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,

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Amendment to the Korean Foreign Investment Promotion Act 2019 – Investment Incentives in Korea

The Korean Foreign Investment Promotion Act (hereinafter as “FIPA”) is intended to support foreign investment in Korea by providing investment incentives to investors in the Korea market. The Korean National Assembly amended the FIPA this year. Key-facts about the Korean FIPA The Korean FIPA shall “…promote foreign investment in Korea by providing necessary support and benefit and to contribute to the sound development of the nation’s economy.” (FIPA Art. 1).

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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

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