer prepaid card, etc. with the credit card business entity, electronic financial transaction business entity, or financial institution that issued the relevant bear prepaid cards, etc. and obtained user certification before using them initially;

(b) Bearer prepaid cards, etc. that the actual user linked to his/her deposit account opened in a financial institution before using them initially.

(2)"Corporation or business operator prescribed by Presidential Decree" in Article 126-2 (2) 1 of the Act means the following: <Amended on Feb. 7, 2017>

1. A quasi-superstore defined in subparagraph 4 of Article 2 of the Distribution Industry Development Act;

2. A per-business unit taxable entrepreneur referred to in Article 8 (3) of the Value-Added Tax Act, in whose case the amount spent on credit cards provided for in paragraph (5) at a place of business inside the zone of a traditional market and a place of business outside the zone of a traditional market is not separable.

(3)"Person prescribed by Presidential Decree" in Article 126-2 (3) of the Act means any of the following persons. In such cases, the lineal ascendants and descendants who make a living together with a resident specified in subparagraph 2 shall be the cohabiting family members listed on the resident’s resident registration card, and who actually make a living together at the address or residence of such resident (this shall not apply to the lineal descendants, but those falling under Article 53 (2) and (3) of the Income Tax Act shall be deemed to make a living together); and a determination as to whether a person makes a living together shall be made, based on the circumstances as at the end of the taxable period of the relevant year (or the date immediately preceding the date of death, if a person dies before the end of the taxable period): <Amended on Jan. 10, 2000; Dec. 31, 2001; Dec. 30, 2002; Feb. 19, 2005; Feb. 28, 2007; Feb. 4, 2009; Feb. 18, 2010; Feb. 5, 2016>

1. A resident's spouse, whose total annual income does not exceed one million won (including a spouse who has only earned income of not exceeding five million won of gross wage and salary income, etc. per year);

2. Lineal ascendants and descendants who make a living together with a resident (including the spouse's lineal ascendants and adoptees living together as prescribed in Article 106 (7) of the Enforcement Decree of the Income Tax Act, but excluding persons granted basic deductions for another resident (hereafter in this subparagraph, referred to as "lineal ascendants and descendants")) and whose total annual income does not exceed one million won (including lineal ascendants and descendants who have only earned income of not exceeding five million won of gross wage and salary income, etc. per year).

(4)"Fraudulent use of a credit card, a debit card, an electronic debit payment instrument, a registered prepaid card, a registered electronic prepaid instrument, registered electronic cash, or a cash receipt prescribed by Presidential Decree" in Article 126-2 (4) 2 of the Act means any of the following: <Amended on Dec. 30, 2003; Feb. 28, 2007; Feb. 18, 2010>

1. Pretending to engage in a trade without any transaction of goods or services, or engaging in a trade by credit cards, debit cards, electronic direct debit payments, registered prepaid cards, registered electronic prepaid instruments, registered electronic cash, or cash receipts (hereafter in this Article, referred to as"credit card, etc.") in excess of the actual sales amount;

2. Engaging in a trade with credit cards, etc. by a person paying the price with the credit cards, etc. while knowing that the trade is conducted in the name of a different credit card merchant, etc. In such cases, when he/she has received a sales slip, etc. stating a trade name different from the actual one, he/she shall be deemed to have engaged in a trade with the knowledge of the relevant fact.

(5)"Grounds prescribed by Presidential Decree" in Article 126-2 (5) of the Act means where the withholding agent is unable to verify that the amount of income deduction for the amount spent on credit cards, etc. referred to in Article 126-2 (1) of the Act as indicated on a report on wage and salary income deduction and on an application for income deduction for credit cards under paragraph (8) (hereafter in this Article, referred to as"amount spent on credit cards, etc.") contains the amount referred to in the subparagraphs of paragraph (6) or the subparagraphs of Article 126-2 (4) of the Act, by the time he/she make a year-end settlement of earned income tax. <Amended on Dec. 30, 2003; Feb. 28, 2007; Feb. 18, 2010>

(6) For the purposes of 126-2 of the Act, the amount spent on credit cards, etc. shall be the total amount spent on credit cards, etc. for the period prescribed by the Commissioner of the National Tax Service, but none of the following amounts shall be included therein: <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 28, 2007; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 2, 2012; Jun. 28, 2013; Feb. 21, 2014; Feb. 3, 2015; Feb. 7, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 29, 2024>

1. Insurance premiums payable under the National Health Insurance Act, the Long-Term Care Insurance Act, or the Employment Insurance Act, pension insurance premiums payable under the National Pension Act, insurance premiums or mutual-aid installments payable under insurance contracts referred to in Article 25 (2) of the Enforcement Decree of the Income Tax Act;

2. Tuitions, admission fees, nursery fees, and other public imposts payable to schools under the Early Childhood Education Act, the Elementary and Secondary Education Act, the Higher Education Act, or special Acts (including graduate schools), and to nursery institutions under the Child Care Act;

3. National or local taxes payable to the State and local governments, and fees for electric power, water, gas, and telephone (including information service charges, Internet service fees, etc.), apartment management fees, and television viewing fees (including fees for composite cable broadcasting service under the Composite Cable Broadcasting Act), and tolls;

4. Costs for purchasing the securities, such as gift cards;

5. Lease fees (including the automobile rental fees of the automobile rental business under the Passenger Transport Service Act);

6. Deleted; <Dec. 31, 2008>

7. Costs for purchasing any assets (excluding used motor vehicles under paragraph (14)) on which the acquisition tax or registration and license tax on registration is imposed under the Local Tax Act;

8. Payments, such as user fees or service charges, made to the State, local government, or an association of local governments (excluding medical institutions under the Medical Service Act, public health centers under the Community Health Care Act. and corporations or business entities designated by the Minister of Culture, Sports and Tourism under Article 126-2 (2) 3 (a) and (b)) that perform services other than the business activities referred to in subparagraphs 1 and 3 of Article 46 of the Enforcement Decree of the Value-Added Tax Act;

9. Payments related to financial or insurance services, such as the amount of redemption of interest on loans, fees for security transactions, etc., service charges, guarantee fees, and other similar amounts;

9-2. Consideration paid to a virtual asset business operator under subparagraph 1 (n) of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information for virtual asset transactions under subparagraph 2 (d) of the same Article;

10. Political funds (limited to those eligible for tax credits under Article 76 of the Act) donated by payment with credit cards, debit cards, registered prepaid cards, electronic direct debit payments, registered electronic prepaid instruments, or registered electronic cash to a political party (including supporters' association and all levels of Election Commissions) as provided for in the Political Funds Act;

10-2. Donations for the love of hometown under the Hometown Love Donation Act (limited to cases where a tax credit is applied under Article 58 of the Act);

11. Monthly rents eligible for tax credits under Article 95-2 of the Act;

12. Purchase cost of duty-free goods sold in a bonded store under Article 196 of the Customs Act, or in a designated duty-free shop, ship or aircraft under Article 121-13 of the Act;

