ENFORCEMENT RULE ON THE ACT ON RESTRICTION OF SPECIAL TAXATION

Article 1(Purpose) #

The purpose of this Rule is to provide for matters delegated by the Restriction of Special Taxation Act and the Enforcement Decree of the Act and matters necessary for the enforcement thereof. <Amended on Mar. 11, 2005>

Article 2(Scope of Small and Medium Enterprises) #

(1) Deleted. <Mar. 17, 2017>

(2) Deleted. <Mar. 13, 2015.>

(3) Deleted. <Mar. 13, 2015.>

(4) “Turnover” in Article 2 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act (hereinafter referred to as the “Decree”) means the sales turnover on a profit and loss statement prepared in accordance with the Financial Accounting Standards at the end of the relevant taxable year: Provided, That in cases of a start-up business or a division or merger, it means the amount calculated by converting the sales turnover for the taxable year, in which the day immediately following the date of registration of such event (in cases of a start-up business, the date of establishment) is included into the annual sales turnover. <Newly Inserted on Mar. 28, 2001; Feb. 28, 2012; Mar. 13, 2015; Mar. 17, 2017; Mar. 13, 2020>

(5) “Total assets” in the proviso to the part other than each subparagraph of Article 2 (1) of the Decree means the total assets on the statement of financial position prepared in accordance with the Financial Accounting Standards at the end of the relevant taxable year. <Newly Inserted on Mar. 24, 2003; Feb. 28, 2012; Feb. 23, 2013; Mar. 13, 2015>

(6) Deleted. <Mar. 13, 2015.>

(7) Article 2 (3) of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to the computation of the indirect holding ratio of outstanding stocks provided for by Article 2 (4) of the Decree. < Newly Inserted on Apr. 29, 2008; Mar. 16, 2021>

(8) Whether a business is a related company, as defined in Article 3 (1) 2 (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, shall be determined in accordance with Article 2 (4) of the Decree at the end of the relevant taxable year. <Newly Inserted on Mar. 14, 2014>

Article 3 #

Deleted. <Mar. 16, 2021>

Article 3-2(Scope of Finance Lease) #

“Finance lease stipulated by Ordinance of the Ministry of Economy and Finance” in Article 3 of the Decree means leasing of an asset in any of the following cases (hereinafter referred to as “lease”):

1. Where it is agreed to transfer the ownership of the asset subject to the relevant lease (hereafter in this Article, referred to as “leased asset”) to the lessee, without consideration or at the amount set out in the previous agreement, upon or before expiration of the lease term [referring to a provision to which the condition that terminating the agreement is prohibited is additionally attached (including a provision to which it is deemed that the condition that terminating the agreement is prohibited can be implied, although no express condition prohibiting termination of the agreement exists) and including a provision stipulated by a renewed agreement, if it is agreed at the end of the agreed term by a renewed contract to additionally attach the condition prohibiting termination of the agreement; hereafter in this Article, the same shall apply];

2. Where the right to purchase the leased asset at an amount not exceeding 10/100 of the acquisition price upon expiration of lease term vests to the lessee on the date of the commencement of the lease or where the right to renew the lease agreement under the condition that the principal of the renewed agreement shall be not more than 10/100 of the acquisition price vests to the lessee on the date of commencement of the lease;

3. Where the lease term is at least 75/100 of the standard useful years of the leased asset for each type of asset and business (the lessee's type of business shall apply) in attached Tables 5 and 6 of the Enforcement Rule of the Corporate Tax Act;

4. Where the present value of the minimum lease charge assessed on the date of commencement of lease under the Financial Accounting Standards is at least 90/100 of the book value of the leased asset;

5. Where the purpose of use of the leased asset is limited to the lessee's specific purpose and diverting the leased asset for any other purpose is impracticable because of an incurrence of excessive expenses.

[This Article Newly Inserted on Apr. 7, 2011]

Article 4 #

Deleted. <Mar. 16, 2021>

Article 4-2(Scope of Manufacturing Businesses) #

“Businesses specified by Ordinance of the Ministry of Economy and Finance” in Article 5 (6) of the Decree means businesses that do not self manufacture products but outsource manufacturing of their products to manufacturers (limited to business entities that have a place of business within the Republic of Korea or in the Gaeseong Industrial District, as defined in subparagraph 1 of Article 2 of the Act on the Support of Gaeseong Industrial District) and meet the following requirements:

1. A business that conducts planning (referring to conception, designing, sample making, etc.) for the products to be manufactured;

2. A business that manufactures the relevant products in its own name;

3. A business that accepts the delivery of the relevant products and is responsible to sell the products.

[This Article Newly Inserted on Mar. 17, 2017]

Article 4-3(Scope of Newly Growing Service Industries Eligible for Tax Reduction and Exemption for Newly Established Small or Medium Businesses) #

“Newly growing service industries specified by Ordinance of the Ministry of Economy and Finance” in Article 5 (12) 7 of the Enforcement Decree refers to any of the following businesses: <Amended on Mar. 13, 2020>

1. The exhibition industry as defined in subparagraph 1 of Article 2 of the Act on the Development of Exhibition Industry;

2. Other industries for science and technology;

3. The market researching and public polling industry;

4. The advertising agency industry and the outdoor and display advertising industry, among advertising industries.

[This Article Newly Inserted on Mar. 21, 2018]

Article 5(Turnover of Small Enterprises) #

Turnover under Article 6 (5) of the Decree shall be determined by the sales turnover under Article 2 (4).

[This Article Wholly Amended on Mar. 17, 2017]

Article 5-2(Scope of Assets for Ex Gratia Rental) #

“Assets specified by Ordinance of the Ministry of Economy and Finance” in Article 7-2 (6) of the Decree means the assets specified in Article 13-10 (1) 1. <Amended on Mar. 20, 2019; Mar. 16, 2021>

[This Article Newly Inserted on Mar. 17, 2017]

Article 6 #

Deleted. <Mar. 17, 2017>

Article 7(Scope of Expenses for Research and Human Resources Development) #

(1) “Research institutes or specialized departments specified by Ordinance of the Ministry of Economy and Finance” in the main sentence of the part other than subparagraph 1 (a) 1) through 3) of attached Table 6 of the Decree means any of the following research institutes and specialized departments (hereinafter referred to as “specialized departments, etc.”); and “research and development service business” under the main sentence of the part other than subparagraph 1 (a) 1) through 3) of attached Table 6 means a research business engaged in by a professional research business entity defined in subparagraph 1 (a) of Article 2 of the Research Industry Promotion Act (hereafter in this Article, referred to as “research and development service business”). <Amended on Apr. 29, 2008; Apr. 7, 2009; Aug. 28, 2009; Apr. 20, 2010; Apr. 7, 2011; Feb. 28, 2012; Mar. 23, 2013; Mar. 14, 2014; Mar. 13, 2015; Mar. 17, 2017; Mar. 20, 2019; Mar. 18, 2022>

1. Business-affiliated research institutes or departments specialized in research and development, recognized by the Minister of Science and ICT under Article 14-2 (1) of the Basic Research Promotion and Technology Development Support Act;

2. Corporate-affiliated creative research institutes or specialized corporate creative departments referred to in Article 17-3 (1) of the Framework Act on the Promotion of Cultural Industries;

3. Specialized industrial design firm under Article 9 of the Industrial Design Promotion Act (hereafter in this Article, referred to as “specialized industrial design firm”)

(2) “Research institutes or specialized departments provided for by Ordinance of the Ministry of Economy and Finance” in Article 9 (3) 1 (a) of the Decree means specialized departments, etc. and enterprises engaging in research and development service business that only performs research on and development of new growth engines and source technologies under attached Table 7 of the Decree (hereafter in this Article, referred to as “research on and development of new growth engines and source technologies”) such as specialized departments located in the Republic of Korea (hereafter in this Article, referred to as “departments specialized in research on and development of new growth engines and source technologies”): Provided, That, as for specialized departments performing general research and development or enterprises engaged in the research and development service business, the organizations classified under each of the following shall be deemed as departments specialized in research on and development of new growth engines and original technologies. <Newly Inserted on Apr. 20, 2010; Apr. 7, 2011; Feb. 28, 2012; Mar. 14, 2014; Mar. 17, 2017; Mar. 20, 2019; Mar. 13, 2020; Mar. 18, 2022>

Article 7-2(Scope of Investment in Kind) #

“Investment in kind in the manner stipulated by Ordinance of the Ministry of Economy and Finance” in the main sentence of Article 9 (10) of the Decree means an all-inclusive investment of rights (excluding the right to receivables) and obligations (excluding the obligation to disburse payables) in the relevant business for each business establishment. <Amended on Nov. 23, 2007; Apr. 29, 2008; Apr. 20, 2010; Apr. 7, 2011; Feb. 23, 2013; Mar. 13, 2020; Mar. 18, 2022>

[This Article Newly Inserted on Mar. 30, 2000]

Article 7-3(Contributions, etc. Related to Research and Development) #

“Acts specified by Ordinance of the Ministry of Economy and Finance” in Article 9-2 (1) 4 of the Decree means the following Acts: <Amended on Apr. 7, 2011; Feb. 28, 2012; Feb. 23, 2013; Mar. 17, 2017; Mar. 13, 2020>

1. Act on Special Measures for Strengthening the Competitiveness of Materials, Components, and Equipment Industries;

2. Special Act on Promotion of Special Research and Development Zones;

3. Basic Research Promotion and Technology Development Support Act.

[This Article Newly Inserted on Apr. 7, 2009]

Article 8 #

[Former Article 8 Moved to Article 13 <Mar. 20, 2019>]

Article 8-2(Scope of Corporations, etc. Managing and Operating Funds) #

“Corporation provided by Ordinance of the Ministry of Economy and Finance” in Article 12 (2) of the Decree means a corporation specified in any of the subparagraphs of Article 56-2 (1) or (2) of the Enforcement Rule of the Corporate Tax Act. <Amended on Mar. 14, 2014>

[This Article Newly Inserted on Apr. 7, 2009]

Article 8-3(Scope of Business Assets for Purpose of Reduction of or Exemption from Corporate Tax, etc. for Enterprises, etc. Moving into Special Research and Development Zones) #

“Business assets provided by Ordinance of the Ministry of Economy and Finance” in Articles 11-2 (2), 61 (3), 99-8 (2), 116-14 (2), 116-15 (4), 116-21 (4), 116-25 (2), 116-26 (3), and 116-27 (3) of the Decree means the following assets: <Amended on Feb. 28, 2012; Mar. 14, 2014; Mar. 20, 2019; Mar. 20, 2019; Mar. 18, 2022>

1. Tangible business assets located in the relevant special zone, etc. or used predominantly for the relevant business in the relevant special zone, etc.;

2. Assets located in the relevant special zone, etc. or under construction to be predominantly used for the relevant business in the relevant special zone, etc.;

3. Intangible assets under attached Table 3 of the Enforcement Rule of the Corporate Tax Act.

[This Article Newly Inserted on Apr. 7, 2011]

Article 8-4(Requirements, etc. for Exclusive Accounts for Stock Options of Venture Businesses) #

(1) “Exclusive account for stock options in the form provided by Ordinance of the Ministry of Economy and Finance” in Article 14-4 (2) of the Decree means account meeting all the following requirements: <Amended on Mar. 21, 2018; Mar. 20, 2019>

1. Each of such account shall be opened in the name of an executive officer or employee of a venture business specified in the part other than each subparagraph of Article 16-4 (1) of the Act (hereafter in this Article, referred to as “executive officer or employee of a venture business”);

2. A financial investment business entity referred to in Article 8 (1) of the Financial Investment Services and Capital Markets Act shall open and manage an account under the title “exclusive account for stock options,” separate from other trading accounts of the relevant executive officer or employee of a venture business;

3. Only stocks acquired by exercising stock options shall be traded;

4. Agreement shall be concluded in advance to close the relevant account where no stock is deposited within one month upon opening the account.

(2) “Inevitable causes specified by Ordinance of the Ministry of Economy and Finance, such as death or retirement at the retirement age” in Article 14-4 (5) 3 of the Decree means where an executive officer or employee of a venture business who received a stock option deceases, where the age of such executive officer or employee exceeds the retirement age or where such executive officer or employee retires or resigns due to any other cause for which he/she is not liable. <Amended on Mar. 20, 2019>

[This Article Newly Inserted on Mar. 13, 2015]

[Title Amended on Mar. 21, 2018]

Article 8-5(Scope, etc. of Innovative Small and Medium Enterprises) #

(1) “Certifications, etc. specified by Ordinance of the Ministry of Economy and Finance" in Articles 11-3 (1) 4 (g) and 11-4 (2) 4 (g) of the Decree means certifications, etc. determined and publicly notified by the Minister of Economy and Finance, among those similar to the certifications, etc. specified in Articles 11-3 (1) 4 (a) through (e) and 11-4 (2) 4 (a) through (f) of the Decree. <Amended on Mar. 17, 2017; Mar. 18, 2022>

(2) “Technical knowhow or technology specified by Ordinance of the Ministry of Economy and Finance” in Article 11-3 (3) 1 of the Decree means any of the following technical expertise or technologies registered with and managed by the Korea Institute for Advancement of Technology established pursuant to Article 38 of the Industrial Technology Innovation Promotion Act: <Newly Inserted on Mar. 17, 2017>

1. Technical expertise developed by a merged or acquired corporation through its own activities conducted domestically for research and development in any area of science and technology (excluding industrial property rights and technical expertise related to engineering activities for overseas construction under the Overseas Construction Promotion Act or engineering activities under the Engineering Industry Promotion Act);

2. Technologies defined in subparagraph 1 of Article 2 of the Technology Transfer and Commercialization Promotion Act that have been developed by a merged or acquired corporation through its own activities conducted domestically for research and development.

[This Article Newly Inserted on Mar. 14, 2016]

[Title Amended on Mar. 17, 2017]

Article 8-6(Requirements for Exclusive Accounts for Stocks for Investment of Industrial Property Rights) #

(1) “Account provided by Ordinance of the Ministry of Economy and Finance” in Article 14-5 (3) of the Decree means an account meeting all the following requirements: <Amended on Mar. 17, 2017; Mar. 20, 2019; Mar. 18, 2022>

1. A person who holds a right specified in any subparagraph of Article 14-5 (1) of the Decree (hereafter in this Article, referred to as “industrial property right”) shall open such account in his/her name;

2. A financial investment business entity referred to in Article 8 (1) of the Financial Investment Services and Capital Markets Act shall open and manage the account under “exclusive account for stocks for investment of an industrial property right” separate from other trading accounts of the person holding the industrial property right;

3. Only the stocks of any of the venture businesses, etc. specified in Article 14 (3) of the Decree that have been acquired in consideration for the investment of an industrial property right in such venture business shall be traded;

4. Agreement shall be concluded in advance to close the relevant account where no stock is deposited within one month upon opening the account.

[This Article Newly Inserted on Mar. 14, 2016]

Article 8-7(Scope, etc. of Technical Expertise) #

“Technical expertise or technology that meets the requirements stipulated in the Ordinance of the Ministry of Economy and Finance for the level of revenue, etc.” in Article 11 (3) 2 and 3 of the Decree means circumstances meeting all the following requirements:

1. The average sales turnover (sales turnover shall be calculated by the formula prescribed in Article 2 (4) of the Decree and the sales turnover for a taxable year of less than one year means sales turnover converted into that for one year; hereafter in this Article, the same shall apply) for the preceding five taxable years of the relevant enterprise or of the related corporation. If the relevant enterprise is a related corporation defined in subparagraph 3 of Article 2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, the average sales turnover shall not exceed 50 billion won;

2. The average sales turnover that the relevant enterprise has achieved during the preceding five years by trading any of those specified in Article 11 (3) of the Decree shall not exceed seven billion won;

3. Deleted. <Mar. 18, 2022>

[This Article Newly Inserted on Mar. 17, 2017]

Article 8-8(Scope of Materials, Parts, and Equipment) #

In Article 12-3 (7) of the Decree, “materials, parts, and equipment items specified by Ordinance of the Ministry of Economy and Finance” mean items associated with core strategic technologies under Article 12 of the Act on Special Measures for Strengthening the Competitiveness of Materials, Components, and Equipment Industries, and items publicly notified by the Minister of Trade, Industry and Energy in consultation with the Minister of Economy and Finance.

