Korean National Tax Service Tax Law News Release to Foreign Corporate Taxpayers: Korean Tax Law Updates

The following Korean Tax Law News is a publicly released Korean tax notification that is intended for foreigner companies in Korea.  The notification was not translated or drafted by this law firm.  For any questions on this notification please Contact Us. Korean Tax Law News 【January 2018】 ☞ The following Korean tax information is translated from Korean for foreign-invested companies, and is not legally binding. ※ Year-end tax settlement by foreign workers in Korea □ With the increase in foreigners residing in Korea, the number of foreign workers in Korea has increased every year as well. ○ For the convenience of foreign workers‘ year-end tax settlement in Korea, here are a few tips on year-end tax settlement for foreign workers this year. □ If a foreigner has wage and salary income generated in Korea, he/she should perform year-end tax settlement just like domestic workers, regardless of his/her sojourn period and

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Korean Tax Law Amendment Press Release by Korean Government

The following is a Press Release by the Korean Government on recent Korean Tax Law enforcement decrees.  We shall update the reader when more is known.  The following press release was not proofread or translated by this firm.  The Press Release was published by the Ministry of Strategy & Finance in the English language and copied, in its entirety, below. Decree Focuses on Boosting Investment and Broadening Tax Base The government announced a revision to a total of 17 tax enforcement decrees, including ones to help create jobs, improve income and broaden the tax base.  Major revisions to the 2017 tax enforcement decrees are as follows. – Expand the angel investment tax incentives (30 to 100 percent income tax deduction):  Include crowdfunding investment in companies run for less than 7 years, or investment in companies run for less than 3 years if they are qualified by credit rating agencies –

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Korean Tax Risk of Foreign Corporation Deemed “Actual Business Management Locale” within Korea: Korea Tax Law Basics

Foreign corporations, doing business in Korea, may be deemed local corporations subject to taxation on worldwide income if the foreign-incorporated company is deemed a Korean “domestic corporation” for Korean tax purposes.  This liaison-office Korean Tax Risk can, thus, lead to taxes on worldwide income, a tax audit and even criminal sanctions against those operating in Korea.  We have dealt with matters were employees, even, received exit bans. Thus, in most cases the establishment of a local Korean corporation is essential in assisting in shielding your foreign corporation from tax and other liabilities unless substantial reasons exist to not establish a local Korean corporate entity. One of the most significant risks of foreign companies doing business in Korea without a local entity is being deemed a local corporation subject to tax on worldwide income.  A domestic corporation under the Corporate Tax Act of Korea is a company with its “actual business

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Korean Real Estate Acquisition Taxes for Purchase of Real Estate in Korea

The following are the Korean real estate acquisition taxes for the purchase of real estate in Korea. These acquisition taxes are applicable to the purchase of an apartment, land or a commercial property. Taxes in Korea change, often, when new administrations come into office.  Thus, these taxes may change, thus, please consult with your real estate agent and/or accountant. Foreigner may purchase property in Korea, certain restrictions do apply to the purchase of property by foreigners. Basic Taxes Related to the Acquisition of Property in Korea.  Acquisition Tax (with surtax):     4.6% of Purchase Price Recording Tax:                        Zero. Presently, incorporated into Acquisition Tax under recent                                                        amendments to Real Estate Tax Law. Stamp Duty:  

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Can a Foreign Company be Deemed a Domestic Company for Tax Purposes and Taxed on Worldwide Income?

If Korea deems a foreign incorporated company a Domestic Corporation, the company shall be taxed on its worldwide income.  The relevant law, this determination is made under, is the Corporate Tax Act of Korea (“CTA”).  In the typical case, the National Tax Service of Korea designates the foreign-incorporated company a Domestic Corporation and requests details on overseas earnings in order to impose taxes on overseas earnings.  Of course this leads, invariable, to your Korean tax lawyer challenging the determination to the Korean courts. Domestic Company Tax Residency Test in Korea The Korean Corporate Tax Act defines a Domestic Corporation as a corporation with: Headquarters within Korea; or  Actual Business Management Place in Korea.  Disputes, normally, concern the definition of Actual Business Management Place after an imposition of a tax on worldwide income (often based on funds being forwarded to the parent company by the Korean company – E.g. license fees) and

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