13. Others prescribed by Ordinance of the Ministry of Economy and Finance, similar to subparagraphs 1 through 12.

(7) Upon receipt of a request made by members of credit cards, debit cards, registered prepaid cards, electronic direct debit payments, registered electronic prepaid instruments, or registered electronic cash under the Electronic Financial Transactions Act (hereafter in this paragraph, referred to as"members of credit cards, etc.") to issue a confirmation note indicating the total sum spent on credit cards, etc. and the amount subject to income deduction (hereafter in this Article, referred to as"confirmation note of amounts spent on credit cards, etc."), credit card companies (including debit card companies and registered prepaid card companies) under the Specialized Credit Finance Business Act, and financial institutions and electronic financial entrepreneurs under the Electronic Financial Transactions Act (hereafter in this Article, referred to as"credit card company, etc."), shall issue it without delay: Provided, That the credit card companies may issue it and notify thereof for the convenience of the members of credit cards, etc. even where no request is made to issue a confirmation note of amounts spent on credit cards, etc. <Amended on Jan. 10, 2000; Dec. 30, 2003; Feb. 19, 2005; Feb. 28, 2007; Feb. 18, 2010>

(8) Any person who wishes to be granted an income deduction for amounts spent on credit cards, etc. shall enter the amount of the income deduction in his/her return on wage and salary income deduction under Article 140 (1) of the Income Tax Act, and shall concurrently file an application for income deduction for credit cards, etc. and a confirmation note of amounts spent on credit cards, etc., in the forms prescribed by Ordinance of the Ministry of Economy and Finance, when filing the return on wage and salary income deduction to the withholding agent: Provided, That if the amount spent in traditional markets, the amount spent for mass transit, the amount spent for books, etc. under Article 126-2 (2) 1 through 3 of the Act is omitted in the confirmation note of amounts spent on credit cards, etc., he/she may file an application for an income deduction for amounts spent on credit cards, etc. by submitting data verifying such amount spent in traditional markets, the amount spent for mass transit, the amount spent for books, etc., such as receipts, boarding tickets, and admission tickets. <Amended on Feb. 19, 2005; Feb. 28, 2007; Oct. 7, 2008; Feb. 18, 2010; Feb. 15, 2013; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023>

(9) For the purposes of paragraph (8), if receipts are received from an entrepreneur whose sales amount does not exceed the sales amount prescribed by Ordinance of the Ministry of Economy and Finance (in cases of business operators selling books or newspapers, limited to cases where the relevant sales are not less than 90/100 of total sales), the whole amount thereof shall be deemed the amount spent for books, etc., even if the amount spent for books, etc. cannot be clearly separated from the amount spent for other purposes. <Newly Inserted on Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023>

(10) Where the Commissioner of the National Tax Service becomes aware of the fraudulent use of a credit card referred to in paragraph (4), he/she shall notify the relevant credit card company, etc. of such fact within seven days. <Amended on Dec. 30, 2003; Feb. 28, 2007; Feb. 18, 2010; Feb. 12, 2019>

(11) Where a credit card company, etc. becomes aware of the fraudulent use of the credit card referred to in paragraph (4), it shall notify the relevant credit card member, etc. of the details of the relevant transaction within 30 days after becoming aware of such facts, and shall exclude the same amount from the amount spent on credit cards, etc. eligible for income deduction as at the time of issuing a confirmation note of amounts spent on credit cards, etc. for the relevant transaction: Provided, That, where it becomes aware of the fraudulent use of the credit card after having issued a confirmation note of amounts spent on credit cards, etc., the relevant amount shall be excluded from the amount spent on credit cards, etc. eligible for income deduction for the following taxable year. <Amended on Dec. 30, 2003; Feb. 28, 2007; Feb. 18, 2010; Feb. 12, 2019>

(12) For the purpose of paragraph (8), where the evidentiary documents of income deductions is submitted to the Commissioner of the National Tax Service pursuant to Article 216-3 of the Enforcement Decree of the Income Tax Act, documents prescribed by Ordinance of the Ministry of Economy and Finance may be submitted instead of a confirmation note of amounts spent on credit cards, etc. <Newly Inserted on Feb. 9, 2006; Feb. 28, 2007; Feb. 29, 2008; Feb. 12, 2019>

(13) The Commissioner of the National Tax Service may request the relevant administrative agencies, such as the Minister of Culture, Sports and Tourism, the Minister of Land, Infrastructure and Transport, the Minister of SMEs and Startups, and the heads of local governments, to submit necessary data, including the status of corporations and business operators within the area of traditional markets or the status of mass transit operators, and business operators selling books or newspapers, providing public performance business, or operating a museum, art gallery, or movie theater to him/her or credit card companies, etc. in order to calculate the income deduction applied for amounts spent on credit cards, etc. In such cases, the relevant administrative agencies, etc. in receipt of such request shall comply therewith unless there is good cause. <Newly Inserted on Feb. 2, 2012; Feb. 15, 2013; Mar. 23, 2013; Jul. 26, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023>

(14)"Used motor vehicle prescribed by Presidential Decree" in the proviso of Article 126-2 (4) of the Act, with the exception of its subparagraphs, means a used motor vehicle, among motor vehicles registered under the Motor Vehicle Management Act. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019>

(15)"Amount prescribed by Presidential Decree" in the proviso of Article 126-2 (4) of the Act, with the exception of its subparagraphs, means 10/100 of the purchase price of a used motor vehicle. <Newly Inserted on Feb. 7, 2017; Feb. 12, 2019>

[This Article Newly Inserted on Oct. 30, 1999]

[Title Amended on Dec. 30, 2002]

Article 121-3(Special Taxation for Cash Receipt Service Operators and Cash Receipt Merchants) #

(1) Upon receipt of an application filed by a business operator for approval to be a cash receipt service operator under Article 126-3 (1) of the Act, the Commissioner of the National Tax Service shall verify whether the business operator is equipped with the system to approve and transmit cash receipt settlement by wire, and shall approve such business operator as a cash receipt service operator if nothing obstructs the business relating to such service. <Amended on Feb. 4, 2009>

(2) To apply for approval to be a cash receipt service operator under paragraph (1), every applicant shall file an application for approval for a cash receipt service operator, in the form prescribed by the Commissioner, which is accompanied by documents publicly notified by the Commissioner of the National Tax Service, such as a business plan, a plan to develop cash receipt issuing devices, and a plan to distribute cash receipt terminal, with the Commissioner of the National Tax Service. <Amended on Feb. 4, 2009>

(3) Matters necessary for the smooth operation of the Cash Receipt service, such as the method of issuance, details of entry and form of cash receipt, and keeping and submission of cash receipt, shall be determined by the Commissioner of the National Tax Service. <Amended on Feb. 4, 2009>

(4) Where paragraph (3) is violated, the Commissioner of the National Tax Service may revoke approval for the relevant cash receipt service operator granted under paragraph (1). <Newly Inserted on Feb. 15, 2013>

(5) Deleted. <Feb. 13, 2018>

(6) Deleted. <Feb. 13, 2018>

(7)"Number of cash receipt account settlement" in Article 126-3 (1) of the Act means the number of settlements for which a cash receipts merchant referred to in Article 126-3 (1) of the Act (hereafter referred to as"cash receipt merchant" in this Article) has issued cash receipts by the cash receipts issuing devices, and which were electrically transmitted to the Commissioner of the National Tax Service through the cash receipt service operator pursuant to Article 126-3 (3) of the Act. <Amended on Feb. 22, 2008; Feb. 4, 2009; Feb. 15, 2013>

(8)"Amount prescribed by Presidential Decree" in Article 126-3 (1) of the Act means the amount determined by the Commissioner of the National Tax Service by adding or subtracting an amount equivalent to 30/100 of the base amount of 12 won per settlement by cash receipt, considering the factors affecting the cost, etc. <Amended on Feb. 13, 2018>

(9) A cash receipt service operator who intends to apply for special taxation under Article 126-3 of the Act shall file an application for tax credit on the amount of value-added tax on the cash receipt service operator, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the Commissioner of the National Tax Service. <Amended on Feb. 29, 2008>