[This Article Newly Inserted on Mar. 13, 2020]

Article 9(Exemption, etc. of Foreign Engineers from Income Tax) #

(1) “Engineering technology license agreement provided for by Ordinance of the Ministry of Economy and Finance” in Article 16 (1) 1 means a license agreement entered into for engineering technology as defined in subparagraph 5 of Article 2 of the Engineering Industry Promotion Act (limited to license agreements for a contract amount of at least USD 300,000). <Amended on Mar. 11, 2005; Apr. 29, 2008; Feb. 28, 2012; Mar. 13, 2012; Mar. 20, 2019>

(2) When Article 16 (1) 2 (a) of the Decree is applied, examples of natural sciences, science and engineering, and medicine fields are as indicated in attached Table 1-2. <Amended on Mar. 16, 2021>

(3) “Overseas universities and research institutes, etc. specified by Ordinance of the Ministry of Economy and Finance” in Article 16 (1) 2 (b) of the Decree means overseas universities and their affiliated research institutes, national research institutes, and corporate-affiliated research institutes (hereafter in this Article, referred to as “overseas research institutes, etc.”). <Newly Inserted on Mar. 16, 2021>

(4) When applying Article 16 (1) 2 (b) of the Decree, if the combined period of service as a researcher at overseas research institutes, etc. (excluding those in charge of administrative affairs only) matches or is greater than period provided in the same item (excluding the period in which he or she did not in fact serve as a researcher due to the period spent for acquiring a degree or leave of absence), he or she shall be deemed to have the experience in the research and development and technology development. <Newly Inserted on Mar. 16, 2021>

(5) When submitting an application for tax reduction or exemption under Article 16 (3) of the Decree as the applicant satisfies the requirements in Article 16 (1) 2 of the Decree, he or she shall also submit a certificate containing each of the following subparagraphs: <Newly Inserted on Mar. 16, 2021>

1. Name of the person applying for the reduction or exemption;

2. Name and address of the overseas research institutes, etc.;

3. Confirmation of the length of service, department, research field, and person in charge of the relevant department at an overseas research institutes, etc.

Article 10(Income Tax Reduction or Exemption for Return of Outstanding Korean Workforce to Korea) #

(1) When Article 16-3 (1) 1 of the Decree is applied, examples of natural sciences, science and engineering, and medical fields are as indicated in attached Table 1-2.

(2) “Overseas universities and research institutes, etc. specified by Ordinance of the Ministry of Economy and Finance” in Article 16-3 (1) 3 of the Decree means overseas universities and their affiliated research institutes, national research institutes, and corporate-affiliated research institutes (hereafter in this Article, referred to as “overseas research institutes, etc.”).

(3) When applying Article 16-3 (1) 3 of the Decree, if the combined period of service as a researcher at overseas research institutes (excluding those in charge of administrative affairs only) is five years or longer (excluding the period in which he or she did not in fact serve as an researcher due to absence of leave), he or she shall be deemed to have experience in research and development and technology development.

(4) When submitting an application for tax reduction or exemption under Article 16-3 (3) of the Decree, he or she shall also submit a certificate containing each of the following subparagraphs:

1. Name of the person applying for the reduction or exemption;

2. Name and address of the overseas research institutes, etc.;

3. Confirmation of the length of service, department, research field, and person in charge of the relevant department at an overseas research institutes, etc.

[This Article Newly Inserted on Mar. 13, 2020]

Article 11(Scope of Securities Denominated in Foreign Currency) #

(1) “Those provided for by Ordinance of the Ministry of Economy and Finance” in Article 18 (4) 1 of the Decree mean securities denominated in a foreign currency and issued in accordance with the standards determined by the Minister of Economy and Finance for foreign exchange transactions. <Amended on Mar. 30, 2000; Apr. 29, 2008; Apr. 20, 2010>

(2) “Foreign securities markets provided for by Ordinance of the Ministry of Economy and Finance” in Article 18 (4) 2 of the Decree means foreign securities markets similar in function, to the securities markets and the KOSDAQ market established under the Financial Investment Services and Capital Markets Act. <Newly Inserted on Mar. 30, 2000; Mar. 30, 2002; Mar. 11, 2005; Apr. 29, 2008; Apr. 7, 2009>

Article 12(Scope of Business Assets, etc.) #

(1) “Assets specified by Ordinance of the Ministry of Economy and Finance, such as buildings” in Article 21 (2) of the Decree mean tangible business assets such as buildings in attached Table 1.

(2) “Assets specified by Ordinance of the Ministry of Economy and Finance as business assets” in Article 21 (3) 1 of the Decree mean the facilities under any of the following subparagraphs:

1. Research, testing, and vocational training facilities: Facilities under Article 13-10 (1) and (2);

2. Energy-saving facilities: Facilities under any of the following:

(a) Investment in energy-saving facilities under Article 14 (1) of the Energy Use Rationalization Act (including cases where a company specialized in energy-saving has installed them under Article 25 of the same Act under the promise of transferring the ownership after the consideration is redeemed by installment) and energy-saving machines and materials;

(b) Gray water system under subparagraph 4 of Article 2 of the Act on Promotion and Support of Water Reuse;

3. Environmental conservation facilities: Environment conservation facilities under attached Table 2;

4. Worker welfare promotion facilities: Facilities under any of the following:

(a) National housing scale under the Housing Act for rent to non-home owning employees (excluding executive officers who are investors);

(b) Dormitories for employees;

(c) Facilities for promoting convenience for persons with disabilities, the elderly, pregnant women, etc., or facilities for employing persons with disabilities under attached Table 3;

(d) Resting rooms for employees, fitness rooms, shower facilities, or bath facilities (including cases where the facility is acquired by changing the structure of the building, etc.);

(e) Affiliated medical institutions established under Article 35 of the Medical Service Act for employees' health care;

(f) Workplace child care centers under subparagraph 4 of Article 10 of the Child Care Act;

5. Safety facilities: Safety facilities under attached Table 4.

(3) “Assets specified by Ordinance of the Ministry of Economy and Finance, such as vehicles and carriers directly used for business by a person who runs a transportation business” in Article 21 (3) 2 of the Decree mean the facilities directly used for business according to the classification of each of the following subparagraphs:

Article 12-2(Scope of Facilities for Commercialization of New Growth Engines and Source Technologies, etc.) #

(1) “Facilities for commercializing new growth engines and source technologies specified by Ordinance of the Ministry of Economy and Finance” in Article 21 (4) 1 (a) of the Decree mean facilities specified in attached Table 6.

(2) “Facilities for commercializing the national strategic technology as specified by Ordinance of the Ministry of Economy and Finance” in Article 21 (4) 2 of the Decree mean facilities specified in attached Table 6-2.

(3) “Reasons specified by Ordinance of the Ministry of Economy and Finance” in the proviso to the part other than each subparagraph of Article 21 (10) of the Decree mean the cases where the applicable facilities are damaged by fire, etc., and therefore, inoperative, during the period from the date on which investment is completed for the applicable facilities until the end date of the three taxable years following the taxable year in which investment is completed.

(4) Among new growth commercialization facilities under Article 21 (4) 1 (a) of the Decree (hereinafter referred to as “new growth engines commercialization facilities”) or national strategic technology commercialization facilities (hereinafter referred to as “national strategic technology commercialization facilities”) under subparagraph 2 of the same paragraph according to Article 21 (14) of the Decree, those who intend to benefit from the tax credit for the facilities used for the production of the products other than the products to be produced using the applicable technology under Article 24 (1) shall measure and record the amount of production as prescribed under each of the following subparagraphs and keep them for five years from the end of the measurement period in subparagraph 2:

1. Products or semi-finished products (excluding other products or semi-finished products produced using those products or semi-finished products) produced in a form that can be stored and sold through the relevant facility shall be measured;

2. Measurement shall take place from the date on which the investment is completed (April 1, 2022 if the date on which the investment is completed is before April 1, 2022) to the end date of the three taxable years following the taxable year in which the date falls;

3. Measurement shall take place for units under the following classifications:

(a) Solids: Number of units;

(b) Liquids and gases: Volume or the number of containers of the same volume containing the products.

Article 12-3(Scope of Buildings or Structures Subject to Follow-Up Management) #

“Buildings or structures specified by Ordinance of the Ministry of Economy and Finance” in Article 21 (5) 1 of the Decree mean any of the following facilities:

1. Worker welfare promotion facilities under Article 12 (2) 4;

2. Storage facilities among the facilities for rationalizing the distribution industry under Article 12 (3) 4;

3. Lodging facilities, special recreation facilities (excluding golf course facilities) and facilities of the general amusement facility business under Article 12 (3) 6

[This Article Newly Inserted on Mar. 16, 2021]

Article 13 #

Deleted. <Mar. 16, 2021>

Article 13-2 #

Deleted. <Mar. 16, 2021>

Article 13-3 #

Deleted. <Mar. 16, 2021>

Article 13-4 #

Deleted. <Mar. 16, 2021>

Article 13-5 #

Deleted. <Mar. 16, 2021>

Article 13-6 #

Deleted. <Mar. 16, 2021>

Article 13-7 #

Deleted. <Mar. 16, 2021>

Article 13-8 #

Deleted. <Mar. 16, 2021>

Article 13-9(Tax Credit for Video Content Production Costs) #

(1) In Article 22-10 (1) of the Enforcement Decree, “a person who meets the requirements prescribed by Ordinance of the Ministry of Strategy and Finance” refers to a person who meets the qualifications in the following items: <Amendment Mar. 20, 2019>

1. In the case of a person who produces dramas, etc. pursuant to Article 22-10 (2) 1 of the Enforcement Decree: As a person in charge of the

actual production of video contents (hereinafter referred to as “video contents” in this Article) pursuant to Article 22-10 (2) of the

Enforcement Decree, he/she shall satisfy at least three of the following requirements:

(a) The person is responsible for signing contracts with writers (referring to a person who writes a screenplay, script, etc.);

(b) The person is responsible for signing contracts with major performers;

(c) The person is responsible for signing contracts with the managers of the key staff of two or more fields (i.e. directing, filming, editing,

lighting, or art staff);

(d) The person is responsible for all decision-making related to the execution and management of production expenses;2. In the case of a person who produces a film pursuant to Article 22-10 (2) 2 of the Enforcement Decree: As a film producer pursuant to subparagraph 9 (a) of Article 2 of the Promotion of the Motion Pictures and Video Products Act in charge of the actual production of video content, he/she shall satisfy at least three of the requirements in each item of Subparagraph 1.

(2) Deleted. <Mar. 13, 2020>

(3) Deleted. <Mar. 13, 2020>

(4) “Video content that has been screened consecutively at a movie theater for at least a certain period of time as prescribed by Ordinance of the Ministry of Strategy and Finance” under Article 22-10 (2) 2 of the Enforcement Decree refers to those that have been consecutively screened at a movie theater for seven days or more. However, if the Korean Film Council under Article 4 of the Promotion of the Motion Pictures and Video Products Act recognizes a video content as an art film or independent film, it shall refer to those that have been screened for one day or longer. <Amended Mar. 20, 2019>

(5) Confirmation of the screening period under paragraph (4) shall be made through an integrated computer network for movie theater admission tickets pursuant to Article 39 of the Promotion of Motion Pictures and Video Products Act.

Article 13-10(Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment) #

(1) “Facilities specified by Ordinance of the Ministry of Economy and Finance” in Article 25-3 (3) 2 (a) of the Decree mean specialized departments, etc. and research and testing facilities to be directly used by a research and development service business entity who has filed a report to the Minister of Science and ICT pursuant to Article 18 of the Special Act on Support of Scientists and Engineers for Strengthening National Science and Technology Competitiveness and Article 17 of the Enforcement Decree of the same Act, and an industrial technology research association pursuant to the Industrial Technology Research Cooperatives Support Act, which fall under any of the following subparagraphs: Provided, That, those not in operations shall be excluded:

1. Tools, office equipment, telecommunications equipment, clocks, testing equipment, measuring equipment, optical equipment, photographing equipment;

2. Assets subject to application of the standard operating years and the range of operating years specified for each type of business in attached Table 6 of the Enforcement Rule of the Corporate Tax Act.

(2) “Facilities specified by Ordinance of the Ministry of Economy and Finance” in Article 25-3 (3) 2 (b) of the Decree mean vocational skills development training facilities under Article 2 (3) of the Act on the Development of Vocational Skills of Workers (including vocational training facilities installed for small and medium enterprises by Korean nationals under Article 2 (1) of the Decree) that fall under any of the subparagraphs of paragraph (1): Provided, That, those not in operations shall be excluded:

(3) “Facilities specified by Ordinance of the Ministry of Economy and Finance” under Article 25-3 (3) 3 (a) of the Decree mean energy-saving facilities as indicated in attached Table 7.

(4) “Facilities specified by Ordinance of the Ministry of Economy and Finance” under Article 25-3 (3) 3 (d) of the Decree mean facilities that manufacture facilities for producing new and renewable energy in attached Table 7-2.

(5) “Facilities specified by Ordinance of the Ministry of Economy and Finance” in Article 25-3 (3) 4 (a) and (b) of the Decree mean the process improvement, automation, informatization facilities, and high-tech facilities as indicated in attached Table 7-3, which are directly used for the relevant business.

[This Article Newly Inserted on Mar. 16, 2021]

Article 14(Scope of Business Assets Eligible for Tax Credit for Job-Creating Investment) #

“Asset for business specified by Ordinance of the Ministry of Economy and Finance” in Article 23 (1) of the Decree means any of the business assets specified in Article 3 and the following assets: Provided, That in cases of a person engaging in a special recreation business or general recreation business registered pursuant to the Tourism Promotion Act, such asset shall be limited to the assets specified in subparagraph 5: <Amended on Mar. 30, 2000; Mar. 6, ,2004; Mar. 11, 2005; Mar. 30, 2007; Apr. 29, 2008; Dec. 31, 2008; Aug. 28, 2009; Apr. 7, 2011; Dec. 26, 2013; Mar. 14; 2014>

1. The machines and equipment specified in Article 3 of the Enforcement Rule of the Local Tax Act among business assets used directly for the relevant business by a person engaging in a construction business;

2. The facilities specified in attached Table 3 for rationalizing the distribution industry among business assets used directly for the relevant business by a person engaging in a wholesale or retail business, the logistics industry or an air transportation business;

3. The buildings specified in Article 6 of the Enforcement Decree of the Local Tax Act among the buildings under the Building Act and structures attached to such buildings for business assets used directly for the relevant business by a person engaging in a tourist lodging business or international convention planning business registered pursuant to the Tourism Promotion Act or a person engaging in a business of operation of a facility for the welfare of older persons under the Welfare of Older Persons Act;

4. The wireless equipment under Articles 68 and 69 of the Enforcement Decree of the Radio Waves Act for business assets acquired by a person engaging in a telecommunications business to rent it to another person, to entrust the operation of such equipment to another person or to use such equipment jointly with another person;

5. The lodging facilities, special recreation facilities (excluding facilities of golf courses) or facilities of a general amusement facility business under Article 2 (1) 3 (a) or 5 (a) of the Enforcement Decree of the Tourism Promotion Act for business assets used directly for the relevant business by a person engaging in a special or general recreation business registered pursuant to the Tourism Promotion Act;

6. The facilities specified in Article 6 of the Enforcement Decree of the Local Tax Act for buildings under the Building Act and structures attached to such buildings for the following assets that a person engaging in a business referred to in any subparagraph of Article 23 (1) of the Decree has acquired or in which such person has invested:

Article 14-2(Tax Credit for Enterprises Increasing Earned Income) #

(1) “The largest stockholder or the largest investor of the relevant enterprise as provided for by Ordinance of the Ministry of Economy and Finance” in Article 26-4 (2) 3 of the Decree means either of the following persons: <Amended on Mar. 16, 2021>

1. If the person whose direct holding ratio [referring to the ratio calculated by dividing a corporation's stocks or equity shares held by the person (hereafter in this Article, referred to as “stocks, etc.”) by the total number of outstanding stocks of or the total amount of investments in the corporation (excluding treasury stocks and treasury equity shares); hereinafter the same shall apply] of the relevant corporation is the highest amount is an individual, it means such individual;

2. If the person whose direct holding ratio of the relevant corporation is the highest is a corporation, it means the individual whose ratio calculated by aggregating the direct holding ratio of the relevant corporation and the indirect holding ratio calculated by applying Article 2 (3) of the Enforcement Decree of the Adjustment of International Taxes Act.

(2) Pursuant to 26-4 (8) of the Decree, if the average wage increase rate for the immediately preceding taxable year is a negative figure or is less than 30/100 of the average wage increase rate (only if the amount is positive) for the immediately preceding three taxable years, the average wage, the average wage increase rate, the average of the average wage increase rates for the immediately preceding three taxable years (hereafter in this Article, referred to as “the average of the average wage increase rates for the immediately preceding three years”), and the wage increase exceeding the average for the immediately preceding three years under Article 29-4 (2) of the Act (hereafter in this Article, referred to as “wage increase exceeding the average for the immediately preceding three years”) shall be calculated by the following formulas respectively:

1. Average wage:

[Average wage for the relevant taxable year + average wage for the immediately preceding taxable year] / 2

2. Average wage increase rate:

[Average wage under subparagraph 1 ? average wage for the immediately preceding two taxable years] / Average wage for the preceding two taxable years

3. The average of the average wage increase rates for the immediately preceding three taxable years (If the average wage increase rates for the immediately preceding two taxable years or the average wage increase rates for the immediately preceding three taxable years is a negative figure, it shall be deemed zero for the purpose of calculation):

Article 14-3(Scope of Infertility Treatments) #

“Infertility treatments specified by Ordinance of the Ministry of Economy and Finance” in Article 26-3 (4) 2 of the Decree mean assisted reproductive technologies under the Mother and Child Health Act. <Amended on Mar. 13, 2020; Mar. 18, 2022>

[This Article Newly Inserted on Mar. 14, 2016]

Article 14-4(Scope, etc. of Newly Growing Service Industries Eligible for Tax Credits for Social Insurance Premiums of Small or Medium Enterprises) #

(1) “Newly growing service industries specified by Ordinance of the Ministry of Economy and Finance” in Article 27-4 (5) 7 of the Decree mean the industries specified in any of the subparagraphs in Article 4-3.