(10)"Amount prescribed by Presidential Decree" in the former part of Article 126-3 (2) of the Act means 20 won. <Newly Inserted on Feb. 22, 2008>

(11) Every cash receipt merchant shall issue a cash receipt for each trade pursuant to Article 126-3 (4) of the Act. <Amended on Feb. 22, 2008; Feb. 15, 2013>

(12) Where a mail order business operator defined under Article 14 (1) 11 of the Enforcement Decree of the Value-Added Tax Act supplies goods or services through a cyber-mall defined under subparagraph 4 of Article 2 of the Act on the Consumer Protection in Electronic Commerce, which is operated by a business operator who engages in value-added telecommunications business under Article 5 of the Telecommunications Business Act (hereinafter referred to as"value-added telecommunications business operator") and receives payments therefor through the value-added telecommunications business operator, the value-added telecommunications business operator may issue cash receipts under the name of the mail order business operator. <Newly Inserted on Feb. 28, 2007; Feb. 22, 2008; Feb. 18, 2010; Oct. 1, 2010; Jun. 28, 2013; Feb. 3, 2015>

(13) Matters necessary for the total sum of amounts settled by cash receipts and the notice of amounts eligible for income deduction to the persons issued cash receipts under paragraph (11), shall be determined by the Commissioner of the National Tax Service. <Amended on Feb. 28, 2007; Feb. 22, 2008; Feb. 11, 2020>

[This Article Newly Inserted on Dec. 30, 2003]

[Title Amended on Feb. 22, 2008]

Article 121-5(Confirmation of Cash Transactions) #

(1)"Business operator prescribed by Presidential Decree" in the former part of Article 126-5 (1) of the Act means a person who supplies goods or services eligible for income deduction for the spent amount as prescribed in Article 126-2 of the Act. <Amended on Feb. 22, 2008; Feb. 4, 2009; Feb. 18, 2010>

(2) A person who intends to file an application for verification of a cash transaction in accordance with Article 126-5 (1) of the Act shall file an application for verification of cash transactions in the form prescribed by Ordinance of the Ministry of Economy and Finance within three years from the date of a transaction with the head of a tax office, the Commissioner of a Regional Tax Office, or the Commissioner of the National Tax Service, along with the materials that can prove the facts of the transaction objectively. <Amended on Feb. 29, 2008; Feb. 4, 2009; Feb. 15, 2013>

(3) Upon receiving an application for verification of cash transactions under paragraph (2), the head of a tax office, the Commissioner of a Regional Tax Office, or the Commissioner of the National Tax Service shall forward an application for verification of cash transactions and evidencing materials to the head of a tax office having jurisdiction over the supplier of the goods or services (hereafter referred to as"supplier" in this Article) against whom verification of the transaction was requested.

(4) Upon receiving the application under paragraph (3), the head of a tax office having jurisdiction over the supplier shall review the details of the application filed by the applicant and the evidencing materials submitted, and verify whether the transaction was actually conducted. In such cases, the applicant shall be responsible for proving the existence of the facts of the transaction and the details thereof.

(5) The head of a tax office having jurisdiction over the supplier shall verify whether the cash transaction was actually made, as prescribed by the Commissioner of the National Tax Service, by the end of the month following the month in which the date of filing an application falls, and shall notify the applicant of the facts: Provided, That if unavoidable reasons specified by Ordinance of the Ministry of Economy and Finance exist, such as momentary absence of the business operator, the period for verifying the facts of the transaction may be extended by up to 20 days. <Amended on Feb. 29, 2008>

(6) If the facts of the cash transaction are verified under paragraph (5), a cash receipt under Article 126-3 (4) of the Act on Restriction on Special Cases concerning Taxation shall be deemed issued to an applicant regardless whether the supplier is a cash receipt merchant. <Amended on Feb. 22, 2008>

(7) Where the head of a tax office having jurisdiction over the place of tax payment has entered the revenue amount of cash transactions prescribed by Ordinance of the Ministry of Economy and Finance out of the revenue amount entered in the statement of cash sales submitted by a business operator under Article 55 of the Value-Added Tax Act to the Cash Receipt system of the National Tax Service by the end of the month following the end of the month in which a deadline for preliminary return or final return of value-added tax falls, the business operator shall be deemed to have issued verified cash receipts for such transactions under Article 126-5 (1) of the Act. <Newly Inserted on Feb. 22, 2008; Feb. 29, 2008; Feb. 15, 2013; Jun. 28, 2013>

(8) When a person supplied with goods or services from a business operator becomes aware that the details of revenue amount of cash transactions were omitted or the revenue amount entered falls short of the actual amount as the result of inquiring into the details of entries after expiration of a deadline for entry into the cash receipt system under paragraph (7), he/she may apply for the verification of the fact of cash transactions within three years from the date of conducting a transaction by applying paragraph (2) mutatis mutandis: <Newly Inserted on Feb. 22, 2008; Feb. 15, 2013>

1. Deleted. <Feb. 15, 2013>

2. Deleted. <Feb. 15, 2013>

(9) Paragraphs (3) through (6) shall apply mutatis mutandis to procedures for filing applications, verification of the fact of conducting transactions, etc. under paragraph (8). <Newly Inserted on Feb. 22, 2008>

[This Article Newly Inserted on Feb. 28, 2007]

Article 121-7(Special Taxation for Gold Bullion Traded in Spot Gold Markets) #

(1)"Gold bullion prescribed by Presidential Decree" in Article 126-7 (1) of the Act, with the exception of its subparagraphs, means gold with at least 9,999/10000 in the state of raw materials, such as gold ingot (lumps) or gold bar (hereafter referred to as"gold bullion" in this Article).

(2)"Business bullion supplier prescribed by Presidential Decree" in Article 126-7 (1) 1 of the Act means a business operator who intends to supply or import gold bullion, and is prescribed by the terms and conditions of the Korea Exchange (hereafter referred to as"Korea Exchange" in this Article) permitted under Article 373-2 (1) of the Financial Investment Services and Capital Markets Act (hereafter referred to as"gold bullion supplier" in this Article).

(3)"Safekeeping agency prescribed by Presidential Decree" in Article 126-7 (1) 1 of the Act means a person who performs the business related to safekeeping and withdrawal of gold bullion, and is prescribed by the terms and conditions of the Korea Exchange (hereafter referred to as"safekeeping agency" in this Article).

(4)"Spot gold market prescribed by Presidential Decree" in Article 126-7 (1) 1 of the Act means a market established by the Korea Exchange after obtaining approval from the Financial Services Commission to trade gold bullion deposited at safekeeping agencies (hereafter referred to as"spot gold market" in this Article).

(5) Where any gold bullion is traded using a gold trading account under Article 106-4 (1) of the Act (hereafter referred to as"gold trading account" in this Article), Article 106-4 of the Act shall apply mutatis mutandis to the method of payment, calculation of a payable tax amount, penalty tax levied for a failure to use a gold trading account, and other matters necessary for the procedures for filing returns and payment of value-added tax and relevant forms shall be prescribed by Ordinance of the Ministry of Economy and Finance.

(6) A person designated by the Commissioner of the National Tax Service under Article 106-9 (5) may refund any of the following value-added taxes to a gold bullion supplier by up to an amount of the value-added tax deposited by the purchaser under Article 106-4 (3) of the Act, as prescribed by the Commissioner of the National Tax Service:

1. An amount of the value-added tax which is the input tax amount deductible for the gold bullion supplier under Article 126-7 (2) of the Act, which is deposited using a gold trading account;

2. An amount of the value-added tax which is the input tax amount deductible for the gold bullion supplier under Article 126-7 (2) of the Act, which is paid to a customs office as at the time the gold bullion is imported.