(2) The following formula shall apply to the computation of the tax base of income tax on business income under Article 27-4 (13) 2 of the Decree: <Amended on Mar. 18, 2022>

Tax base of global income for the relevant taxable year × (amount of business income for the relevant taxable year/amount of global income for the relevant taxable year)

[This Article Newly Inserted on Mar. 21, 2018]

[Former Article 14-4 Moved to Article 14-5 <Mar. 21, 2018>]

Article 14-5(Extenuating Circumstances for Exemption from Additional Collection of Gift Tax) #

“Extenuating circumstances provided for by Ordinance of the Ministry of Economy and Finance” in Article 27-6 (4) 3 of the Decree means circumstances where a donee is unable to engage directly in the family business due to performance of military duty under the Act, medical treatment of a disease, schooling or any similar reason: Provided, That the cases where a donee disposes of stocks or equity shares that he/she received as a gift or does not engage in the family business after such extenuating circumstances terminate shall be excluded. <Amended on Mar. 13, 2020>

[This Article Newly Inserted on Apr. 29, 2008]

[Moved from Article 14-4 <Mar. 21, ,2018>]

Article 15(Acquisition Price of Assets Eligible for Carried-Forward Taxation) #

(1) In applying the carried-forward taxation under Article 28 or 29 of the Decree, the acquisition price of the asset eligible for carried-forward taxation shall be the actual trading price of the relevant asset at the time of acquisition. <Amended on Mar. 30, 2002; Nov. 23, 2007; Apr. 7, 2009>

(2) If the actual trading price under paragraph (1) at the time of acquisition is unclear, the amount calculated by applying the provisions under the following subparagraphs in the order specified below to the relevant asset as of the date of consolidation, the date of conversion into a corporation or the date of investment in kind shall be converted by applying mutatis mutandisArticle 176-2 (2) 2 of the Enforcement Decree of the Income Tax Act: <Amended on Mar. 30, 2000; Mar. 11, 2005; Mar. 17, 2017>

1. The value appraised by an appraiser under the Act on Appraisal and Certified Appraisers: Provided, That stocks, etc. not listed on the stock exchange shall be excluded;

2. The value evaluated by applying mutatis mutandisArticles 38, 39, and 61 through 64 of the Inheritance Tax and Gift Tax Act;

(3) “Assets that satisfy the standards for determining real estate unrelated to the business of corporations specified by Ordinance of the Ministry of Economy and Finance” in Article 28 (2) of the Decree mean real estate unrelated to business under Article 49 (1) 1 of the Enforcement Decree of the Corporate Tax Act (hereafter in this paragraph, referred to as “real estate unrelated to business”). Whether an asset constitutes real estate unrelated to business shall be determined as of the date of transfer. <Newly Inserted on Mar. 30, 2002; Mar. 11, 2005; Apr. 29, 2008>

Article 16(Assets Subject to Collective Investment Schemes for Specific Infrastructure) #

(1) “Infrastructure and real estate accepted as specified by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 24 (2) of the Decree means infrastructure and real estate deemed associated with the industry in paragraph (2) 2 of the same Act via deliberation of the Committee under paragraph (13) of the same Act by the Minister of Economy and Finance.

(2) “Assets specified by Ordinance of Ministry of Economy and Finance” in Article 24 (2) 1 (c) of Decree mean assets under any of the following subparagraphs:

1. Real estate that falls under subparagraph 1 of Article 2 of the Act on Public-Private Partnerships In Infrastructure (hereafter in this Article, referred to as “infrastructure real estate”);

2. Derivatives with infrastructure real estate as the underlying asset;

3. Assets acquired by investing in the infrastructure real estate and securities related to the infrastructure real estate (referring to securities under each subparagraph of paragraph (5) of the same Article) by the method specified in Article 240 (4) of the Enforcement Decree of Financial Investment Services and Capital Markets Act;

[This Article Newly Inserted on Mar. 16, 2021]

Article 17 #

Deleted. <Mar. 30, 2002>

Article 18(Scope, etc. of Liabilities) #

(1) “Liabilities specified by Ordinance of the Ministry of Economy and Finance” in the former part of Article 34 (15) of the Decree mean the sum of loans procured from others out of the sum of liabilities in the statement of financial position as of the end of each business year: Provided, That, if the interest paid is added to the principal of the borrowings according to the decision to approve a rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act, the amount equivalent to the paid interest shall not be deemed as loans. <Amended on Mar. 30, 2000; Mar. 30, 2002; Mar. 11, 2005; Apr. 17, 2006; Apr. 29, 2008; Aug. 28, 2009; Feb. 23, 2013; Aug. 9, 2016>

(2) For determining the debt ratio and the standard debt ratio under Article 34 (15) and (16) of the Decree, the stockholders' equity shall be calculated by deducting total liabilities (including various reserves and allowances but excluding accrued corporate tax) from total assets as at the end of each business year or the record date for calculation of the standard debt ratio under Article 34 (16) 1 of the Decree (hereafter in this Article, referred to as “record date for calculation of the standard debt ratio”). In such cases, for determining total assets, if assets owned by the relevant corporation have been revaluated in accordance with the Assets Revaluation Act before the end of each business year or the record date for calculation of the standard debt ratio, the difference accruing from the revaluation under the said Act (referring to the amount after deducting the revaluation tax) shall be deducted. <Amended on Mar. 30, 2000; Mar. 30, 2002; Mar. 11, 2005; Aug. 28, 2009; Aug. 9, 2016>

(3) For determining the debt ratio and the standard debt ratio under Article 34 (15) and (16) of the Decree, the paid-in capital shall be based on the paid-in capital as at the end of each business year or the record date for calculation of the standard debt ratio, but if the relevant corporation reduced capital without consideration before the end of each business year the reduced amount shall be added to the paid-in capital. <Newly Inserted on Mar. 28, 2001; Mar. 30, 2002; Aug. 28, 2009; Aug. 9, 2016>

(4) Notwithstanding the forepart of paragraph (2), if the stockholders' equity for each business year is reduced to be less than the stockholders' equity for the immediately preceding business year or as of the record date for calculation of the standard debt ratio due to deficits incurred within three years after paying debts owed to financial creditors, the calculation of the debt ratio shall be based on stockholders' equity for the immediately preceding business year and the stockholders' equity as of the record date for calculation of the standard debt ratio, whichever is greater. <Amended on Mar. 28, 2001; Aug. 28, 2009; Aug. 9, 2016; Mar. 21, 2018>

Article 19(Documents Certifying Eligibility for Taxation Support for Exchange, etc. of Stocks, of Venture Businesses) #

“Document provided for by Ordinance of the Ministry of Economy and Finance which verifies eligibility for taxation support” in Article 43-2 (9) of the Decree means a document issued by the Minister of SMEs and Startups to certify the eligibility for taxation support under Article 14 (3) of the Act on Special Measures for the Promotion of Venture Businesses. <Amended on Mar. 11, 2005; Apr. 29, 2008; Mar. 16, 2021>

[Newly Inserted on Mar. 6, 2004]

Article 19-2(Scope, etc. of Logistics Expenses) #

“Interest rate provided for by Ordinance of the Ministry of Economy and Finance” in Article 43-4 (5) of the Decree means the interest rate specified in Article 6 of the Enforcement Rule of the Corporate Tax Act. <Amended on Apr. 29, 2008>

(2) “Logistics expenses specified by Ordinance of the Ministry of Economy and Finance” in Article 43-4 (6) 2 of the Decree mean any of the following expenses: <Amended on Apr. 29, 2008>

1. Expenses incurred in logistics activities from storing manufactured or purchased goods (including containers, materials, etc. for packaging and transportation; hereafter in this paragraph, the same shall apply) in a store warehouse to delivery to consumers;

2. Expenses incurred in logistics activities until goods sold (including consigned sale; hereafter in this paragraph, the same shall apply) to consumers are returned by consumers to the seller due to cancellation of sale contracts;

3. Expenses incurred in logistics activities for collection of recyclable goods from consumers are processed for reuse;

4. Expenses incurred in logistics activities for damaged or obsolete goods collected from consumers are discarded.

[This Article Newly Inserted on Mar. 30, 2007]

Article 19-3(Documents Certifying Eligibility for Taxation Support for Exchange, etc. of Unlisted Stocks for Strategic Partnership) #

“Document specified by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for taxation support” in Article 43-7 (9) of the Decree means a document issued by the Minister of SMEs and Startups to certify the eligibility for taxation support under Article 14 (3) of the Act on Special Measures for the Promotion of Venture Businesses: Provided, That, shareholders of small and medium enterprises under Article 43-7 (1) of the Decree and venture companies listed on the KONEX market under Article 11 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (referring to venture companies under the Act on Special Measures for the Promotion of Venture Businesses) shall be excluded. <Amended on Mar. 13, 2020; Mar. 16, 2021>

[This Article Newly Inserted on Mar. 14, 2014]

Article 19-4(Documents Certifying Eligibility for Special Taxation for Re-Investment in Venture Businesses, etc. after Sale of Stocks) #

“Documents specified by Ordinance of the Ministry of Economy and Finance as those that can certify eligibility for taxation support” in Article 43-8 (12) of the Decree means the following documents:

1. A copy of the articles of incorporation or any other documents certifying that the person who intends to apply for tax deferment is the founder or an incorporator of the enterprise for sale under Article 43-8 (1) of the Decree (hereafter in this Article, referred to as the “enterprise for sale”);

2. A certificate of venture company confirmation issued under Article 25 (2) of the Act on Special Measures for the Promotion of Venture Businesses to the enterprise for sale;

3. A certificate of venture company confirmation issued under Article 25 (2) of the Act on Special Measures for the Promotion of Venture Businesses for the reinvested corporation or a document certifying that its technology has been rated as excellent under Article 2-2 (1) 2 (c) (3) of said Act: Provided, That this shall be limited only to the case where a re-investment is made under Article 46-8 (1) 1 (c) or (d).

[This Article Newly Inserted on Mar. 14, 2014]

[Title Amended on Mar. 17, 2017]

Article 20(Definition of Multi-Unit Houses) #

“Multi-unit house specified by Ordinance of the Ministry of Economy and Finance” in Article 51-2 (3) of the Decree means a house falling under subparagraph 1 (c) of attached Table 1 of the Enforcement Decree of the Building Act. In this case, each section separated for independent dwelling of one household shall be deemed as one house. <Amended on Mar. 11, 2005; Apr. 29, 2008>

[This Article Wholly Amended on Mar. 30, 2002]

Article 21(Scope of Investment Trust Stabilization Funds) #

“Cooperative specified by Ordinance of the Ministry of Economy and Finance” in subparagraph 2 of Article 53 of the Decree means the Investment Trust Stabilization Fund established on February 6, 1998, through joint investment from trustor companies, the Investment Trust Association, etc. under the Securities Investment Trust Business Act for the purpose of stabilizing the securities investment trust market. <Amended on Mar. 11, 2005; Apr. 29, 2008>

Article 22(Scope of Automobile Maintenance Shops) #

“Automobile maintenance shops specified by Ordinance of the Ministry of Economy and Finance” in Article 54 (1) of the Decree mean a place of business of a general auto repair business or a small auto repair business under Article 131 of the Enforcement Rule of the Motor Vehicle Management Act. <Amended on Mar. 11, 2005; Apr. 29, 2008>

Article 23(Standard Area of Factory Site) #

“Standard size for factory sites specified by Ordinance of the Ministry of Economy and Finance” in the proviso to the part other than each subparagraph of Articles 56 (1), 79-3 (5), 79-8 (5) and 79-9 (5) of the Decree mean the area specified in either of the following subparagraphs: <Amended on Mar. 30, 2000; Mar. 30, 2002; Mar. 11, 2005; Apr. 17, 2006; Apr. 29, 2008; Apr. 20, 2010; Apr. 7, 2011>

1. In cases of a manufacturing factory, the standard area of a factory site under attached Table 3 of the Enforcement Rule of the Local Tax Act;

2. In cases of an auto repair shop, the greater of the area calculated by multiplying the floor area of the relevant building (in cases of a structure its horizontally projected area) by the multiplying factor applicable to the specific-use area under Article 101 (2) of the Enforcement Decree of the Local Tax Act; and the area 1.5 times larger than the minimum standard area under relevant statutes at the time of registration of the relevant business.

Article 23-2 #

Deleted. <Mar. 24, 2003>

Article 24(Scope of Business Assets, etc. upon Application of the Tax Reduction or Exemption for Corporations Relocating Their Head offices Outside the Seoul Metropolitan Area) #

(1) “Business assets specified by Ordinance of the Ministry of Economy and Finance” in Article 60-2 (4) 1 of the Decree mean the following assets:

1. Tangible assets for business located in the head office or main office relocated out of the Seoul metropolitan area (hereafter in this Article, referred to as “relocated head office”) or primarily used by the relocated head office;

2. Assets located at the relocated head office or under construction primarily to be used at the relocated head office;

(2) “Amount computed specified by Ordinance of the Ministry of Economy and Finance” in Article 60-2 (4) 1 of the Decree means the amount obtained by subtracting the amount in subparagraph 2 from the amount in subparagraph 1.

1. The sum of the amount invested in assets specified in each subparagraph of paragraph (1) from the taxable year under which the date on which two years elapse retrospectively from the registration date of relocation of the relocated head office falls until the taxable year for which corporate tax is reduced or exempted under Article 63-2 (1) of the Act;

2. Where the assets are disposed of under each subparagraph of paragraph (1) invested during the period specified in subparagraph 1 (including leases but excluding cases falling under any of the subparagraphs of Article 137 (1) of the Decree), the value of the relevant assets at the time of acquisition thereof.

[This Article Newly Inserted on Mar. 18, 2022]

Article 25(Scope of Areas Eligible for Special Support for Local Small or Medium-Sized Enterprises) #

“Area specified by Ordinance of the Ministry of Economy and Finance” in Article 61 (2) of the Decree means any of the following areas eligible for special support for local small or medium enterprises under Article 23 of the Regional Small and Medium Enterprise Fostering and Innovation Promotion Act: <Amended on Mar. 11, 2005; Apr. 29, 2008; Apr. 20, 2010; Mar. 13, 2015; Mar. 21, 2018; Mar. 13, 2020; Mar. 18, 2022>

1. The Naju General Industrial Complex;

2. The Gimje Horizon General Industrial Complex;

3. The Jangheum General Industrial Complex for Bio-Food;

4. The Bukpyeong National Industrial Complex;

5. The Bukpyeing General Industrial Complex;

6. The Naju General Industrial Complex for Innovation;

7. The Gangjin Industrial Complex;

8. The Jeongeup High-Tech Industrial Complex;

9. The Damyang General Industrial Complex;

10. The Daema Industrial Complex for Electric Vehicles.

11. The Donghampyeong General Industrial Complex;

12. The Sepung General Industrial Complex (Stage 1);

13. The Boryeong Jupo 2nd Agricultural and Industrial Complex.

Article 26(Income Excluded from the Reduction or Exemption of Corporate Tax for Agricultural Incorporated Companies) #

(1) “Agricultural incorporated companies specified by Ordinance of the Ministry of Economy and Finance” in Article 65 (2) of the Decree mean farmers whose total investment exceeds eight billion won and who fall under subparagraph 1 of Article 2 under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities and an agricultural incorporated company whose ratio of the total investment shares of agricultural producer organizations under subparagraph 4 of article 3 of the Framework Act on Agriculture, Rural Community and Food Industry is less than 50/100.

(2) “Business category specified by Ordinance of the Ministry of Economy and Finance” in Article 65 (2) of the Decree means a wholesale/retail business and service business (excluding a service business related to crop cultivation).

[This Article Newly Inserted on Mar. 20, 2019]

Article 27(Scope, etc. of Farmland) #

(1) “Farmland” in Articles 66 (4) and 67 (3) of the Decree means the land de facto used for farming such as fields and paddies, irrespective of the land category on the official cadastral register, and it shall include farmers' huts, compost depots, pumping stations, substations, farm roads and irrigation ditches directly necessary for managing farmland. <Amended on Mar. 30, 2002; Mar. 24, 2003; Dec. 31, 2005>

(2) Whether a parcel of land constitutes a farmland under Articles 66 (4) and 67 (3) of the Decree shall be determined according to the following criteria: <Amended on Mar. 30, 2002; Mar. 24, 2003; Mar. 11, 2005; Dec. 31, 2005; Apr. 17, 2006; Jul. 5, 2006; Nov. 23, 2007; Apr. 20, 2010; Aug. 3, 2011; Mar. 14, 2014; Mar. 17, 2017; Mar. 21, 2018>

1. It shall be verifiable by any of the following methods that the land has been owned by the transferor for at least eight years (or at least three years if the land is transferred to the Korea Rural Community Corporation under the Korea Rural Community Corporation and Farmland Management Fund Act, or an agricultural partnership or an agricultural incorporated company, under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities, or at least four years if the formerly owned land, referred to in Article 67 (3) 1 and 2 of the Decree, is transferred). Where it shall be verified in such cases whether or not the farmland, etc. that a farmer, to whom capital gains tax was refunded under Article 70-2 (1) of the Act, repurchased can be classified as farmland under Article 66 (4) of the Decree, when the farmer re-transfers the farmland, the farmer shall be deemed to have owned the relevant farmland, etc. during the period in which the farmer has cultivated the land, from the lease period under Article 24-3 (3) of the Korea Rural Community Corporation and Farmland Management Fund Act:

(a) Verification of the certificate of entries in the relevant register or the certified transcript of the relevant land cadastre by using the administrative information shared under Article 36 (1) of the Electronic Government Act;

(b) Verification of other documentary evidence, if it is not verifiable through the means specified in item (a);

2. It shall be verified by all the following methods that the transferor has cultivated the farmland, while residing in the area in which the farmland is located, for at least eight years (or at least three years where the land is transferred to the Korea Rural Community Corporation, established under the Korea Rural Community Corporation and Farmland Management Fund Act, or an agricultural partnership or an agricultural company established under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities, or at least four years where the formerly owned land referred to in Article 67 (3) 1 and 2 of the Decree is transferred) and that the land is farmland as at the date of transfer:

Article 27-2(Scope, etc. of Site of Livestock Stables) #

(1) “Site of livestock stables” in Article 66-2 (3) of the Act means the stables de facto used for breeding livestock and the land auxiliary thereto irrespective of the land category on the official cadastral register.

(2) Whether a parcel of land is classified as a site of livestock stables under Article 66-2 (3) of the Decree shall be subject to the following criteria: <Amended on Mar. 17, 2017; Mar. 21, 2018>

1. It shall be verified by either of the following methods that the land is a site for livestock stables that the transfer has owned for at least eight years:

(a) Verification of the certificate of entries in the relevant register or the certified transcript of the relevant land cadastre by using the administrative information shared under Article 36 (1) of the Electronic Government Act;

(b) Verification of other documentary evidence, if it is not verifiable through the means specified in item (a);

2. It shall be verified by all of the following methods that the transferor has directly engaged in breeding livestock for at least eight years, while residing in the area in which the site of livestock stables is located, and that the land is a site of livestock stables as of the date of transfer:

(a) Verification of the individual register through joint use of the administrative information under Article 36 (1) of the Electronic Government Act: Provided, That the applicant shall be required to submit the document if he or she does not consent to verification by such methods;

(b) Verification of the confirmation of the period of breeding livestock and business closure in item (b) of paragraph (7).

(3) “Scale specified by Ordinance of the Ministry of Economy and Finance” in Article 66-2 (3) 1 (a) of the Decree means one million square meters: Provided, That it means 100,000 square meters in cases of a housing site development project under the Housing Site Development Promotion Act or a building site development project under the Housing Act.

(4) “Public institution specified by Ordinance of the Ministry of Economy and Finance” in Article 66-2 (3) 1 (b) of the Decree means a public institution designated under the Act on the Management of Public Institutions or an enterprise established and directly run by the local government or a public corporation or public service funded by a local government under the Local Public Enterprises Act.

Article 27-3(Scope, etc. of Land, etc. for Fisheries) #

(1) “Land, etc. for fisheries” in Article 66-3 (3) of the Decree means buildings and the land de facto used for aquatic farming or for fish seed production irrespective of the land category on the relevant official cadastral register.

(2) Whether a parcel of land is classified as the land for fisheries under Article 66-3 (3) of the Decree shall be determined by the following criteria:

1. It shall be verified by either of the following methods that the transferor has owned the land for fisheries for at least eight years:

(a) Verification of the certificate of entries in the relevant register or the certified transcript of the relevant land cadastre by using the administrative information shared under Article 36 (1) of the Electronic Government Act;

(b) Verification of other documentary evidence, if it is not verifiable through the means specified in item (a);

2. It shall be verified by all of the following methods that the transferor has directly engaged in aquatic farming or producing fishery seedlings for at least eight years, while residing in the area in which the land for fisheries is located, and that the land is the land for fisheries as at the date of transfer:

(a) Verification of the individual register through joint use of the administrative information under Article 36 (1) of the Electronic Government Act: Provided, That the applicant shall be required to submit the document if he or she does not consent to verification by such methods;

(b) Verifying the written confirmation issued by the head of the relevant Si/Gun/Gu on the period during which the applicant has engaged in aquatic farming or fish seed production.

(3) “Scale specified by Ordinance of the Ministry of Economy and Finance” in Article 66-3 (3) 1 (a) of the Decree means one million square meters: Provided, That it means 100,000 square meters in cases of a housing site development project under the Housing Site Development Promotion Act or a building site development project under the Housing Act.

(4) “Public institution specified by Ordinance of the Ministry of Economy and Finance” in Article 66-3 (3) 1 (b) of the Decree means a public institution designated under the Act on the Management of Public Institutions or an enterprise established by a local government and directly operated by the local government or a public corporation or public service funded by a local government pursuant to the Local Public Enterprises Act.

Article 27-4(Scope, etc. of Self-Cultivated Mountainous Districts) #

(1) “Mountainous district” in Article 66-4 (3) of the Decree means the land de facto used for cultivation irrespective of the land category on the relevant official cadastral register.

(2) Whether a parcel of land is classified as a mountainous district under Article 66-4 (3) of the Decree shall be determined by the following criteria:

1. It shall be verified by either of the following methods that the transferor has owned the mountainous district for at least eight years:

(a) Verification of the certificate of entries in the relevant register or the certified transcript of the relevant land cadastre by using the administrative information shared under Article 36 (1) of the Electronic Government Act;

(b) Verification of other documentary evidence, if it is not verifiable through the means specified in item (a);

2. It shall be verified by all of the following methods that the transferor has directly cultivated the mountainous district for at least eight years, while residing in the area in which the mountainous district is located, and that the land is a mountainous district as of the date of transfer:

(a) Verification of the individual register through joint use of the administrative information under Article 36 (1) of the Electronic Government Act: Provided, That the applicant shall be required to submit the document if he or she does not consent to verification by such methods;

(b) Verification of the written confirmation issued by the head of the relevant Si/Gun/Gu for the period during which the applicant has directly cultivated the mountainous district.

(3) “Scale specified by Ordinance of the Ministry of Economy and Finance” in Article 66-4 (3) 1 (a) of the Decree means one million square meters: Provided, That it means 100,000 square meters in cases of a housing site development project under the Housing Site Development Promotion Act or a building site development project under the Housing Act.

(4) “Public institution specified by Ordinance of the Ministry of Economy and Finance” in Article 66-4 (3) 1 (b) of the Decree means a public institution designated under the Act on the Management of Public Institutions or an enterprise established by a local government and directly operated by the local government or a public corporation or public service funded by a local government pursuant to the Local Public Enterprises Act.

Article 28(Exception, etc. to Period for Commencement of Cultivation in Substitute Farmland) #

(1) “Extenuating circumstances specified by Ordinance of the Ministry of Economy and Finance” in Article 67 (3) 1 and 2 and Article 67 (10) 2 of the Decree mean the following circumstances:

1. Where a person needs to undergo medical treatment or medical care for an illness that requires medical treatment or medical care for at least one year;

2. Where a person suspends cultivation to improve the farmland under Article 3-2 of the Enforcement Decree of the Farmland Act;

3. Where a person suspends cultivation as a natural disaster renders it impossible to continue farming.

(2) “Period specified by Ordinance of the Ministry of Economy and Finance” in Article 67 (3) 1 and 2 and Article 67 (10) 2 of the Decree both means two years.

[This Article Newly Inserted on Mar. 14, 2014]

[Moved from Article 27-3 <Mar. 21, ,2018>]

Article 29(Special Taxation of Corporate Tax for Association Corporations, etc.) #

(1) For calculations of the amount of non-deductible expenses under Article 26 of the Corporate Tax Act subject to Article 69 (1) of the Decree, if the maximum amount calculated according to Article 44-2 (4) of the Enforcement Decree of the same Act is negative, the amount shall be deemed nil.

(2) For calculations of the amount of non-deductible expenses under Article 33 of the Corporate Tax Act subject to Article 69 (1) of the Decree, the cumulative amount of allowances for severance benefits on the annual financial statements as at the end of the business year under which December 31, 2012 falls shall be deemed to have been included in the deductible expenses under Article 60 (2) of the Enforcement Decree of the said Act, and thus, shall be applied with paragraph (3) of the same Article.

(3) “As specified by Ordinance of the Ministry of Economy and Finance” in Article 72 (4) of the Act means keeping accounts for interests accrued from the fund deposited in the National Federation of Fisheries Cooperatives for improving the financial structure and the spending thereof independent and separate from other accounts.

(4) “As specified by Ordinance of the Ministry of Economy and Finance" in Article 72 (5) of the Act mean keeping accounts for interests accrued from the fund deposited in the National Credit Union Federation of Korea or the Korean Federation of Community Credit Cooperatives for transferring contracts and the spending thereof independent and separate from other accounts.

[This Article Wholly Amended on Feb. 23, 2013]

Article 29-2(Scope of Cultural and Arts Organizations) #

“Organizations specified by Ordinance of the Ministry of Economy and Finance” in Article 70 (1) 3 of the Decree mean corporations and organizations publicly notified by the Minister of Economy and Finance in consultation with the Minister of Culture, Sports and Tourism, among specialized arts corporations and specialized arts organizations designated under Article 7 of the Culture and Arts Promotion Act. <Amended on Mar. 11, 2005; Apr. 29, 2008; Sep. 28, 2009>

[Newly Inserted on Mar. 28, 2001]

Article 29-3(Scope of Areas of Non-Profit Medical Corporations Eligible for Special Taxation for Including Reserves for Proper Purpose Business in Deductible Expenses) #

“Areas specified by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 70 (5) of the Decree mean areas as indicated in attached Table 8-6.

[This Article Newly Inserted on Apr. 7, 2011]

Article 29-4(Deadline, etc. for Reporting Fulfillment of Eligibility by Organizations Eligible for Donation Incentives) #

(1) An organization eligible for donation incentives designated under Article 75 (2) of the Act fill out a report on whether the organization meets the eligibility in Article 71 (1) of the Decree for organizations eligible for donation incentives (hereafter in this Article, referred to as “fulfillment of eligibility”) in attached Form 53-3 and shall submit the report to the Commissioner of the National Tax Service by the applicable deadline specified in the following: <Amended on Mar. 17, 2017>

1. Fulfillment of eligibility for the year in which the designation is granted and the year thereafter: March 31 of the year into which the second anniversary of the date of designation falls;

2. Fulfillment of eligibility for the year into which second anniversary of the date of designation falls and the year thereafter: March 31 of the year into which the fourth anniversary of the date of designation falls;

3. Fulfillment of eligibility for the year into which the fourth anniversary of the date of designation falls and the year thereafter: March 31 of the year into which the sixth anniversary of the date of designation falls.

(2) If an organization eligible for donation incentives fails to file a report on the fulfillment of eligibility by the applicable deadline in paragraph (1), the Commissioner of the National Tax Service shall, without delay, require the organization to file the said report by May 31 of the year into which the applicable deadline in paragraph (1) falls.

(3) “Statement of donation amount and utilization performance specified by Ordinance of the Ministry of Economy and Finance” in the main sentence of Article 71 (1) 4 of the Decree means attached Form 6-2 under subparagraph 7 of Article 100 of the Enforcement Rule of the Income Tax Act or attached Form 63-7 under Article 18-2 (5) of the Enforcement Rule of the Corporate Tax Act. <Amended on Mar. 16, 2021>

(4) Where the Commissioner of the National Tax Service requests the Minister of Economy and Finance to revoke the designation of an organization eligible for donation incentives under Article 71 (8) of the Decree, such a request shall be made through a document containing the matters specified in the following subparagraphs. In this case, a report on whether the eligibility for an organization eligible for donation incentives are met under paragraph (1) shall be attached:

1. Name of the donation organization subject to revocation of designation;

Article 30(Reduction or Exemption of Capital Gains Tax on Land, etc. to be Purchased Following Designation of Development Restriction Areas) #

“School attendance, conscription, recuperation from an illness or other unavoidable reasons specified by Ordinance of the Ministry of Economy and Finance” in Article 74 (4) of the Decree means any of the following cases: <Amended on Aug. 28, 2009>

1. Enrollment in schools under the Elementary and Secondary Education Act (excluding kindergartens, elementary schools and middle schools) and schools under the Higher Education Act;

2. Conscription under the Military Service Act;

3. Medical treatment or medical care for an illness that requires medical treatment or medical care for at least one year.

[This Article Newly Inserted on Apr. 7, 2009]

Article 31 #

Deleted. <Mar. 30, 2002>

Article 32 #

Deleted. <Mar. 30, 2002>

Article 32-2(Special Taxation for Relocating Factories in Areas Subject to Development Plans of Administrative City and Innovation Cities to Rural Areas) #

“Extenuating circumstances specified by Ordinance of the Ministry of Economy and Finance” in Articles 79-3 (5) 2, 79-8 (5) 2, 79-9 (5) 2 and 79-10 (6) 2 of the Decree mean any of the following: <Amended on Apr. 29, 2008; Apr. 20, 2010; Mar. 23, 2013>

1. Where the permit or approval of a construction is delayed;

2. Where a lawsuit is filed in relation to the compensation for land, etc.;

3. Where the master plan for the construction of administrative city and innovation cities publicly notified Minister of Land, Infrastructure and Transport under Article 19 (4) of the Special Act on the Construction of Administrative City in Yeongi-Gongju Area for Follow-Up Measures for New Administrative Capital allows the operation for a certain period of time at the same location as the place to which the previous factories will be relocated has not been decided;

4. Where the master plan for the development of an innovation city publicly notified by the Minister of Land, Infrastructure and Transport under Article 11 (5) of the Special Act on the Construction and Support of Innovation Cities for the Relocation of Public Agencies to Rural Areas allows the operation for a certain period of time in the same location as the place to which the previous factories will be relocated has not been decided;

5. Where the relocation plan for factories established by project implementers under Article 78-2 of the Act on Acquisition of and Compensation for Land for Public Works Projects allows the operation for a certain period of time at the same location as the place to which the previous factories will be relocated has not been decided;

6. Other circumstances deemed equivalent to the reasons specified in subparagraphs 1 through 5.

[This Article Newly Inserted on Mar. 30, 2007]

[Title Amended on Apr. 20, 2010]

Article 32-3(Special Taxation for Relocating Logistics Facilities due to Expropriation, etc. for Public Works Projects) #

(1) “Facilities specified by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 79-10 (1) of the Decree mean logistics facilities classified under each of the following subparagraphs: <Amended on Apr. 7, 2011>

1. Where a building for a logistics facility exists: The appurtenant land not greater than the area obtained by multiplying the floor areas of the building for the logistics facility and the relevant building by the multiples applicable to the relevant specific-use area under Article 101 (2) of the Enforcement Decree of the Local Tax Act;

2. Where no building for a logistics facility exists: The land not greater than the area for which the competent authority granted authorization or permission or accepted a report as land used for transportation, storage, unloading, fabrication, repair, etc. of cargoes.

[This Article Newly Inserted on Apr. 20, 2010]

Article 33 #

Deleted. <Feb. 23, 2013>

Article 33-2 #

Deleted. <Feb. 23, 2013>

Article 34(Income Deductions for Housing Savings Accounts) #

(1) A person who intends to benefit from an income deduction under Article 87 (2) of the Act shall submit a certificate of deposit in a housing savings account to the head of the tax office having jurisdiction over his or her place of domicile or the relevant withholding agent when filing a final return on the tax base of income tax or applying for the year-end tax settlement.

(2) The certificate of deposit in a housing savings account under paragraph (1) may be replaced by a copy of the bankbook of the housing savings account indicting the amount of deposit as of the end of each year or by a document issued by the Commissioner of the National Tax Service with the payment details for housing savings under Article 216-3 of the Enforcement Decree of the Income Tax Act.