(7) Pursuant to Article 126-7 (3) of the Act, a gold bullion supplier shall issue a tax invoice under Article 32 of the Value-Added Tax Act stating the relevant safekeeping agency as a person supplied with gold bullion as at the time the person supplied with gold bullion completes payments for the gold bullion on after having traded it in the spot gold market. In such cases, the value of supply shall be the sale price as at the time the payment is completed, and the amount of value-added tax shall be zero.

(8) Notwithstanding the paragraph (7), gold bullion suppliers may issue tax invoices aggregating the total value of supply for one calendar month in accordance with Article 34 (3) 1 of the Value-Added Tax Act.

(9)"Value of supply prescribed by Presidential Decree" in Article 126-7 (4) of the Act means an amount computed by multiplying the average unit price calculated by applying mutatis mutandis the moving average method provided for in Article 92 (2) 5 of the Enforcement Decree of the Income Tax Act by the quantity of gold bullion withdrawn.

(10) Where any gold bullion is withdrawn from a safekeeping agency under Article 126-7 (4) of the Act, goods shall be deemed to have been supplied as at the time an application is filed with the safekeeping agency to withdraw the gold bullion: Provided, That where a person entrusted with a transaction of gold bullion in the spot gold market from a third person, and is qualified, by the Korea Exchange, for a broker of the entrusted affairs (hereafter referred to as"gold bullion broker" in this Article) withdraws any gold bullion at the request of the trustor, goods shall be deemed to have been supplied as at the time the trustor requests the gold bullion broker to withdraw the gold bullion.

(11) Where any gold bullion is withdrawn from a safekeeping agency under Article 126-7 (4) of the Act, the safekeeping agency shall directly collect the value added-tax from the other party to a transaction, which is the person who withdraws the gold bullion and pay the amount so collected: Provided, That where a gold bullion broker withdraws gold bullion at the request of the trustor, the safekeeping agency shall collect the value-added tax that the gold bullion broker has received from the trustor and pay the amount so collected.

(12) Where a gold bullion broker withdraws gold bullion from a safekeeping agency at the request of the trustor under the proviso of paragraph (11), the gold bullion broker shall provide the safekeeping agency with data necessary for issuing a tax invoice, such as the personal information of the person supplied with the gold bullion, value of supply of the gold bullion, and amount of value-added tax.

(13)"Scope prescribed by Presidential Decree" in Article 126-7 (6) of the Act means where a safekeeping agency makes or receives a payment of the supply value of gold bullion or the amount of value-added tax by means of a gold trading account as prescribed in Article 126-7 (3) through (5) of the Act.

(14) Where any gold bullion is withdrawn from a safekeeping agency under Article 126-7 (8) of the Act, the weighted average method provided for in Article 92 (2) 4 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the evaluation of the amount used in the spot gold market.

(15)"Special relationship prescribed by Presidential Decree" in Article 126-7 (8) of the Act means a relationship with the related party provided for in Article 98 (1) of the Enforcement Decree of the Income Tax Act and Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended on Feb. 12, 2019>

(16)"Gold bullion supplier prescribed by Presidential Decree" in Article 126-7 (9) of the Act means a person recommended by the head of the Korea Exchange from among persons qualified for importing and trading gold bullion in the spot gold market in accordance with the terms and conditions of the Korea Exchange.

(17) A person exempted from customs duties under Article 126-7 (9) of the Act shall deposit the relevant gold bullion in a safekeeping agency by the day following the date on which the import declaration is filed (or the following day of the relevant day if the relevant day falls under any subparagraph of Article 5 (1) of the Framework Act on National Taxes) and shall conduct the transactions thereof in the spot gold market within three years from the filing date of the import declaration. <Amended on Feb. 28, 2023>

(18) Upon granting exemption from customs duties on gold bullion under Article 126-7 (9) of the Act, the head of a customs office shall, without delay, notify the Korea Exchange and the relevant safekeeping agency of such fact.

(19) Where any cause for collecting customs duties exempted under Article 126-7 (11) of the Act occurs, the Korea Exchange and the safekeeping agency which has been notified of exemption from customs duties on the relevant gold bullion from the head of a customs office under paragraph (18) shall immediately notify the head of the customs office of such fact.

(20) Where any exempt customs duties are collected under Article 126-7 (11) of the Act, the amount to be collected shall be calculated as classified below. In such cases, if it is impracticable to collect customs duties from the person granted customs duty exemption in cases falling under subparagraph 2, such customs duties shall be collected from the transferee (including the lessee) or withdrawer:

1. Where the requirements prescribed in Article 126-7 (10) of the Act are not fulfilled:

Customs duties exempted under Article 126-7 (9) of the Act × Gold bullion which fails to fulfill the requirements prescribed in Article 126-7 (10) of the Act ÷ Customs duty-free gold under Article 126-7 (9) of the Act

2. Where the customs duty-free gold bullion is transferred (including the lease; hereafter the same shall apply in this paragraph) or withdrawn (excluding where the gold bullion is withdrawn after obtaining confirmation from the Korea Exchange or the safekeeping agency for quality inspection and is re-deposited) without conducting transactions in the spot gold market after depositing it at a safekeeping agency:

Customs duties exempted under Article 126-7 (9) of the Act × Gold bullion transferred or withdrawn ÷ Customs duty-free gold bullion under Article 126-7 (9) of the Act:

(21)"Persons prescribed by Presidential Decree" in Article 126-7 (12) of the Act means:

1. The Korea Exchange;

2. Safekeeping agencies;

3. Persons eligible to participate in trading in the spot gold market and prescribed by the terms and conditions of the Korea Exchange (including gold bullion brokers)

(22) Persons referred to in the subparagraphs of paragraph (21) shall prepare and keep particulars of transactions, etc., stating the following relevant information. In such cases, such particulars of transactions, etc. can be stored in an electronic form, such as an information processing unit, electronic data processing tape, or diskette:

1. Where gold bullion is deposited at a safekeeping agency:

(a) Depositor of the gold bullion;

(b) Date of deposit and quantity of the deposited gold bullion;

2. Where gold bullion is traded in the spot gold market:

(a) Quantity and amount of the gold bullion traded in the spot gold market by each trader, and the date of trade (trades conducted under Article 126-7 (1) 1 of the Act shall be stated separately from other trades);

(b) Personal information of the parties to a trade and the income accrued from the trade of the gold bullion for one year;

3. Where gold bullion is withdrawn from a safekeeping agency:

(a) Personal information of the withdrawer;

(b) Date of withdrawal;

(d) Other matters prescribed by the Commissioner of the National Tax Service.

(23) Article 112 of the Enforcement Decree of the Customs Act shall apply mutatis mutandis to the procedures for filing applications for tax exemptions, and documents to be submitted under Article 126-7 (13) 3 of the Act, and other necessary matters shall be prescribed by the Commissioner of Korea Customs Service.

(24) Procedures for notifying a decision on exemption under paragraph (18), and the occurrence of the causes for collection of customs duties under paragraph (19), relevant forms, and other necessary matters shall be prescribed by the Commissioner of Korea Customs Service.