(3) “A document certifying the period of military service specified by Ordinance of the Ministry of Economy and Finance” in Article 81 (15) 2 of the Decree means the military service certificate in attached Form 5 of the Enforcement Rule of the Military Service Act. <Newly Inserted on Mar. 20, 2019>

[This Article Newly Inserted on Apr. 29, 2008]

[Title Amended on Apr. 20, 2010]

Article 35(Submission, etc. of Opinions on Notification) #

A financial institution handling the relevant savings account which has been notified by the Commissioner of the National Tax Service under Article 87 (9) 1 and 2 and (10) 3 of the Act shall notify the relevant subscriber of the details thereof within 14 days from the date of receipt of the notification, and the relevant subscriber who has any objection to the details of notification shall submit a written opinion to the head of the competent tax office having jurisdiction over the place on which tax is levied within two months from the date on which the said financial institution was notified by the head of the tax office and inform the said financial institution of the fact thereof: Provided, That, if the subscriber fails to submit a written opinion before the above deadline due to death, long-term business trip to overseas, or other extenuating circumstances, the written opinion may be submitted within seven days after such extenuating circumstance ceases to exist. <Amended on Mar. 20, 2019>

[This Article Newly Inserted on Apr. 29, 2008]

Article 36 #

Deleted. <Mar. 16, 2021>

Article 37 #

Deleted. <Mar. 30, 2000>

Article 38 #

Deleted. <Mar. 30, 2000>

Article 39 #

Deleted. <Mar. 30, 2000>

Article 40 #

Deleted. <Mar. 30, 2000>

Article 41 #

Deleted. <Mar. 30, 2000>

Article 42 #

Deleted. <Mar. 14, 2014>

Article 42-2(Submission, etc. of Opinions on Notification) #

A financial institution handling the relevant savings account that has been notified by the head of a tax office under Articles 92-13 (2), 93-2 (2), 93-6 (3) or 93-7 (5) or a financial company, etc. under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article, referred to as the “financial company, etc.”) shall inform the relevant subscriber of the details thereof within 14 days of the notification, and a subscriber who has any objection against the details notified shall submit a written opinion to the head of the tax office having jurisdiction over the place on which tax is levied within two months from the said notification and inform the financial institution handling the relevant savings account of the financial company, etc. of the fact thereof: Provided, That, if the subscriber fails to submit a written opinion before the above deadline due to death, long-term business trip to overseas, or other extenuating circumstances, the written opinion may be submitted within seven days after such extenuating circumstance ceases to exist. <Amended on Mar. 14, 2014; Mar. 18, 2022>

[This Article Newly Inserted on Feb. 23, 2013]

Article 42-3(Special Taxation for Individual Savings Accounts) #

(1) Deleted. <Mar. 18, 2022>

(2) Deleted. <Mar. 18, 2022>

(3) Deleted. <Mar. 18, 2022>

(4) Only where a trust business entity is unable to manage individual savings accounts as the assets under Article 91-18 (3) 3 of the Act, the trust business entity may manage such accounts by lending temporary funds to the accounts used to manage the own property of such trust business entity under Article 106 (5) 3 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act. <Amended on Mar. 16, 2021>

(5) Interest income accrued from the management under paragraph (4) shall be included in the interest income, etc. under Article 91-18 (5) of the Act. <Amended on Mar. 16, 2021>

[This Article Newly Inserted on Mar. 14, 2016]

Article 43 #

Deleted. <Mar. 20, 2019>

Article 43-2 #

Deleted. <Mar. 20, 2019>

Article 43-3(Documents to be Submitted for Tax Reduction or Exemption for Small Housing Rental Business Entities) #

“Documents specified by Ordinance of the Ministry of Economy and Finance” in Article 96 (8) 4 of the Decree mean attached Form 23-2 of under Article 19 (8) of the Enforcement Rule of the Special Act on Private Rental Housing.

[This Article Wholly Amended on Mar. 13, 2020]

Article 44(Calculation of Housing Rental Period) #

“Period specified by Ordinance of the Ministry of Economy and Finance” in Article 97 (5) 5 of the Decree means the period not greater than three months starting from the date on which the previous tenant vacates the property until the date on which the next tenant moves in. <Amended on Apr. 29, 2008>

Article 44-2(Real Estate Investment Companies for Rental Housing) #

“Real estate investment company which invests in a housing rental business under Article 14-8 (3) 2 of the Real Estate Investment Company Act which is specified by Ordinance of the Ministry of Economy and Finance” in Article 97-6 (1) of the Decree means a real estate investment company that meets all the following criteria:

1. A real estate investment company shall provide at least 70/100 of the total floor area of the building it owns as build-to-rent housing or buy-to-rent housing (hereafter in this Article, referred to as “rental housing”) under subparagraph 2 or 3 of Article 2 of the Rental Housing Act;

2. The sum of the standard market price at the time of acquisition of each house provided as rental housing and the land appurtenant thereto shall not be greater than 600 million won;

3. The exclusive habitable area of each house provided as rental housing shall be no greater than 85 square meters.

[This Article Newly Inserted on Oct. 30, 2015]

Article 45(Reduction or Exemption of Capital Gains Tax for Purchasers of Newly-Built Houses) #

“Housing eligible under circumstances specified by the Ordinance of the Ministry of Economy and Finance” in the provisos to Article 99 (2) of the Decree and Article 99-3 (4) of the Decree means houses acquired as a replacement sold by the applicable housing construction business entity due to any of the circumstances provided in Article 71 (3) of the Enforcement Rule of the Income Tax Act. <Amended on Mar. 28, 2001; Mar. 11, 2005; Apr. 29, 2008; Apr. 20, 2010>

Article 45-2(Special Taxation for Delinquent Taxes, etc. of Resurgent Small or Medium Entrepreneurs) #

(1) “Written form” under Article 99-6 (3) of the Decree means a payment plan for delinquent taxes.

(2) “Application” under Article 99-6 (8) of the Decree means an application for postponement of notice of taxation, extension of the designated due date for payment or deadline specified in a reminder (hereinafter referred to as the “extension of the designated due date for payment, etc.”), and postponement of seizure or sale. <Amended on Mar. 14, 2016; Mar. 16, 2021>

(3) Deleted. <Mar. 14, 2016.>

[This Article Newly Inserted on Oct. 21, 2013]

[Former Article 45-2 Moved to Article 45-3 <Oct. 21, 2013>]

Article 45-3(Calculation of Average Monthly Earned Income) #

“Average monthly earned income specified by Ordinance of the Ministry of Economy and Finance” means the amount obtained by dividing the total amount of pay a resident has received from a company for which he or she continues to work as of the end of the taxable period for the relevant income (referring to the total amount of pay under Article 20 (2) of the Income Tax Act; the same shall apply hereafter in this Article) by the number of months he or she has worked at the said company during the taxable period. In this case, the months in which he or she worked for less than 15 days shall be excluded from the calculation of the total amount of pay and the number of months worked, but if he or she began to work in December during the taxable period, even the said months shall be deemed as the months in which he or she fully worked for the calculation of the average monthly earned income.

[This Article Wholly Amended on Mar. 18, 2022]

Article 45-4(Scope and Value of Securities, etc.) #

(1) “Securities specified by Ordinance of the Ministry of Economy and Finance” in Article 100-4 (3) 6 of the Decree mean the following: <Newly Inserted on Mar. 18, 2022>

1. Stocks or shares;

2. Securities under each of the following:

(a) National bonds, local government bonds or bonds issued in accordance with a Special Act by a corporation established pursuant to the Special Act;

(b) Debentures (referring to such securities as corporate bonds);

(c) Cheques or commercial papers.

(2) “Rights to acquire real estate, as specified by Ordinance of the Ministry of Economy and Finance” in Article 100-4 (3) 7 of the Decree mean the following: <Newly Inserted on Mar. 18, 2022>

1. The right to acquire a house as an association member under subparagraph 9 of Article 88 of the Income Tax Act;

2. The right to acquire a building and the land appurtenant thereto once the construction thereof is completed (excluding the right to acquire a house as an association member referred to in subparagraph 1);

3. Land redemption bonds under the following Acts:

(a) Housing Site Development Promotion Act;

(b) Urban Development Act;

(c) Special Act on the Development of Enterprise Cities;

(d) New Harbor Construction Promotion Act;

(e) Special Act on Construction and Development of Innovation Cities;

(f) Korea Land and Housing Corporation Act.

4. Redeemable housing bonds under Article 80 of the Housing Act.

(3) The value of securities under each subparagraph of paragraph (1) pursuant to Article 100-4 (8) 5 of the Decree shall be the value specified as follows: <Amended on Apr. 7, 2009; Apr. 20, 2010; Mar. 13, 2015; Mar. 14, 2015; Mar. 18, 2022>

1. Stocks of stock-listed corporations under the Financial Investment Services and Capital Markets Act: The closing market price on the Korea Exchange which is deemed to have been granted a permit to serve as an exchange under Article 15 (1) of the Addenda to the partial amendment (Act No. 11845) to the Financial Investment Services and Capital Markets Act as of the base date for ownership (referring to the base date for ownership under Article 100-4 (4) of the Decree): Provided, That it shall be the closing market price as of the immediately preceding trading date if the closing market price as of the base date for ownership is not available;

Article 45-5(Scope, etc. of Persons Other than Business Entities) #

“Any person other than business entities specified by Ordinance of the Ministry of Economy and Finance” in Article 100-6 (2) 2 of the Decree means any person to whom either of the following has not been issued or provided; and the “business entity specified by Ordinance of the Ministry of Economy and Finance” in the proviso to subparagraph 4 of the same Article mean any persons to whom either of the following has been issued or provided: <Amended on Apr. 29, 2008; Feb. 23, 2013; Mar. 14, 2014; Mar. 13, 2015>

1. A business registration certificate under Article 168 (3) of the Income Tax Act, Article 111 (3) of the Corporate Tax Act, or Article 8 (5) of the Value-Added Tax Act;

2. An identification number under Article 168 (5) of the Income Tax Act.

[This Article Newly Inserted on Mar. 30, 2007]

[Title Amended on Feb. 23, 2013]

[Moved from Article 45-4, Former Article 45-5 Moved to Article 45-6 <Oct. 21, 2013>]

Article 45-6(Submission, etc. of Materials) #

(1) “Materials specified by Ordinance of the Ministry of Economy and Finance” in Article 100-7 (5) of the Decree mean the certificate of family relations of a resident (referring to the certificate of family relations of a spouse in cases of an alien married to a person who has the nationality of the Republic of Korea under the proviso to Article 100-3 (2) 2 of the Act), a certified transcript of the resident registration card of the resident and the following documents: <Amended on Apr. 29, 2008; Apr. 20, 2010; Feb. 23, 2013; Mar. 17, 2017; Mar. 13, 2020; Mar. 16, 2021>

1. Where the resident supports a cohabiting adoptee under Article 100-2 (1) of the Decree: A certificate of adoption under the Act on Registration of Family Relationships;

2. Where the resident supports lineal grandchild or sibling under Article 100-2 (2) 1 and 3 of the Decree: Documents determined by the Commissioner of the National Tax Service as evidence of support, such as a certificate of enrollment in a school of a supported child and a certificate of payment of tuition fees;

3. Where a resident supports lineal grandchild or sibling under Article 100-2 (2) 2 of the Decree: Documents determined by the Commissioner of the National Tax Service as evidence of support, such as a certificate of enrollment in a school of a supported child and a certificate of payment of tuition fees, and any of the following documents:

(a) A copy of the certificate of registration of a person with disabilities under Article 4 (2) of the Enforcement Decree of the Act on Welfare of Persons with Disabilities;

(b) A copy of the certificate of a person of distinguished service to the State under the Act on the Honorable Treatment of and Support for Persons, etc. of Distinguished Service to the State;

(c) A copy of the certificate of a person of distinguished service to the May 18 Democratization Movement under Article 6 (6) of the Enforcement Decree of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement;

4. Where a resident supports a person with disabilities under Articles 100-2 (3) and 100-4 (9) of the Decree: Any of the following materials:

(a) A copy of the certificate of registration of a person with disabilities under Article 4 (2) of the Enforcement Decree of the Act on Welfare of Persons with Disabilities;

(b) A copy of the certificate of a person of distinguished service to the State under the Act on the Honorable Treatment of and Support for Persons, etc. of Distinguished Service to the State;

Article 45-7(Inspection of Amount Paid as Earned Income or Business Income) #

(1) The Commissioner of the National Tax Service shall publish an amount paid as earned income or business income specified in Article 100-7 (3) of the Decree in the Home Tax Service Network pursuant to subparagraph 19 of Article 2 of the Framework Act on National Taxes, etc. to allow relevant residents to inspect the amount. <Amended on Feb. 30, 2013>

(2) The time, methods, etc. for the inspection through the Home Tax Service Network, etc. shall be determined by the Commissioner of the National Tax Service.

[This Article Newly Inserted on Mar. 30, 2007]

[Title Amended on Feb. 23, 2013]

[Moved from Article 45-6, Former Article 45-7 Moved to Article 45-8 <Oct. 21, 2013>]

Article 45-8(Accompanies Documents in Reporting Tax Base and Amount of Corporate Tax on Quasi-Liquidation Income) #

“Documents specified by Ordinance of the Ministry of Economy and Finance” in Article 100-16 (7) of the Decree mean the following documents: <Amended on Feb. 30, 2013>

1. A statement of financial position of the relevant domestic corporation as at the date of quasi-liquidation;

2. A statement of adjustment of capital and reserves of the relevant domestic corporation as at the date of quasi-liquidation.

[This Article Newly Inserted on Apr. 7, 2009]

[Moved from Article 45-7 <Oct. 21, 2013>]

Article 45-9(Special Taxation for Promoting Investment and Collaborative Cooperation) #

(1) “Corporate tax return on unappropriated earnings in the form specified by Ordinance of the Ministry of Economy and Finance” in Article 100-32 (3) of the Decree means attached Form 114.

(2) “Amount of corporate tax specified by Ordinance of the Ministry of Economy and Finance” in Article 100-32 (4) 2 (a) of the Decree means an amount obtained by subtracting the reduced or exempted amount of tax and the amount of tax credit from the amount calculated by applying the tax rate under Article 55 (1) of the Corporate Tax Act to the tax base under Article 13 of the same Act, plus an additional tax. <Newly Inserted on Mar. 18, 2022>

(3) “Amount of local corporate income tax specified by Ordinance of the Ministry of Economy and Finance” in Article 100-32 (4) 2 (a) of the Decree means the amount equivalent to 10/100 of the amount obtained by applying the tax rate under Article 55 (1) of the Corporate Tax Act to the tax base under Article 13 of the same Act. <Newly Inserted on Mar. 18, 2022>

(4) “Amount specified by Ordinance of the Ministry of Economy and Finance” in Article 100-32 (4) 2 (c) of the Decree means any of the following amounts (limited to the amounts not included in the deficit/loss for the relevant business year) that need to be reserved within the limit of the amount subject to mandatory reservation as prescribed by individual statutes, such as the Banking Act. <Amended on Mar. 13, 2020; Mar. 16, 2021; Mar. 18, 2022>

1. Earned surplus reserve for the relevant business year under individual statutes such as the Banking Act (excluding the amount reserved as the earned surplus reserve under Article 100-32 (4) 2 (b) of the Decree);

2. The amount that financial companies or mutual aid associations are obliged to reserve as allowance for bad debts or reserve for bad debts for the relevant business year;

3. The amount that a corporation engaged in the insurance business is required to reserve as the reserve to compensate the loss in the dividend insurance and guarantee reserve under the Insurance Business Act for the relevant business year;

4. The amount that local public corporations are obliged to reserve as the sinking-fund reserve under Article 67 (1) 3 of the Local Public Enterprises Act;

5. The amount that corporations managing real estate trust business under the Financial Investment Services and Capital Markets Act are obliged to reserve as the reserve for trust business for the relevant business year under the same Act.

Article 46(Reasons, etc. for Tax Evasion Concerns) #

(1) “Reasons specified by Ordinance of the Ministry of Economy and Finance” in Article 100-17 (2) of the Decree mean the cases where the profit and loss sharing ratio for the immediately preceding taxable year and the profit and loss sharing ratio for the relevant taxable year are applied differently in any of the following circumstances:

1. Where the sum of income and deficits of the partner company by group of partner company of any of the partner company within the relevant partner company is greater than he Decree for the immediately preceding taxable year and less than the Decree for the relevant taxable year;

2. Where the sum of deficits of the partner company by group of partner company of any of the partner company within the relevant partner company is less than he Decree for the immediately preceding taxable year and greater than the Decree for the relevant taxable year;

(2) Paragraph (1) shall apply only to partners that belonging to the group of partners in which the cause under paragraph (1) arose, and if a partner is changed due to joining or withdrawing during the relevant taxable year, it shall be applicable only to partners that have not been changed.

[This Article Newly Inserted on Apr. 29, 2008]

Article 46-2(Documents Attached to Report Income Calculation and Distribution Specifications for Partner Companies) #

“Documents specified by Ordinance of the Ministry of Economy and Finance” in subparagraph 3 of Article 100-24 of the Decree mean the following documents:

1. Documents classified under each of the following:

(a) Resident group and non-resident group consisting of non-residents under Article 121 (2) or (5) of the Income Tax Act: Documents related to the relevant resident group or non-resident group among the following documents:

1) Statement of interest income, statement of dividend income, statement of real estate rental income, statement of business income, statement of earned income, pension income, and other income in attached Form 40 (1) of the Enforcement Rule of the Income Tax Act;

2) Documents under Article 65 (2) 1 (a) and (c) of the Enforcement Rule of the Income Tax Act and each item of subparagraph 2 of the same paragraph;

3) The statement of adjustment and related documents under Article 102 of the Enforcement Rule of the Income Tax Act;

4) Statement of donations in attached Form 45 of the Enforcement Rules of the Income Tax Act.