[This Article Newly Inserted on Feb. 21, 2014]

Article 123-2(Procedure for Restriction on Special Taxation for Savings Subsidization) #

(1) Financial companies referred to in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which handle accounts prescribed in Article 129-2 (1) of the Act, and the following mutual aid associations (hereafter in this Article referred to as"savings institutions") shall explain to persons who intend to open such accounts or extend the contract period that the application of the relevant special taxation to persons subject to global taxation on financial income is restricted and that the amount of tax exempted or reduced will be additionally collected:

1. The Military Personnel Mutual Aid Association established under the Military Personnel Mutual Aid Association Act;

2. The Korea Teachers' Credit Union established under the Korean Teachers' Credit Union Act;

3. The Public Officials Benefit Association established under the Public Officials Benefit Association Act;

4. The Police Mutual Aid Association established under the Police Mutual Aid Association Act;

5. The Korea Fire Officials Credit Unit established under the Korea Fire Officials Credit Union Act;

6. The Korea Scientists and Engineers Mutual-Aid Association established under the Korea Scientists and Engineers Mutual-Aid Association Act;

(2) By not later than April 30 of the year following the year in which an account is opened or a contract period is extended, the Commissioner of the National Tax Service shall notify the Korea Federation of Banks of the matters prescribed by Ordinance of the Ministry of Economy and Finance ordinance as necessary to identify persons subject to global taxation on financial income: Provided, That, if any change occurs in the identification of a person subject to global taxation on financial income due to a determination, correction, etc. under Article 80 of the Income Tax Act, the notice may be given again by October 31 of the year following the year in which the account is opened or the contract period is extended.

(3) Savings institutions may identify persons subject to global taxation on financial income through the Korea Federation of Banks.

(4) A savings institution shall give notice to the relevant account holder within 14 days from the day it identifies the account holder as a person subject to global taxation on financial income.

(5) A person who receives notice under paragraph (4) may present his/her opinion to the Commissioner of the National Tax Service, as prescribed by Ordinance of the Ministry of Economy and Finance, and the Commissioner of the National Tax Service shall notify the account holder and the savings institution of whether or not he/she accepts the opinion within 14 days from the date he/she receives the opinion.

[This Article Newly Inserted on Feb. 17, 2021]

Article 124(Exclusion from Tax Reduction or Exemption for Investment in Over-Concentration Control Region of Seoul Metropolitan Area) #

(1)"Enlarged investment prescribed by Presidential Decree" in the main clause of Article 130 (1) of the Act means investment in the following cases: <Amended on Feb. 29, 2008; Apr. 14, 2020>

1. Where the business place is a factory prescribed by Ordinance of the Ministry of Economy and Finance: Investment for an increase of the total floor area of the factory by installing new fixed assets for business use;

2. Where the business place is not a factory referred to in subparagraph 1: Investment for an increase of the number of fixed assets for business use or an increase of the total floor area of the business place by installing new fixed assets for business use.

(2)"Industrial complex or industrial area prescribed by Presidential Decree" in the proviso of Article 130 (1) of the Act means an industrial complex or industrial area located in the over-concentration control region of the Seoul Metropolitan area, falling under any of the following subparagraphs: <Amended on Feb. 19, 2005; Feb. 18, 2010; Apr. 10, 2012>

1. An industrial complex under the Industrial Sites and Development Act;

2. An industrial area under Article 36 (1) 1 of the National Land Planning and Utilization Act and the zone to be used as the sites for industrial facilities from among the district unit planning zone under Article 51 (3) of that Act.

(3)"Fixed business assets . . . prescribed by Presidential Decree" in the provisos of Article 130 (1) and (2) of the Act means the following assets respectively: <Amended on Feb. 17, 2021>

1. Broadcasting equipment acquired for use in the production, editing, transmission, etc. of programs for digital broadcasting;

2. The exchange system, signal transmission system, wiring system, and information processing system under subparagraphs 1 through 3 and 5 of Article 8 of the Regulations on Settlement of Accounts and Reporting of Telecommunications Business, among telecommunications systems under Article 8 of that Act;

3. Assets falling under Article 21 (3) 1;

4. Other fixed assets for business use, as prescribed by Ordinance of the Ministry of Economy and Finance.

(4) Deleted. <Feb. 17, 2021>

[This Article Wholly Amended on Dec. 30, 2003]

[Title Amended on Feb. 17, 2021]

Article 126(Exclusion from Reduction of, or Exemption from, Tax Short of Minimum Tax) #

(1)"Tax prescribed by Presidential Decree, collectible as a penalty" in Article 132 (1) and 132 (2) of the Act means, with the exception of their subparagraphs: <Amended on May 24, 1999; Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Feb. 5, 2016>

1. An additional amount equivalent to interest where various reserves, etc. are included in gross income, and the amount of tax reduced or exempted pursuant to the Act is additionally collected (including voluntary payment or collection of such amount upon levied in addition to the income tax or corporate tax);

2. The amount of tax paid voluntarily or collected upon levied in addition to the income tax or corporate tax for the relevant business year, where the amount of income tax or corporate tax reduced or exempted is additionally collected pursuant to the Act or the Corporate Tax Act.

(2)"Tax credits, etc. prescribed by Presidential Decree" in Article 132 (1) of the Act, with the exception of its subparagraphs, means tax credits, tax reductions, or exemptions not referred to in Article 132 (1) 3 and 4 of the Act among corporate tax reductions or exemptions, and"where a company ceases to be classified as a small or medium enterprise for the first time, as prescribed by Presidential Decree" in Article 132 (1) of the Act, with the exception of its subparagraphs, means where the taxable year in which the reason that the company ceases to be classified as small or medium enterprise under Article 2 (2), with the exception of its subparagraphs, and Article (5), has occurred and subsequent three taxable years lapse. <Amended on Feb. 4, 2009; Dec. 30, 2010>

(3) Deleted. <Feb. 2, 2012>

(4)"Tax credits, etc. prescribed by Presidential Decree" in Article 132 (2) of the Act, with the exception of its subparagraphs, means tax credits, tax reductions, or exemptions not referred to in subparagraphs 3 and 4 of Article 132 (2) among income tax reductions or exemptions. <Amended on Feb. 4, 2009>

(5) Where the income tax or corporate tax is revised, as the amount of income tax or corporate tax reported by a taxpayer (including a revised return or a request for rectification, etc. pursuant to the Framework Act on National Taxes) falls short of the amount of tax calculated under Article 132 of the Act, the amount of tax shall be calculated by excluding the following reductions or exemptions in the following order (in the same subparagraphs, it shall be governed by the order provided for in the subparagraphs of Article 132 (1) and (2) of the Act): <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 28, 2007; Feb. 21, 2014>

1. Deleted; <Feb. 21, 2014>

2. Deleted; <Feb. 11, 2020>

2-2. Inclusion in deductible expenses and exclusion from gross income under Article 132 (1) 2 and (2) 1 of the Act;

3. Tax credits under Article 132 (1) 3 and (2) 3 of the Act. In such cases, where there exists a carried-over tax credit amount among the amount of reduced or exempted tax under that Article, the exclusion from such application shall begin with those accrued later;

4. Corporate tax or income tax reductions or exemptions under Article 132 (1) 4 and (2) 4 of the Act;

5. Income deductions and non-taxation under Article 132 (1) 2 and (2) 2 of the Act.

[Title Amended on Feb. 18, 2010]

Article 130(Special Cases concerning Exclusion of Business Promotion Expenses from Deductible Expenses) #

(1) Deleted. <Dec. 31, 2001>

(2) Deleted. <Feb. 9, 2006>

(3)"Government-contributed institutions prescribed by Presidential Decree" in Article 136 (2) 2 of the Act means the corporations in which the Government has invested at least 20/100 of its capital: Provided, That the listed corporations which are neither public corporations nor quasi-governmental institutions referred to in Article 5 of the Act on the Management of Public Institutions shall be excluded. <Amended on Feb. 22, 2008; Feb. 18, 2010>

(4)"Corporations prescribed by Presidential Decree" in Article 136 (2) 3 of the Act means the corporations in which the institutions referred to in Article 136 (2) 2 of the Act have invested as the largest stockholder. <Amended on Feb. 22, 2008; Feb. 18, 2010>

(5)"Expenses for cultural purposes prescribed by Presidential Decree" in Article 136 (3) of the Act means culture-related expenses spent for the following purposes within the Republic of Korea: <Newly Inserted on Aug. 6, 2007; Feb. 18, 2010; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015; Feb. 5, 2016; Feb. 12, 2019; Dec. 31, 2019; May 26, 2020; Jun. 7, 2023>

1. Purchasing admission tickets to cultural or art performances or exhibitions defined under Article 2 of the Culture and Arts Promotion Act or a museum under the Museum and Art Gallery Support Act;

2. Purchasing admission tickets for watching sports events under Article 2 of the National Sports Promotion Act;

3. Purchasing video products under Article 2 of the Promotion of the Motion Pictures and Video Products Act;

4. Purchasing phonograph record or music video products under Article 2 of the Music Industry Promotion Act;

5. Purchasing publications under subparagraph 3 of Article 2 of the Publishing Industry Promotion Act;

6. Purchasing admission tickets or passes to watch or experience cultural tourism festivals designated by the Minister of Culture, Sports and Tourism as prescribed in Article 48-2 (3) of the Tourism Promotion Act;

7. Purchasing admission tickets for tourist theaters under Article 2 (1) 3 (e) of the Enforcement Decree of the Tourism Promotion Act;

8. Purchasing admission tickets for exhibitions prescribed by Ordinance of the Ministry of Economy and Finance;

9. Purchasing admission tickets to see designated cultural heritage under Article 2 (3) of the Cultural Heritage Protection Act and registered national cultural heritage under paragraph (4) 1 of that Article;

10. Purchasing admission tickets for lectures regarding culture and arts under Article 2 of the Culture and Arts Promotion Act or honoraria for guest speakers;

11. Expenses incurred in relation to art and cultural events, such as performances directly held by a national with his/her own facilities or facilities rented from any third person;

12. Expenses spent for cultural, art, or sporting events held under the sponsorship of the Ministry of Culture, Sports and Tourism;

13. Purchasing works of art (limited to those, the purchase value of which does not exceed one million won per transaction);

14. Purchasing admission tickets or passes for the use of amusement facilities or amusement equipment installed by a person with a license for a general amusement complex business or an ordinary amusement facility business under Article 2 (1) 5 (a) or (b) of the Enforcement Decree of the Tourism Promotion Act pursuant to Article 5 (2) of that Act;

15. Purchasing admission tickets to arboretums and gardens referred to in subparagraphs 1 and 1-2 of the Act on the Creation and furtherance of Arboretums and Gardens;

16. Purchasing passes to tramways defined in subparagraph 3 of Article 2 of the Tramway Transportation Act.

(6)"Domestic corporation prescribed by Presidential Decree" in Article 136 (3) of the Act means a domestic corporation under Article 42 (2) of the Enforcement Decree of the Corporate Tax Act. <Newly Inserted on Aug. 28, 2018; Feb. 12, 2019>

(7) "Types of business prescribed by Presidential Decree, such as a consumer service business" in Article 136 (6) 2 of the Act means the consumer service business referred to in each subparagraph of Article 29 (3). <Newly Inserted on Feb. 29, 2024>

[Title Amended on Feb. 28, 2023]

Article 132(Rental Security Deposits Deemed Gross Income) #

(1)"Standards prescribed by Presidential Decree" in Article 138 (1) of the Act means the amount of borrowings (referring to the larger amount between the following amounts) equivalent to the amount twice the equity capital. In such cases, the borrowings and the equity capital shall be calculated by aggregating the balance of each day, and where the equity capital is changed on the grounds of any merger, division, capital increase, or capital decrease, etc., during the pertinent business year, the aggregate of the equity capital respectively calculated for the period (the equity capital during the relevant period may be calculated by subtracting or adding the increased capital amount or the decreased capital amount from or to the amount referred to in subparagraph 1) from the first date of the relevant business year to the date preceding the date on which the equity capital is changed, and the period from the date on which the equity capital is changed to the date on which the relevant business year ends shall be the equity capital calculated by aggregating the balance of each day for such periods: <Newly Inserted on Feb. 9, 2006; Feb. 18, 2010; Jan. 5, 2021>

1. The amount computed by deducting the total amount of liabilities from the total amount of assets on the statement of financial position (including reserves and excluding the unpaid corporate tax) as of the date on which the relevant business year ends;

2. The paid-in capital as at the end of the relevant business year (the amount obtained by adding up the paid-in capital over par and gains from capital reduction to the capital and subtracting discount on capital stock and loss from capital reduction).

(2) The borrowings that shall be excluded under Article 53 (4) of the Enforcement Decree of the Corporate Tax Act; the borrowings, the interest paid on which has not been included in deductible expenses under Article 55 of the Enforcement Decree of that Act; and the loans provided from the Housing and Urban Fund under the Housing and Urban Fund Act shall be excluded from the borrowings referred to in paragraph (1). <Newly Inserted on Feb. 9, 2006; Jun. 30, 2015>

(3)"Corporation which runs a real estate rental business as its principal business" in Article 138 (1) of the Act means a corporation whose value of assets used for the rental business is at least 50/100 of its total assets value as of the end of the business year of the corporation. In such cases, the assets values shall be calculated as prescribed in Article 99 of the Income Tax Act, and where some of assets is used for a rental business, the assets value used for the rental business shall be calculated, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 19, 2005; Feb. 9, 2006; Feb. 29, 2008>

(4)"House prescribed by Presidential Decree" in Article 138 (1) of the Act means a house and land appurtenant thereto, the area of which does not exceed the following area, whichever is wider: <Amended on Feb. 9, 2006; Feb. 18, 2010>

1. The total floor area of the house (excluding the basement area, the area used for a parking lot on the ground floor, and the area of joint facilities for residents provided for in subparagraph 3 of Article 2 of the Regulations on Standards for Housing Construction);

2. The area computed by multiplying five times by the area (referring to ten times in the case of any land outside the urban area) on which the building stands.

(5) The amount to be added to gross income pursuant to Article 138 (1) of the Act shall be calculated by the following formula. In such cases, where the amount to be added to gross income is smaller than zero, it shall be deemed nil, and the calculation shall be made by multiplying the balance as at the end of each month by the number of days elapsed: <Amended on Feb. 9, 2006; Dec. 30, 2010>

Amount to be added to gross income = [(Deposits, etc. for the relevant business year × number of rental days) － (Amount equivalent to the construction cost of rental real estate × number of rental days) × [(1/365) (366 for leap year)] × Interest rate of time deposit － Total amount of interest, discount charges, dividends, profits from disposal of preemptive rights, and profits from disposal of securities accrued from the rental business for the relevant business year

(6) "Amount equivalent to the construction cost of rental real estate" in paragraph (5) means each of the following: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>

1. The amount equivalent to the construction cost of an underpass prescribed by Ordinance of the Ministry of Economy and Finance, where the underpass built by a corporation and gratuitously donated to the State or a local government under the State Property Act or other statutes or regulations, and is leased by obtaining permission for occupation and use thereof (limited to the initial period for gratuitous occupation and use);

2. The amount equivalent to the construction cost of real estate for lease (excluding the value of land) prescribed by Ordinance of the Ministry of Economy and Finance in the cases of real estate for lease, other than those provided for in subparagraph 1.