(b) Domestic corporation group and foreign corporation group consisting of foreign corporations under Article 97 (1) of the Corporate Tax Act: Among the following documents, documents related to the relevant domestic corporation group or foreign corporation group:

1) Documents under Article 82 (1) 4 through 56 and 60 of the Enforcement Rule of the Corporate Tax Act;

2) Documents under each subparagraph of Article 61 (1) of the Enforcement Rule of the Restriction of Special Taxation Act.

(c) Non-resident group consisting of non-residents under Article 156 (1) of the Income Tax Act and foreign corporation group consisting of foreign corporations under Article 98 (1) of the Corporate Tax Act: Among the following documents, documents related to the relevant non-resident group or foreign corporation group:

1) Statement of payment of interest and dividend income in attached Form 23 (1) of the Enforcement Rules of the Income Tax Act;

2) Statement of payment of business income, other income, etc. of non-residents in attached Form 23 (5) of the Enforcement Rules of the Income Tax Act;

3) Statement of payment of capital gains from the transfer of securities in attached Form 24 (7) of the Enforcement Rule of the Income Tax Act;

Article 46-3(Special Treatment in Calculating Corporate Tax Base for Shipping Enterprises) #

(1) “Joint navigation specified by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 104-7 (1) of the Decree means a type of navigation of ships under an agreement entered into by at least two shipping enterprises to each assign and navigate at least one ship according to the joint shipping scheduling and to allow the shipping enterprises to share ships assigned by them mutually. <Amended on Apr. 29, 2008; Mar. 20, 2019>

(2) “Standard ships determined by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 104-7 (1) of the Decree means the following international ships registered under Article 4 of the International Ship Registration Act: <Amended on Apr. 17, 2006; Apr. 29, 2008; Apr. 20, 2010>

1. Ships owned by the relevant enterprise;

2. Bare boats chartered under the name of the relevant enterprise with an option to acquire nationality;

3. Ships leased by the relevant enterprise on an annual installment payment basis for the transfer of ownership from a person who has registered a facility leasing business under Article 3 (2) of the Specialized Credit Finance Business Act.

(3) The calculation of the annual net navigation tonnage under Article 104-7 (1) of the Decree shall be based on the end of the business year immediately preceding the business year under which the deadline for filing an application for special treatment in calculating the tax base falls (or if a statement of requirements for special treatment in calculating the tax base of a shipping enterprise is to be submitted under Article 104-7 (6) of the Decree; the business year under which the deadline for submitting the statement of requirements falls). <Amended on Apr. 29, 2008; Apr. 7, 2009>

(4) “Activities specified by Ordinance of the Ministry of Economy and Finance and related to the lease of facilities necessary to engage in ocean-going transportation activities” in Article 104-7 (2) 2 (b) of the Decree mean the activities related to the lease of containers necessary for maritime transportation activities. <Amended on Apr. 29, 2008>

(5) “Combined shipping activities specified by Ordinance of the Ministry of Economy and Finance” in Article 104-7 (2) 2 (f) of the Decree mean transportation activities using at least two modes of transportation such as ships, aircraft, railroad vehicles, or motor vehicles. <Amended on Apr. 29, 2008>

Article 46-4(Scope of Facilities Donated to Schools for Research and Development of Human Resources) #

(1) “Facilities for research and experimenting for the purpose of research and development specified by Ordinance of the Ministry of Economy and Finance” in Article 104-17 (2) of the Decree mean research and experiment facilities corresponding to any of the subparagraphs in Article 13 (1): Provided, That the foregoing shall not apply to secondhand facilities and facilities not in use after being donated. <Amended on Mar. 14, 2016; Mar. 20, 2019>

(2) “Facilities for vocational training specified by Ordinance of the Ministry of Economy and Finance” in Article 104-17 (2) of the Decree mean vocational training facilities corresponding to any of the following subparagraphs in Article 13 (1): Provided, That the foregoing shall not apply to secondhand facilities and facilities not in use after being donated. <Amended on Mar. 14, 2016; Mar. 20, 2019>

[This Article Newly Inserted on Apr. 7, 2009]

Article 47(Special Taxation for Establishment and Operation of Sports Teams, etc. of Enterprises) #

(1) “Any event specified by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 104-20 (1) of the Decree and in the part other than each subparagraph of paragraph (3) in the said Article means any event specified in subparagraphs 1 and 2 of attached Table 9, respectively. <Newly Inserted on Mar. 18, 2022>

(2) “Expenses specified by Ordinance of the Ministry of Economy and Finance” in Article 104-20 (4) 2 of the Decree mean the following: <Amended on Mar. 14, 2014; Mar. 18, 2022>

1. Expenses incurred for the preparation of an establishment of sports teams including screening and testing of players;

2. Use charges for sports arenas and training facilities;

3. Meal expenses;

4. Expenses incurred in off-season training;

5. Costs of repairing training facilities;

6. Articles for sports, equipment for training, sportswear, expenses incurred in purchasing medicines and repair expenses;

7. Expenses incurred in participating in sports and travel expenses incurred in participating in games;

8. Expenses incurred in lodging and meals for participation in games held in distant areas;

9. Rental charges for accommodations for players and for vehicles for transporting players;

10. Other direct expenses incurred directly in the operation of an athletic club or an e-sports club.

[This Article Newly Inserted on Apr. 7, 2011]

[Title Amended on Mar. 18, 2022]

Article 47-2(Criteria for Practical Control, etc.) #

(1) “Nationals of the Republic of Korea who de facto control specified by the Ordinance of the Ministry of Economy and Finance (including overseas Koreans granted the status of sojourn as overseas Koreans under Article 5 of the Act on the Immigration and Legal Status of Overseas Koreans) or corporations incorporated under the law of the Republic of Korea (including foreign-capital-invested companies defined in subparagraph 6 of Article 2 of the Foreign Investment Promotion Act)” in the part other than each subparagraph of Article 104-21 (1) of the Decree means corporations that satisfy the requirements in Article 2 of the Enforcement Decree of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation. <Amended on Apr. 21, 2020>

(2) “Amount converted as specified by Ordinance of the Ministry of Economy and Finance in consideration of exchange rates, etc.” in the formulas specified in Article 104-21 (5) 1 and 2 of the Decree and paragraph (6) 1 and 2 of the said Article means the amount calculated according to the classification: < Newly Inserted on Apr. 21, 2020; Mar. 16, 2021>

1. Where it falls under Article 104-21 (5) 1 of the Decree: Amount calculated according to the following formula

Amount converted as specified by Ordinance of the Ministry of Economy and Finance in consideration of exchange rates, etc. = A × B

A: Amount obtained by converting sales marked in the local currency generated in the business establishment managed overseas in the taxable year under which the date of commencement of the business falls by relocating it to Korea into Korean won by applying the average exchange rate (hereinafter referred to as “average exchange rate”) under Article 44-2 of the Enforcement Rule of the Corporate Tax Act of the same taxable year

B: The average value of the producer price index in the taxable year under which the date of commencement of business falls by relocating to Korea (referring to the total amount of the producer price index surveyed and announced by the Bank of Korea pursuant to Article 86 of the Bank of Korea Act for each month of the relevant taxable year divided by the number of months in the relevant taxable year; hereinafter the same shall apply in this paragraph), and ratio obtained by dividing the average value of the producer price index for the taxable year to which the income eligible for reduction belongs (if it is smaller than 1, it shall be deemed as 1)

2. Where it falls under Article 104-21 (5) 2 of the Decree: Amount calculated according to the following formula

Article 47-3(Special Taxation for 2018 PyeongChang Olympic and Paralympic Winter Games) #

(1) “Foreign corporations specified by Ordinance of the Ministry of Economy and Finance” in Article 104-28 (3) of the Act means the following foreign corporations: <Amended on Mar. 17, 2017>

1. Business entities that measure game hours and points or operate an information system for the management of games with a license to use the emblem of the International Olympic Committee under an agreement entered into with the International Olympic Committee;

2. Regional broadcasting service providers with an exclusive license for the 2018 PyeongChang Olympic and Para-Olympic Winter Games.

(2) “Person specified by Ordinance of the Ministry of Economy and Finance” in Article 104-28 (4) of the Act means any executive or employee of a foreign corporation specified in any of the following subparagraphs: <Amended on Mar. 17, 2017>

1. The Olympic Broadcasting Services established by the International Olympic Committee to provide facilities and services necessary for broadcasting the Winter Olympic Games;

2. Regional broadcasting service providers with an exclusive license for the 2018 PyeongChang Olympic and Para-Olympic Winter Games.

3. Business entities that measure game hours and points or operate an information system for the management of games with a license to use the emblem of the International Olympic Committee under an agreement entered into with the International Olympic Committee;

[This Article Newly Inserted on Mar. 14, 2016]

[Title Amended on Mar. 17, 2017]

Article 47-4(Income Deduction for Project Financing and Investment Companies) #

(1) “Documents specified by Ordinance of the Ministry of Economy and Finance” in the part other than each item of Article 104-28 (4) 5 of the Decree means the following documents: Provided, That as for a report of alteration under Article 104-28 (6) of the Decree, this shall be limited to documents with altered details.

1. Articles of incorporation;

2. Details of the specific business that manages the company's assets;

3. Procurement of funds and operational plan;

4. Documents certifying the payment of stocks;

5. A copy of the business consignment agreement entered into with an asset management company and a fund management business consignment company.

(2) The head of the tax office having jurisdiction over the place of tax payment who has received a report under Article 104-28 (4) 5 or (6) of the Decree shall certify the certificate of registered entries for corporation of the declarant through the joint use of administrative information under Article 36 (1) of the Electronic Government Act.

[This Article Newly Inserted on Mar. 16, 2021]

[Former Article 47-4 Moved to Article 47-5 <Mar. 16, 2021>]

Article 47-5(Application of Zero Rate of Value Added Tax) #

(1) “Assisting devices specified by Ordinance of the Ministry of Economy and Finance” in Article 105 (2) of the Decree means assisting devices for persons with disabilities under attached Table 9-2.

[This Article Newly Inserted on Mar. 13, 2020]

[Moved from Article 47-4 <Mar. 16, 2021>]

Article 48(Exemption, etc. from Value-Added Tax) #

(1) “Multi-unit houses stipulated by Ordinance of the Ministry of Economy and Finance” in Article 106 (4) 1 of the Decree means those falling under subparagraph 1 (c) of attached Table 1 of the Enforcement Decree of the Building Act. In this case, each section separated for independent dwelling of one household shall be deemed as one house. <Newly Inserted on Mar. 16, 2021>

(2) “Businesses specified by Ordinance of the Ministry of Economy and Finance” in the main sentence of the part other than each subparagraph of Article 106 (8) of the Decree mean tax-free businesses of substitute organizations for government affairs in attached Table 10. <Amended on Mar. 6, 2004; Apr. 29, 2008; Mar. 20, 2019; Mar. 16, 2021>

(3) Deleted. <Mar. 28, 2001.>

(4) The verification of a farmer or fisher under Article 106 (17) of the Decree shall be subject to a certificate of a farmer or fisher issued by the head of the relevant local agricultural cooperative, local livestock industry cooperative, cooperative by item or by business category or fisheries cooperative. <Amended on Mar. 30, 2000; Feb. 28, 2012; Mar. 21, 2018>

Article 48-2(Scope, etc. of Tax-Free Gold Bullion Wholesalers) #

(1) “At least the amount stipulated by Ordinance of the Ministry of Economy and Finance” in Article 106-3 (2) 1 (b) of the Decree means where the sum of the supply price during two taxable periods immediately preceding the taxable period in which a person intends to trade the tax-free gold bullion under Article 106-3 is at least three billion won. <Amended on Mar. 11, 2005; Apr. 29, 2008>

(2) “Person who satisfies the requirements stipulated by Ordinance of the Ministry of Economy and Finance” in the part other than each subparagraph of Article 106-3 (3) of the Decree means a person who meets the following requirements: <Amended on Apr. 29, 2008; Apr. 7, 2009>

1. A person who retains a computer system of sufficient speed and capacity for stably performing brokerage of transactions of tax-free gold bullions and reporting such transactions;

2. A person who retains professional capabilities necessary for performing brokerage of transactions of tax-free gold bullions, including knowledge and experience in such business.

[This Article Newly Inserted on Mar. 24, 2003]

Article 48-3(Recommended Quantity of Tax-Free Gold Bullions) #

“Matters that are specified by Ordinance of the Ministry of Economy and Finance” in Article 106-4 (8) 3 of the Decree means the following: <Amended on Apr. 29, 2008>

1. A person who is authorized to recommend transactions of tax-free gold bullions shall not recommend the quantity of a transaction in excess of the recommendable quantity publicly notified by the Commissioner of the National Tax Service within 100 kilograms per day for each business entity;

2. A person who is authorized to recommend importation of tax-free gold bullions shall not recommend the quantity to be imported in excess of the recommendable quantity publicly notified by the Commissioner of the National Tax Service within 300 kilograms per day for each business entity.

[This Article Wholly Amended on Mar. 11, 2005]

Article 48-4(Special Taxation for Payment of Value-Added Tax by Purchasers of Gold-Related Products) #

(1) A person designated by the Commissioner of the National Tax Service under Article 106-9 (5) of the Decree may refund the value-added tax paid by a business entity (input tax amount) to the said business entity within the scope of the value-added tax paid by the purchaser under Article 106-4 (3) of the Act (output tax amount) as determined by the Commissioner of the National Tax Service.

(2) Notwithstanding paragraph (1), the amount specified in either of the following subparagraphs may be refunded, if the amount deemed as value-added tax paid by the relevant business entity (input tax amount):

1. The amount of value-added tax paid to the customs office at the time of importing gold-related products;

2. The amount equivalent to 70/100 of an amount obtained by subtracting the amount of value-added tax paid by a refiner of gold bullions (input tax amount) from the amount of value-added tax paid by the purchaser (output tax amount) if the designated person is a refiner of gold bullions.

(3) If an importer of gold-related products intends to receive a refund of the value-added tax paid at the time of importation under paragraph (2) 1, the importer shall file an application for a refund of value-added tax for the importer of gold-related products with the head of the competent tax office.

(4) The head of the competent tax office upon receipt of an application under paragraph (3) shall verify the payment of value-added tax and, if value-added tax has been paid, he or she shall notify the person designated by the Commissioner of the National Tax Service under paragraph (1) of the payment.

[This Article Newly Inserted on Apr. 29, 2008]

Article 48-5 #

Deleted. <Mar. 14, 2014>

Article 48-6(Special Taxation for Payment of Value-Added Tax by Purchasers of Scraps, etc.) #

(1) A person designated by the Commissioner of the National Tax Service under Article 106-13 (4) of the Decree may refund the value-added tax paid by a business entity (input tax amount) to the said business entity within the scope of the value-added tax paid by the purchaser under Article 106-9 (3) of the Act (output tax amount) as determined by the Commissioner of the National Tax Service.

(2) Notwithstanding paragraph (1), the amount paid to the customs office at the time of importation of scraps, etc. may be refunded if the amount is deemed value-added tax paid by the relevant business entity (input tax amount). <Amended on Mar. 14, 2016>

(3) If an importer of scraps, etc. intends to receive a refund of the value-added tax paid at the time of importation under paragraph (2), he or she shall file an application for a refund of the value-added tax to the head of the competent tax office: Provided, That a business entity may not file an application for a refund if it is verified that he or she has paid value-added tax for importation of scraps, etc. <Amended on Mar. 14, 2016>

(4) The head of the competent tax office upon receipt of an application under paragraph (3) shall verify the payment of value-added tax and, if value-added tax has been paid, he or she shall notify the person designated by the Commissioner of the National Tax Service under paragraph (1) of the payment.

[This Article Newly Inserted on Dec. 30, 2013]

[Title Amended on Mar. 14, 2016]

Article 49(Refund of Value-Added Tax to Foreign Business Entities and Procedure therefore) #

(1) “Goods or services specified by Ordinance of the Ministry of Economy and Finance” in Article 107 (1) 3 of the Decree means the following goods or services: Provided, That the foregoing shall not apply to those not eligible for deduction of an input tax under Article 39 (1) 2 through 7 of the Value-Added Tax Act: <Amended on Mar. 11, 2005; Apr. 29, 2008; Apr. 7, 2011; Jun. 28, 2013>

1. Buildings and structures for an office in the Republic of Korea or repair services of such buildings and structures;

2. Office equipment and furniture or leasing services of such equipment and furniture.

(2) If a business entity who has been registered as a business entity under Article 8 of the Value-Added Tax Act (excluding business entities subject to simplified taxation that supply goods or services during the period to which the regulations on the issuance of receipts are applied according to Article 36-2 (1) or (2) needs to supply goods or services in Article 107 (6) of the Act to a foreign business entity, he or she shall issue the tax invoice to a foreign business entity upon receipt of a request from a foreign business entity for an issuance of a tax invoice. <Amended on Mar. 16, 2021>

(3) Matters necessary for the procedure for a refund of value-added tax to foreign business entities shall be determined and publicly notified by the Commissioner of the National Tax Service.