Article 135(Ex Ante and Ex Post Management of Special Taxation) #

(1)"Matters of special taxation prescribed by Presidential Decree" in Article 142 (3) of the Act means any of the following: <Amended on Feb. 18, 2010; Feb. 15, 2013; Sep. 11, 2014>

1. Matters concerning special taxation, the application period of which ends during the relevant taxable year;

2. Matters concerning special taxation, in which cases two years have not elapsed since the enforcement of the special taxation;

3. Matters concerning existing special taxation, the scope of which is to be extended;

4. Matters concerning special taxation, which are enumerated in the master plan formulated under Article 142 (1) of the Act as those subject to review.

(2) The Minister of Economy and Finance may comprehensively assess the following matters concerning special taxation pursuant to the main clause of Article 142 (4) of the Act: <Newly Inserted on Feb. 15, 2013; Sep. 11, 2014>

1. Matters requiring a comprehensive assessment by each field;

2. Matters requiring efficiency of tax expenditures through an objective verification because the amount of reductions or exemptions is anticipated to increase continuously in the future;

3. Other matters recognized by the Minister of Economy and Finance as requiring an in-depth analysis and assessment.

(3)"Matters prescribed by Presidential Decree, including matters wherein the repeal of such special taxation is apparent due to the extinction of eligible items" in the proviso of Article 142 (4) of the Act means the following: <Newly Inserted on Sep. 11, 2014; Feb. 11, 2020>

1. Matters wherein the repeal of such special taxation is apparent due to the extinction of eligible items;

2. Matters related to inter-Korean exchanges and cooperation or those implemented under an agreement or treaty entered into with a foreign country;

3. Matters that the Minister of Economy and Finance recognizes as having no significant change in matters concerning existing special taxation, including the extent and scope of application, which have undergone assessment under Article 142 (4) of the Act within the recent two years.

(4)"Amount prescribed by Presidential Decree" in the proviso of Article 142 (4) of the Act means 30 billion won. <Newly Inserted on Sep. 11, 2014>

(5)"Matters prescribed by Presidential Decree, including the level of target achievement, economic effects, effects of income redistribution, and effects on finance" in the proviso of Article 142 (4) of the Act means: <Newly Inserted on Sep. 11, 2014>

1. An analysis of effects of special taxation schemes, including the level of target achievement, economic effects, effects of income redistribution, and effects on finance;

2. An analysis of the validity of special taxation schemes, including appropriateness of the purposes and objects of policies and means for implementing policies;

3. An analysis of the causes that hamper achievements of special taxation schemes and schemes to improve achievements.

(6) The cases to which Article 142 (5) of the Act shall apply include cases where a legislative bill for amending any existing provision on a special taxation scheme is submitted if the amount to be annually added under the amended provision to the amount under the existing provision on the special taxation scheme is 30 billion won or more. <Amended on Feb. 11. 2020>

(7) Deleted. <Feb. 11, 2020>

(8)"Matters prescribed by Presidential Decree, including the necessity and timeliness of the special taxation, expected effects, and potential problems" in Article 142 (5) of the Act means: <Newly Inserted on Sep. 11, 2014>

1. The validity of policies, including the necessity and timeliness of the special taxation, expected effects, potential problems, and methods for support;

2. The impact on various areas of the economy, including employment and investment;

3. The impact on the redistribution of income in various areas of the society, such as families, enterprises, and local communities.

(9) A legislative bill that amends matters concerning an existing special taxation scheme, including the change of a special tax rate and the addition of an item eligible for a special taxation scheme, shall be deemed a legislative bill that introduces a new special taxation scheme under Article 142 (5) of the Act: Provided, That an extension of the deadline for application of a special taxation scheme shall not be deemed a legislative bill that introduces a new special taxation scheme. <Newly Inserted on Sep. 11, 2014>

(10) The head of a relevant administrative agency or any other institution requested to present an opinion or data pursuant to Article 142 (7) of the Act shall submit his/her opinion or data within 10 days from the receipt of such request, if no deadline is specified for submission: Provided, That the head of a relevant administrative agency or any other institution may extend the period in consultation with the Minister of Economy and Finance thereon, if it is impracticable to submit an opinion or data within 10 days from the receipt of a request, but shall notify the Minister of Economy and Finance of the reasons and a management plan, if he/she has not maintained or managed, or is unable to produce the data requested. <Newly Inserted on Sep. 11, 2014>

[Title Amended on Feb. 15, 2013]

Article 136-2(Tax Credits Carried-Forward) #

(1)"Number of graduates from high schools, etc. aligned to industry demand" in Article 144 (3) 1 of the Act means the number of full-time employees for whom two years have not elapsed from the date of graduation from high schools, etc. aligned to industry demand as at the date an employment contract is entered into (which shall not exceed the number calculated by subtracting the largest of the numbers referred to in the items of Article 144 (3) 3 of the Act, from the number of full-time employees in the taxable year to which tax credits are carried forward). <Amended on Feb. 2, 2012>

(2)"Number of youth employees" in Article 144 (3) 2 of the Act means the number of full-time employees defined in Article 23 (8) 1 (which shall not exceed the number calculated by subtracting the largest of the numbers referred to in the items of Article 144 (3) 3 of the Act and the number of graduates from high schools, etc. aligned to industry demand referred to in paragraph (1), from the number of full-time employees in the taxable year to which tax credits are carried forward). <Amended on Feb. 2, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 3, 2015>

(3)"Number of employees with a disability" in Article 144 (3) 2 of the Act means the number of full-time employees defined under Article 23 (8) 2 (which shall not exceed the number calculated by subtracting the largest of the numbers referred to in the items Article 144 (3) 3 of the Act, the number of graduates from high schools, etc. aligned to industry demand referred to in paragraph (1), and the number of youth employees referred to in paragraph (2), from the number of full-time employees in the taxable year to which tax credits are carried forward). <Newly Inserted on Feb. 21, 2014; Feb. 3, 2015>

(4)"Number of employees aged at least 60" in Article 144 (3) 2 of the Act means the number of full-time employees defined in Article 23 (8) 3 (which shall not exceed the number calculated by subtracting the largest of the numbers referred to in the items of Article 144 (3) 3 of the Act, the number of graduates from high schools, etc. aligned to industry demand referred to in paragraph (1), and the number of youth employees referred to in paragraph (2), and the number of employees with a disability referred to in paragraph (3), from the number of full-time employees in the taxable year to which tax credits are carried forward). <Newly Inserted on Feb. 21, 2014; Feb. 3, 2015>

(5) Article 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and the method for calculating the number of full-time employees under paragraphs (1) through (4). <Newly Inserted on Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2015>

[This Article Newly Inserted on Dec. 30, 2010]

Article 137-2(Additional Collection of Non-Taxable or Exempted and Reduced Amount of Tax on Interest Income, Dividend Income, and Financial Investment Income) #

(1) A withholding agent under Article 146-2 (1) of the Act (hereafter in this Article referred to as"withholding agent") shall additionally collect the amount of tax exempted or reduced, deeming that the contract period expires on the date on which it is determined that the account holder is ineligible for the special taxation (hereafter in this Article referred to as"ineligibility determination date").