Article 49-2(Certificates of Provision of Medical Services, etc.) #

A certificate of provision of medical services under Article 107-3 (2) of the Act shall be subject to attached Form 68-2: Provided, That if a medical institution eligible for special treatment under Article 109-3 (2) of the Decree is a franchisee of a business entity runs refund desks under Article 109-3 (3) of the Decree, such certificate may be substituted by a refund slip (including an electronic document sent using an information and communications network) approved by the Commissioner of the National Tax Service.

[This Article Newly Inserted on Mar. 14, 2016]

Article 50(Special Cases concerning Deduction of Input Tax for Value-Added Tax Imposed for Recycled Waste Resources, etc.) #

(1) “Persons designated by Ordinance of the Ministry of Economy and Finance” in Article 110 (3) 5 of the Decree means persons who are primarily engaged in the business of collecting and selling waste materials for recycling. <Amended on Apr. 29, 2008>

(2) Deleted. <Apr. 17, 2006.>

Article 50-2(Submission of Documentary Evidence) #

“Motor vehicle registers of the decrepit diesel motor vehicle (referring to the decrepit diesel motor vehicle specified in the former part of Article 109-2 (1) of the Act; hereafter the same shall apply in this Article) and the new vehicle, a copy of the resident registration certificate (or a copy of the business registration certificate for a business entity) and other documentary evidence specified by Ordinance Ministry of Economy and Finance” in Article 111 (1) of the Decree means the following documents: <Amended on Mar. 10, 2017>

1. The motor vehicle registers of the decrepit diesel motor vehicle and new motor vehicle;

2. A copy of the resident registration certificate (or a copy of the business registration certificate for a business entity): Provided, That the copy of the resident registration certificate may be substituted by the driver's license, passport, certificate of domicile in the Republic of Korea or certificate of a public official;

3. If the resident registration number, business registration number or trade name written on the motor vehicle register of the decrepit diesel motor vehicle does not match the resident registration number, business registration number or trade name at the time of registration of the new motor vehicle, documents certifying that the registered owner of the decrepit diesel motor vehicle and the new motor vehicle is the same person or the same corporation, such as the abstract of the registration card and the certificate of entries of the owner in the relevant register under Article 15 of the Commercial Registration Act.

[Newly Inserted on Aug. 28, 2009]

[Former Article 50-2 Moved to Article 50-3 <Aug. 28, 2009>]

Article 50-3(Method for Calculating Quantity of Petroleum, etc. Eligible for Tax Refund) #

The quantity eligible for tax refund, reduction or exemption under Articles 112-2 (11), 112-3 (3) and 112-4 (5) of the Decree shall be calculated by any of the following formulas: <Amended on Oct. 15, 2008; Apr. 7, 2011; Feb. 23, 2013>

1. The quantity of petroleum under Article 112-2 (11) of the Decree = (The amount of petroleum purchased with an oil purchase card for refund)/(The average selling price per unit of petroleum at a petrol station or a charging station in the Special Metropolitan City, Metropolitan City, Special Self-Governing City, Do or Jeju Special Self-Governing Province where the relevant petrol station or charging station is located as surveyed and published by the Korea National Oil Corporation under Article 38-2 (3) of the Petroleum and Alternative Fuel Business Act and Article 42-2 (5) of the Enforcement Decree of said Act);

2. The quantity of butane under Article 112-3 (3) of the Decree = (The amount of butane purchased with an oil purchase card for tax-exempted taxis)/(The average selling price per unit of butane at a charging station in the Special Metropolitan City, Metropolitan City, Special Self-Governing City, Do or Jeju Special Self-Governing Province where the charging station is located as surveyed and published by the Korea National Oil Corporation under Article 38-2 (3) of the Petroleum and Alternative Fuel Business Act and Article 42-2 (5) of the Enforcement Decree of said Act);

3. The quantity of petroleum under Article 112-4 (5) of the Decree = (The amount of petroleum purchased with an oil purchase card)/(The average selling price per unit of petroleum at a petrol station or a charging station in the Special Metropolitan City, Metropolitan City, Special Self-Governing City, Do or Jeju Special Self-Governing Province where the relevant petrol station or charging station is located as surveyed and published by the Korea National Oil Corporation under Article 38-2 (3) of the Petroleum and Alternative Fuel Business Act and Article 42-2 (5) of the Enforcement Decree of said Act).

[This Article Newly Inserted on Apr. 30, 2008]

[Moved from Article 50-2 <August 28, 2009>]

Article 50-4(Articles Eligible for Reduction of Customs Duties) #

(1) The articles eligible for reduction of customs duties under Article 118 (2) of the Act shall be as indicated in attached Table 13: Provided, That, articles eligible for reduction of customs duties under Article 118 (1) 22 of the Act shall be those recommended by the head of the pertinent central administrative agency in charge of manufacturing, processing, etc., or a person designated by the head of the pertinent central administrative agency. <Amended on Mar. 13, 2020>

(2) The rate of reduction of customs duties levied on the articles eligible for reduction of customs duties pursuant to paragraph (1) shall be 50/100 of the said amount of customs duties (100/100 for articles under the proviso to paragraph (1)). <Amended on Dec. 29, 2017; Mar. 13, 2020>

[This Article Newly Inserted on Dec. 30, 2011]

Article 50-5(Application for Reduction or Exemption of Customs Duties for Overseas Korean Enterprises on Their Return to Korea) #

A person who intends to apply for reduction or exemption of customs duties under Article 115-3 (6) of the Decree shall file an application for reduction or exemption with the head of the relevant customs office accompanied by the following documents: <Amended on Mar. 23, 2013; Mar. 14, 2014; Mar. 21, 2018>

1. A copy of the certificate of selection as an enterprise returning to Korea that is eligible for support issued by the Minister of Trade, Industry and Energy under Article 7 (4) of the Act on Assistance to Korean Off-Shore Enterprises in Repatriation;

2. A copy of the confirmed statement of imported articles verified by the Minister of Trade, Industry and Energy as capital goods under Article 115-3 (1) of the Decree;

3. Other documents publicly notified by the Commissioner of the Korea Customs Service as necessary.

[This Article Newly Inserted on Feb. 23, 2013]

Article 50-6(Requirements, etc. for Exemption of Market Makers from Securities Transaction Tax) #

(1) “Requirements specified by Ordinance of the Ministry of Economy and Finance” in Article 115 (1) of the Decree mean the following:

1. The person shall be a clearing member of an exchange under Article 387 (2) 1 of the Financial Investment Services and Capital Markets Act;

2. A person in charge of the market-making shall be designated among any of its executives or employees.

(2) “Ratio specified by Ordinance of the Ministry of Economy and Finance” in Article 115 (3) 1 (a) and 2 (a) of the Decree means 5/100, respectively. <Newly Inserted on Mar. 16, 2021>

(3) “Amount specified by Ordinance of the Ministry of Economy and Finance” in Article 115 (3) 1 (b) and 2 (b) of the same paragraph means the amount classified as follows: <Newly Inserted on Mar. 16, 2021>

1. Amount in Article 115 (3) 1 (b): 300 trillion won.

2. Amount in Article 115 (3) 2 (b): 9 trillion won.

(4) “Ratio specified by Ordinance of the Ministry of Economy and Finance” in the latter part of Article 115 (4) of the Decree means the figure specified in each of the following subparagraphs: <Amended on Mar. 16, 2021>

1. For stock-index futures and stock-index futures (hereafter in this Article, referred to as the “stock-index derivatives”), the following figures:

(a) The figure that the Korea Exchange calculates for each issue of stock index derivatives on each trading day according to the Derivatives Market Business Regulations under Article 393 (2) of the Financial Investment Services and Capital Markets Act as the rate of price change in the stock index derivatives with the relevant stock index as the underlying asset in line with the change in the stock index (hereafter in this Article, referred to as “conversion rate of the underlying asset”);

(b) The figure that the Korea Exchange calculates for each stock price index on each trading day as the weighted value of each individual stock to the stock price index (hereafter in this Article, referred to as “ratio of index-reflected total market price”);

2. For stock futures and stock options (hereafter in this Article, referred to as “stock derivatives”): The figure that the Korea Exchange calculates for each issue of stock derivatives on each trading day according to the Derivatives Market Business Regulations under Article 393 (2) of the Financial Investment Services and Capital Markets Act as the rate of price change in the relevant stock derivatives according to the changes in the stock price index (hereafter in this Article, referred to as “conversion rate of the trading volume of stocks”).

Article 50-7(Requirements to be Eligible for Exemption from Securities Transaction Tax for Arbitrage Trading) #

(1) “Synthetic futures specified by Ordinance of the Ministry of Economy and Finance” in Article 115 (11) 4 of the Decree means obtaining the results similar to trading futures pursuant to the provisions in Article 115 (11) 1 through 3 by trading call options and put options with the same settlement month and exercise price (hereafter in this Article, referred to as the “basic futures for arbitrage trading”) falling under either of the following: <Amended on Mar. 16, 2021>

1. Selling call options and purchasing put options;

2. Purchasing call options and selling put options.

(2) “Account only for arbitrage trading specified by Ordinance of the Ministry of Economy and Finance” in Article 115 (12) of the Decree means an account only for transactions made for gains (hereafter in this Article, referred to as “arbitrage trading”) by using a price difference between derivatives specified in any of the subparagraph in Article 115 (11) of the Decree (hereafter in this Article, referred to as “futures for arbitrage trading”) and the stock certificates which are underlying assets of the said futures for arbitrage trading (referring to stock certificates comprising the relevant index if the underlying asset of the relevant derivative is a stock price index; hereafter in this Article, the same shall apply) which has been reported by the organization for postal services pursuant to subparagraph 2 of Article 2 of the Act on Special Cases concerning the Management of Postal Services (hereafter in this Article, referred to as the “organization for postal services”) or the corporation that manages and operates funds established pursuant to the provisions set out in attached Table 2 of the National Finance Act (hereafter in this Article, referred to as “fund managing entity”) to the Korea Exchange by satisfying all of the following requirements: <Amended on Mar. 20, 2019; Mar. 16, 2021>

1. An account of derivatives for trading futures for arbitrage trading and an account for trading stock exchange shall be reported jointly;

2. Basic futures for arbitrage trading shall be separately reported by issue.

(3) The amount of a purchase contract cleared under Article 115 (13) 4 of the Decree means the sum of the following amounts aggregated on each day. In this case, if the underlying asset of the futures for arbitrage trading is a stock price index, the clearing amount of a purchase price for the relevant issue shall be obtained by multiplying the clearing amount of the purchase contract by the ratio of the total market capitalization (referring to the figure obtained based on the price of each issue at the time of the first arbitrage trading on the transfer date of stock certificates; hereafter in this Article, referred as “ratio of total market price comprising the index”) that each issue for the share certificates accounts for the stock index as the underlying asset of the futures for arbitrage trading: <Amended on Mar. 16, 2021>

Article 51(Standards, etc. for Tax Reduction or Exemption for Foreign Investment) #

(1) “Amount specified by Ordinance of the Ministry of Economy and Finance” in Article 116-2 (1) 2 of the Decree means two million U.S. dollars.

(2) “Technologies specified by Ordinance of the Ministry of Economy and Finance” in Article 116-2 (2) of the Decree means the technologies as specified in attached Table 14.

[This Article Newly Inserted on Mar. 17, 2017]

[Former Article 51 Moved to Article 51-2 <Mar. 17, 2017>]

Article 51-2(Scope, etc. of Appurtenant Land) #

“Land appurtenant to the new facilities stipulated by Ordinance of the Ministry of Economy and Finance which is traded concurrently with such facilities” in Article 116-2 (8) 2 of the Decree means the land appurtenant to the said facilities with an area not greater than the area obtained by multiplying the area on which facilities are erected by the multiple specified for the relevant area in either of the following subparagraphs: <Amended on Apr. 29, 2008; Mar. 20, 2019>

1. Land within an urban area: Five times;

2. Land outside an urban area: Ten times.

[This Article Wholly Amended on Mar. 6, 2004]

[Moved from Article 51 <Mar. 17, 2017>]

Article 51-3(Application, etc. for Tax Reduction or Exemption) #

(1) A person who intends to apply for tax reduction or exemption or for amending the details of tax reduction or exemption pursuant to Article 121-2 (6) of the Act shall submit three duplicates of an application for tax reduction or exemption or an application for amending the details of tax reduction or exemption to the Minister of Economy and Finance (including the head of the institution delegated by the Minister of Economy and Finance under Article 116-13 (1) of the Decree) accompanied by documents demonstrating or explaining in detail the reasons for filing the application for tax reduction or exemption or the application for amending the details of tax reduction or exemption. <Amended on Apr. 29, 2008; Feb. 23, 2013>

(2) A person who intends to apply for verification of eligibility for tax reduction or exemption before filing an application pursuant to Article 121-2 (7) of the Act shall submit three duplicates of an application for prior verification of eligibility for tax reduction or exemption to the Minister of Economy and Finance (including the head of the institution delegated by the Minister of Economy and Finance under Article 116-13 (1) of the Decree) accompanied by documents demonstrating the eligibility for tax reduction or exemption. <Amended on Apr. 29, 2008; Feb. 23, 2013>

[This Article Newly Inserted on May 24, 1999]

Article 51-4(Reporting of Commencement of Business) #

A person who intends to file a report on the commencement of business under Article 116-4 (1) of the Decree shall submit a report on the commencement of business to the head of the tax office having jurisdiction over the place of business.

[This Article Newly Inserted on May 24, 1999]

Article 51-5(Application for Exemption from Customs Duties, etc.) #

A person who intends to apply for exemption from customs duties, individual consumption tax and value-added tax pursuant to Article 121-3 (3) of the Act shall submit an application for exemption from customs duties, individual consumption tax and value-added tax to the head of a customs office accompanied by the following documents: <Amended on Mar. 6, 2004; Mar. 11, 2005; Feb. 28, 2012>

1. A set of documents demonstrating that the relevant business is eligible for reduction of or exemption from corporate tax, etc. under Article 121-2 (1) of the Act;

2. A set of documents demonstrating that the relevant capital goods fall under any of the subparagraphs in Article 121-3 (1) of the Act;

3. A copy of the statement of details of imported goods verified pursuant to Article 38 (2) of the Enforcement Decree of the Foreign Investment Promotion Act.

[This Article Newly Inserted on May 24, 1999]

Article 51-6(Standards for Proportional Distribution of Common Gross Income and Common Deductible Expenses for Tax Reduction or Exemption of Capital Increase) #

Where Article 116-6 (5) and (6) of the Decree are applied, if it is impracticable to keep separate accounts for common gross income and common deductible expenses under Article 143 of the Act because the business eligible for tax reduction or exemption for capital increase of a foreign-invested corporation is identical to the business originally eligible for tax reduction or exemption and is run in the same process and place of business or because of other reasons, the common gross income and common deductible expenses shall be proportionally distributed according to the standards determined and publicly notified by the Commissioner of the National Tax Service in consideration of the ratio of the value of fixed assets newly acquired and installed for business purposes at the time of capital increase, the ratio of the relevant capital at the time of capital increase, etc.

[This Article Newly Inserted on Mar. 13, 2015]

Article 51-7(Application for Exemption from Customs Duties on Goods Imported by Resident Enterprises of Jeju Advanced Science and Technology Complex) #

A person who intends to be held eligible for exemption from customs duties pursuant to Articles 121-10 and 121-11 of the Act shall submit to the head of a customs office an application for the reduction or exemption of customs duties under Article 112 of the Enforcement Decree of the Customs Act, accompanied by documents falling under any of the following: <Amended on Mar. 11, 2005; Nov. 23, 2007; Mar. 17, 2017>

1. If the person intends to be held eligible for exemption from customs duties pursuant to Article 121-10 of the Act, a document certifying that the company is a resident enterprises of Jeju Advanced Science and Technology Complex pursuant to Article 161 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;

2. If the person intends to be held eligible for exemption from customs duties pursuant to Article 121-11 of the Act:

(a) Documents verified by the Governor of Jeju Special Self-Governing Province pursuant to Article 116-16 (2) of the Decree;

(b) Documents verified by the head of a central administrative agency in charge of the production of goods in issue or a person designated by the head of the said central administrative agency that it is difficult to manufacture the pertinent goods (excluding goods imported by a foreign investor or a foreign-invested enterprise for the purpose of foreign investment).

[This Article Newly Inserted on May 17, 2002]

Article 51-8 #

Deleted. <Mar. 20, 2019>

Article 51-9(Limit on Deductible Income to be Included in Reserves for Proper Purpose Business of National Agricultural Cooperative Federation) #

“Ratio specified by Ordinance of the Ministry of Economy and Finance through consultation between the Minister of Economy and Finance and the Minister of Agriculture, Food and Rural Affairs” in Article 121-23 (6) 2 of the Act means 100/100. <Amended on Mar. 23, 2013; Mar. 17, 2017>

[Newly Inserted on Feb. 28, 2012]

Article 51-10(Limit on Deductible Income to be Included in Reserves for Proper Purpose Business of National Federation of Fisheries Cooperatives) #

“Rate specified by Ordinance of the Ministry of Economy and Finance through consultation between the Minister of Economy and Finance and the Minister of Oceans and Fisheries” in Article 121-25 (4) 2 of the Act means 100/100.

[This Article Newly Inserted on Mar. 17, 2017]

[Former Article 51-10 Moved to Article 51-11 <Mar. 17, 2017>]

Article 51-11(Scope, etc. of Liabilities) #

(1) “Liabilities specified by Ordinance of the Ministry of Economy and Finance” in the former part of Article 116-30 (13) of the Decree means the total amount of loans borrowed from others out of the total liabilities on the statement of financial position as of the end of each business year: Provided, That the foregoing shall not apply to the loans that have been increased to acquire new assets under any of the following which have been verified by the person authorized to approve business restructuring plans under Article 116-30 (1) of the Act. <Amended on Mar. 17, 2017; Mar. 16, 2021; Mar. 18, 2022>

1. Assets eligible for exemption under Article 24 (1) 1;

2. Factories for business under Article 54 (1);

3. Land appurtenant to a factory for business under subparagraph 2: Provided, That, if the land appurtenant exceeds three times the floor area of the factory for business, the excess portion shall not be deemed as the land appurtenant thereto.

(2) When calculating the debt ratio and the standard debt ratio under Article 116-30 (13) and (14) of the Decree, the stockholders' equity shall be obtained by deducting total liabilities (including various reserves and allowances but excluding accrued corporate tax) from total assets as of the end of each business year or the record date for calculation of the standard debt ratio under paragraph (14) 1 of the same Article (hereafter in this Article, referred to as “record date for calculation of the standard debt ratio”). In this case, when determining total assets, if assets owned by the relevant corporation have been revaluated pursuant to the Assets Revaluation Act before the end of each business year or the record date for calculation of the standard debt ratio, the difference accruing from the revaluation under the said Act (referring to the amount after deducting the revaluation tax) shall be deducted. <Amended on Mar. 17, 2017>

(3) Notwithstanding the forepart of paragraph (2), if the stockholders' equity for each business year is reduced to be less than the stockholders' equity for the immediately preceding business year or as of the record date for calculation of the standard debt ratio due to deficits incurred within three years after paying debts owed to financial creditors, the calculation of the debt ratio shall be based on stockholders' equity for the immediately preceding business year and the stockholders' equity as of the record date for calculation of the standard debt ratio, whichever is greater. <Amended on Mar. 21, 2018>

(4) When determining the debt ratio and the standard debt ratio under Article 116-30 (13) and (14) of the Decree, the paid-in capital shall be based on the paid-in capital as of the end of each business year or the record date for calculation of the standard debt ratio, but if the relevant domestic corporation has reduced capital without consideration before the end of each business year, the reduced amount shall be added to the paid-in capital. <Amended on Mar. 17, 2017>

Article 52 #

Deleted. <Apr. 7, 2011>

Article 52-2(Deduction of Medical Expenses, etc. for Compliant Business Operators) #

A person who intends to have medical expenses or educational expenses deducted under Article 117-3 (6) of the Decree shall submit either of the following forms at the time of filing the final return on income taxbase: <Amended on Aug. 28, 2009; Mar. 20, 2019>

1. If the person intends to have medical expenses deducted, the form under subparagraph 17 of Article 101 of the Enforcement Rule of the Income Tax Act;

2. If the person intends to have educational expenses deducted, the form under subparagraph 18 of Article 101 of the Enforcement Rule of the Income Tax Act.

[This Article Newly Inserted on Apr. 29, 2008]

[Former Article 52-2 Moved to Article 52-3 <Apr. 29, 2008>]

Article 52-3(Income Deduction for Amounts Spent on Credit Cards, etc.) #

(1) “Sales amount specified by Ordinance of the Ministry of Economy and Finance” in Article 121-2 (9) of the Decree means sales classified as follows: <Newly Inserted on Mar. 16, 2021>

1. A business operator who deals with books or newspapers: 300 million won

2. A business operator who deals with theater tickets or tickets to museums and art galleries: 75 million won

(2) “Documents specified by Ordinance of the Ministry of Economy and Finance” in Article 121-2 (12) of the Decree means documents issued by the Commissioner of the National Tax Service with full details on income deductions associated with the payments specified in Article 216-3 (1) of the Enforcement Decree of the Income Tax Act. <Amended on Mar. 20, 2019; Mar. 16, 2021>

[This Article Newly Inserted on Feb. 23, 2013]

Article 52-4(Reasons for Extension of Transaction Application Verification Period) #

“If extenuating circumstances specified by Ordinance of the Ministry of Economy and Finance exist” in the proviso to Article 121-5 (5) of the Decree means either of the following circumstances: <Amended on Apr. 29, 2008; Mar. 17, 2017>

1. Where the supplier has requested an extension because it is difficult to verify the transaction due to the supplier's bankruptcy, illness, long-term business trip, etc.;

2. Where a tax official has visited the supplier more than twice to verify the transaction, but has been unable to meet the supplier due to closure or absence.

[This Article Newly Inserted on Mar. 30, 2007]

[Moved from Article 52-3 <Apr. 29, 2008>]

Article 52-5(Verification, etc. of Cash Transactions) #

“Revenue amount of cash transactions specified by Ordinance of the Ministry of Economy and Finance” in Article 121-5 (7) of the Decree means the amount of revenue for which no tax invoice, credit card sale slip or cash receipt is collected.

[This Article Newly Inserted on Apr. 29, 2008]

Article 52-6(Procedures for Restriction of Special Taxation for Savings Support) #

(1) “Matters specified by Ordinance of the Ministry of Economy and Finance” in Article 123-2 (2) of the Decree means the resident registration number of a person subject to aggregate taxation on financing income by taxation period under Article 129-2 of the Act.

(2) A person who intends to offer an opinion to the Commissioner of the National Tax Service under Article 123-2 (5) of the Decree shall submit a written opinion to the head of the tax office having jurisdiction over the place of tax payment within 14 days from the date on which he or she is notified under paragraph (4) of the same Article.

(3) Notwithstanding paragraph (2), where a person who has been notified under Article 123-2 (4) of the Decree fails to submit a written opinion within the period specified in paragraph (2) due to death, long-term overseas business trip, or other compelling circumstances, he or she may submit the written opinion within seven days from the date on which the reason thereof ceases to exist.

[This Article Newly Inserted on Mar. 16, 2021]

Article 53(Scope, etc. of Factories according to Standards for Investment for Extension) #

(1) “Factory as stipulated by Ordinance of the Ministry of Economy and Finance” in Article 124 (1) 1 of the Decree means a factory defined in subparagraph 1 of Article 2 of the Industrial Cluster Development and Factory Establishment Act and “aggregate sizes of the relevant factory” in the said subparagraph means the area of the factory site or the floor area of all floors of buildings located inside the factory site: Provided, That the area of facilities provided to promote the welfare of employees, such as the cafeteria, resting rooms, bathrooms, laundry facilities, clinics, outdoor sports facilities, and dormitories, and the area of evacuation shelters, armories, ammunition depots, and educational facilities shall not be included in the aggregate sizes of the relevant factory. <Amended on Mar. 11, 2005; Apr. 29, 2008; Apr. 21, 2020>

(2) “Investments which lead to an increase of the number of fixed assets for business” in Article 124 (1) 2 of the Decree mean investments made to install additional fixed assets for business such as machinery, and the aggregate size of the relevant business place in the same subparagraph means the area of the business site or the floor area of each floor of a building within the business site: Provided, That, the area of facilities provided to promote the welfare of employees, such as cafeterias, resting rooms, bathroom suites, laundry facilities, medical rooms, outdoor sports facilities, and dormitories, and the areas of shelters, arsenals, ammunition dump, and educational facilities, shall not be included in the total floor area of the relevant business establishment. <Newly Inserted on Apr. 21, 2020>

[Newly Inserted on Mar. 6, 2004]

[Title Amended on Apr. 21, 2020]

Article 54(Scope of Fixed Assets for Business eligible for Tax Reduction or Exemption for Investment in Over-Concentration Control Regions) #

“Other fixed assets for business as specified by Ordinance of the Ministry of Economy and Finance” in Article 124 (3) 4 of the Decree means fixed assets for business that fall under any of the following:

1. Facilities falling under either of Article 13-10 (3) or (4);

2. Facilities to improve the quality control of medical supplies under attached Table 11.

[This Article Newly Inserted on Mar. 16, 2021]

Article 55(Calculation of Amount of Tax Credit for Business Income) #

The amount of tax credit for business income under Article 126 (4) of the Decree shall be calculated by the following formula: <Amended on Mar. 6, 2004; Mar. 11, 2005>

1. A tax credit for the tax paid in a foreign country under Article 57 of the Income Tax Act:

(a) If the case falls under Article 117 (1) 1 of the Enforcement Decree of the Income Tax Act:

(Tax amount in a foreign country or tax amount deemed to have been paid in a foreign country) × (Business income out of taxable foreign source income/Taxable foreign source income);

(b) If the case falls under Article 117 (1) 2 of the Enforcement Decree of the Income Tax Act:

(Tax amount paid in a foreign country or tax amount deemed to have been paid in a foreign country) × (the amount of revenue constituting business income out of the taxable revenue generated in a foreign country/the amount of the taxable revenue generated in a foreign country);

2. A tax credit for casualty losses under Article 58 of the Income Tax Act:

(a) If the case falls under Article 58 (1) 1 of the Income Tax Act:

Tax amount levied but unpaid for global income (including penalty tax) × casualty loss rate × (business income for the taxable year for which the tax has not be paid/global income for the taxable year for which the tax has not be paid);

(b) If the case falls under Article 58 (1) 2 of the Income Tax Act:

[Calculated amount of global tax － (the tax credit amount for global income except the tax credit for casualty losses ＋ the amount of the tax reduction or exemption for global income) ＋ the amount of the penalty tax on global income] × casualty occurrence rate × (the amount of the business income for the taxable year in which casualty occurred/Amount of the global income for the taxable year in which casualty occurred).

Article 56 #

Deleted. <mar. 28, 2001>

Article 56-2 #

Deleted. <Apr. 17, 2006>

Article 57(Scope of Expenditures Included in Special Cases on Non-Inclusion of Entertainment Expenses in Deductible Expenses) #

“Exhibitions specified by Ordinance of the Ministry of Economy and Finance” in Article 130 (5) 8 of the Decree means the EXPO Yeosu Korea held in 2012.

[This Article Newly Inserted on Apr. 20, 2010]

Article 58 #

Deleted. <Apr. 17, 2006>

Article 59(Calculation of Deemed Gross Income from Rental Security Deposits, etc.) #

(1) Where part of the assets under the latter part of Article 132 (3) of the Decree is used for a rental business, the value of the asset used for the rental business shall be calculated by the following formula: <Amended on Mar. 30, 2007>

Value of assets partially used for rental business × (area of part used for rental business/aggregate area of the pertinent building)

(2) When applying Article 132 (5) and (6) of the Decree, the amount equivalent to construction cost shall be the acquisition price for the relevant building (including capital expenses but excluding a difference from the revaluation price) and the cumulative amount shall be the amount obtained by the following formulas. In this case, the cumulative area may be obtained by multiplying the balance as of the end of each month by the number of elapsed days: <Amended on Mar. 30, 2007>

1. If the case fall sunder Article 132 (6) 1 of the Decree:

Total cumulative amount of construction cost of an underpass × (cumulative leased area/cumulative area available for lease);

2. If the case fall sunder Article 132 (6) 2 of the Decree:

Total cumulative amount of construction cost of real estate for lease × (cumulative leased area/total cumulative floor area of a building).

(3) If a leased real estate is sublet, the cumulative amount of the security deposits, etc. specified in the formula in Article 132 (5) of the Decree shall be obtained by subtracting the cumulative amount of the security deposits for lease from the cumulative amount of security the deposits, etc. for sublease. In this case, if the cumulative amount of the security deposits for lease, etc. exceeds the cumulative amount of the security deposits for sublet, etc., the excess shall be deemed nil. <Amended on Mar. 30, 2007>

(4) “Interest rate of time deposit” in the formula in Article 132 (5) of the Decree means the interest rate specified in Article 6 of the Enforcement Rule of the Corporate Tax Act. <Amended on Mar. 11, 2005; Mar. 30, 2007>

(5) “Profits from disposal of securities” in the formula in Article 132 (5) of the Decree means the amount obtained by subtracting the loss on the sale of securities from the gain on the sale of securities. <Amended on Mar. 30, 2007>

(6) When applying Article 132 (5) of the Decree, if a rental business began to operate during a business year, the cumulative amount shall be calculated from the day on which the rental business began to operate. <Amended on Mar. 30, 2007>

Article 59-2(Application for Confirmation of Tax Exemption) #

A person who intends to receive confirmation of tax exemption pursuant to Article 133-2 of the Decree shall submit an application for confirmation of tax exemption to the Minister of Trade, Industry and Energy. <Amended on Apr. 29, 2008; Mar. 23, 2013>

[Newly Inserted on Mar. 6, 2004]

Article 59-3(Scope of Buildings or Structures Subject to Collection of Tax Reduction or Exemption) #

“Buildings or structures specified by Ordinance of the Ministry of Economy and Finance” in Article 137 (3) of the Decree means facilities falling under any of the subparagraphs of Article 12-3.

[This Article Newly Inserted on Mar. 16, 2021]

Article 60(Collection of Non-Taxable and Reduced Tax for Interest and Dividend Income) #

(1) “Days specified by Ordinance of the Ministry of Economy and Finance” in Article 137-2 (2) 2 of the Decree means 30 days.

(2) “Cases specified by Ordinance of the Ministry of Economy and Finance” in the proviso to Article 137-2 (2) 3 of the Decree means cases where income generated until the expiration date of the term of contract immediately before the date of disqualification is withheld.

[This Article Newly Inserted on Mar. 16, 2021]

Article 61(Forms, etc.) #

(1) Forms for the application for tax reduction or exemption, etc. shall be subject to each of the following subparagraphs: <Amended on May 24; 1999; Sep. 30, 1999; Mar. 30, 2000; Mar. 28, 2001; Sep. 29, 2001; Mar. 30, 2002; Mar. 24, 2003; Mar. 6, 2004; Oct 16, 2004; Mar. 11, 2005; Dec. 31, 2005; Apr. 17, 2006; Mar. 30, 2007; Nov. 23, 2007; Apr. 29, 2008; Apr. 30, 2008; Oct. 15, 2008; Apr. 7, 2009; Aug. 28, 2009; Apr. 20, 2010; Jun. 8, 2010, Jun. 30, 2010; Apt. 7, 2011; Aug. 3, 2011; Feb. 28, 2012; Oct. 16, 2012; Feb. 23, 2013; May 14, 2013; Oct. 21, 2013; Dec. 30, 2013; Feb. 28, 2014; Mar. 14, 2014; Jul. 4, 2014; Mar. 13, 2015; Feb. 25, 2016; Mar. 14, 2016; Aug. 9, 2016; Mar. 10, 2017; Jan. 9, 2018; Mar. 21, 2018; Mar. 20, 2019; Mar. 13, 2020; Apr. 21, 2020; Jun. 15, 2020; Mar. 16, 2021; May 13, 2021; Nov. 9, 2021; Mar. 18, 2022>

1. Deleted. <Mar. 30, 2007>

2. Application for tax credit under Articles 30-2 (3), 30-4 (5), 122-4 (3), and 126-7 (13) of the Act and Articles 6-4 (4), 7-2 (4), 7-2 (12), 9 (14), 11 (6), 11-3 (14), 11-4 (12), 12-3 (15), 17 (5), 21 (11), 22-10 (6), 23 (15) through (17), 26-2 (3), 26-3 (6), 26-4 (17), 26-5 (11), 26-7 (10), 27-3 (3), 96-3 (7), 99-11 (4), 104-5 (6), 104-14 (2), 104-20 (5), 104-22 (3), 104-27 (3), 104-29 (2) of the Decree: Attached Form 1, Annex (1) to attached Form 1 and Annexes (1) and (2) to attached Form 1;

2-2. Statement of adjustment of inclusion in deductible expenses under Article 4-2 (3) and Article 7 (3) of the Decree: Attached Form 1-2;

2-3. Statement of disbursement of contributions under Article 7-2 (5) of the Decree: Attached Form 1-3;

2-4. Certificate of gratuitous lease under Article 7-2 (9) of the Decree: Attached Form 1-4;

3. Application for tax reduction (exemption) under Article 85-2 (6) of the Act or Article 5 (26), 6 (8), 11 (6), 11-2 (10), 58 (11), 60 (8), 60-2 (15), 61 (7), 63 (7), 64 (8), 65 (5), 79-7, 96 (8), 99-8 (6), 99-10 (5), 102, 104-21 (12), 116-14 (5), 116-15 (7), 116-21 (7), 116-25 (6), 116-26 (9), 116-27 (6) of the Decree: Attached Form 2 and the Annex to attached Form 2;

3-2. Statement of the reduced or exempted tax amount for a newly established small or medium enterprise under Article 5 (26) of the Decree: Attached Form 2-2;

3-3. Application for special tax refund for retrospective deduction of deficits of small and medium enterprises under Article 7-3 (3) of the Decree: Attached Form 2-3 or 2-4;

3-4. Deleted. <Mar. 18, 2022>