(2) Notwithstanding paragraph (1), the withholding agent shall not additionally collect the amount of tax exempted or reduced with respect of interest income, dividend income, or financial investment income that falls under any of the following: <Amended on Feb. 15, 2022>

1. Income paid by terminating an account before the ineligibility determination date;

2. Income paid by reselling or selling assets to terminate an account during the period from the expiry date of the contract period to the date prescribed by Ordinance of the Ministry of Economy and Finance;

3. Income generated during the period from the extension date of a contract to the ineligibility determination date: Provided, That, this shall not apply to cases prescribed by Ordinance of the Ministry of Economy and Finance, such as where it is possible to distinguish between income generated during the period from the opening date of an account to the expiry date of the initial contract period and income generated from the extension date of the contract to the ineligibility determination date.

(3) Notwithstanding paragraph (2) 1, the withholding agent for a collective savings account for housing subscription giving preferential treatment to youths under Article 87 (3) of the Act shall additionally collect an amount equal to the tax amount exempted on interest income at the time of terminating the account if the withholding agent has not been notified by the Minister of Land, Infrastructure and Transport that the account holder is the head of a household that does not own a house by the time the withholding agent terminates the account and if the withholding agent has not been notified by the Commissioner of the National Tax Service pursuant to Article 87 (10) 3 of the Act that the requirements of paragraph (3) 1 of that Article are met: Provided, That, if all of the following requirements are met, the amount so additionally collected shall be refunded:

1. A refund application shall be submitted in the form prescribed by Ordinance of the Ministry of Economy and Finance to the withholding agent within one month after terminating the savings account;

2. The withholding agent shall confirm that the requirements of Article 87 (3) 1 of the Act are met.

[This Article Newly Inserted on Feb. 17, 2021]

[Title Amended on Feb. 15, 2022]

ENFORCEMENT DECREE OF THE ACT ON RESTRICTION ON SPECIAL CASES CONCERNING TAXATION

Article 1(Purpose) #

Article 1-2(Definitions) #

Article 2(Scope of Small or Medium Enterprises) #

Article 3(Leases Excluded from Tax Credit for Investment) #

Article 4 #

Article 4-2(Special Taxation for Supporting Projects of Informatization for Small or Medium Enterprises) #

Article 4-3 #

Article 5(Tax Reductions or Exemptions for Small or Medium Start-Up Enterprises) #

Article 6(Special Tax Reductions or Exemptions for Small or Medium Enterprises) #

Article 6-2(Tax Credit for Improving Corporate Bill System) #

Article 6-3 #

Article 6-4(Tax Credits on Payments through Mutually-Beneficial Settlement System) #

Article 7(Special Cases of Inclusion in Deductible Expenses for Facilities for Supporting Small or Medium Enterprises) #

Article 7-2(Scope of Small or Medium Enterprises Requiring Cooperation) #

Article 7-3(Special Cases of Tax Refund following Retroactive Deduction of Losses of Small or Medium Enterprise) #

Article 8 #

Article 9(Tax Credits for Research and Human Resources Development Expenses) #

Article 9-2(Special Taxation on Contributions Related to Research and Development) #

Article 10 #

Article 11(Scope of Technical Knowhow) #

Article 11-2(Reduction or Exemption of Corporate Tax for High-Tech Enterprises that Occupy Special Research and Development Zones) #

Article 11-3(Tax Credits for Technological Innovation-Oriented Mergers) #

Article 11-4(Tax Credits for Acquisition of Technological Innovation-Oriented Stocks) #

Article 12(Calculation of Gains from Transfer of Stocks and Dividend Income) #

Article 12-2(Special Taxation for Investment by Domestic Corporations in Venture Businesses) #

Article 12-3(Special Taxation for Domestic Corporation’s Investment in and Acquisition of Enterprises Specialized in Materials, Components, or Equipment) #

Article 12-4(Non-Taxation of Corporate Tax on Gains on Transfer of Shares of Enterprises Specializing in Materials, Components, or Equipment by Venture Investment Companies) #

Article 13(Special Taxation on Investment in Business Starters) #

Article 13-2(Exemption from Secondary Tax Liability of Investors of Venture Businesses) #

Article 14(Income Deduction for Contributions to Venture Investment Funds) #

Article 14-2(Special Treatment for Non-Taxation on Gains from Exercising Stock Options of Venture Businesses) #

Article 14-3(Special Cases on Payment of Gains from Exercising Stock Options of Venture Businesses) #

Article 14-4(Special Taxation for Gains from Exercising Stock Options of Venture Businesses) #

Article 14-5(Special Taxation for Gains from Investment of Industrial Property Rights in Kind) #

Article 15 #

Article 16(Scope of Foreign Engineers) #

Article 16-2(Special Taxation for Foreign Workers) #

Article 16-3(Reduction of Income Tax for Returning of Talented National Human Resources to Korea) #

Article 17(Tax Credits for Management Performance Bonuses of Achievement-Sharing Small and Medium Enterprises) #

Article 18(Exemption of Corporate Tax on Interest Income from International Financial Transactions) #

Article 18-2(Non-Taxation of Interest Income Tax on Foreign Currency Time Deposits of Non-Residents) #

Article 19(Scope of Overseas Resources Development Projects) #

Article 20 #

Article 21(Integrated Investment Tax Credit) #

Article 22 #

Article 22-2 #

Article 22-3 #

Article 22-4 #

Article 22-5 #

Article 22-6 #

Article 22-7 #

Article 22-8 #

Article 22-9 #

Article 22-10(Tax Credit for Production Costs of Video Content) #

Article 22-11(Tax Credit for Investment of Domestic Corporation in Specialized Cultural Industry Company) #

Article 23(Tax Credits for Employment-Creating Investment) #

Article 24(Special Taxation on Investors in Specific Infrastructure Funds) #

Article 24-2(Special Taxation for Investors in Collective Investment Schemes Specializing in Investment and Financing) #

Article 24-3 #

Article 25(Special Taxation for Including Depreciation Cost of Service Businesses in Deductible Expenses) #

Article 25-2(Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment of Small or Medium and Middle-Standing Enterprises in Deductible Expenses) #

Article 25-3(Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment) #

Article 25-4(Special Taxation for Including Depreciation Cost of Energy Saving Facilities in Deductible Expenses) #

Article 26(Scope of Social Infrastructure Bonds) #

Article 26-2(Tax Credits for Enterprises Having Reinstated Graduates of High Schools Aligned to Industry Demand, after Performing their Military Service) #

Article 26-3(Tax Credits for Enterprises Employing Career-Interrupted Women) #

Article 26-4(Tax Credits for Enterprises Increasing Earned Income) #

Article 26-5(Tax Credits for Enterprises Increasing Jobs for Youths) #

Article 26-6(Income Tax Reductions or Exemptions on Payments Received from Performance Compensation Fund for Youth Employees and Core Personnel of Small and Medium Enterprises) #

Article 26-7(Tax Credits for Enterprises Increasing Jobs) #

Article 26-8(Integrated Tax Credit for Employment) #

Article 27(Income Tax Reduction or Exemption for Employees of Small or Medium Enterprises) #

Article 27-2 #

Article 27-3(Special Taxation for Small or Medium Enterprises Maintaining Employment) #

Article 27-4(Scope of Full-Time Employees in Granting Tax Credits for Social Insurance Premiums for Small or Medium Enterprises) #

Article 27-5(Special Taxation for Gift Tax on Start-Up Funds) #

Article 27-6(Special Taxation for Gift Tax on Succession to Family Business) #

Article 27-7(Deferral of Payment of Gift Tax for Succession to Family Business) #

Article 28(Capital Gains Tax Carried Forward Following Consolidation between Small or Medium Enterprises) #