ENFORCEMENT DECREE OF THE ACT FOR THE COORDINATION OF INTERNATIONAL TAX AFFAIRS Presidential Decree No. 14870, Dec. 30, 1995 Amended by Presidential Decree No. 15196, Dec. 31, 1996 Presidential Decree No. 15325, Mar. 29, 1997 Presidential Decree No. 15970, Dec. 31, 1998 Presidential Decree No. 17045, Dec. 29, 2000 Presidential Decree No. 17832, Dec. 30, 2002 Presidential Decree No. 18312, Mar. 17, 2004 Presidential Decree No. 18628, Dec. 31, 2004 Presidential Decree No. 18706, Feb. 19, 2005 Presidential Decree No. 19650, Aug. 24, 2006 Presidential Decree No. 20331, Oct. 23, 2007 Presidential Decree No. 20494, Dec. 31, 2007 Presidential Decree No. 20720, Feb. 29, 2008 Presidential Decree No. 21066, Oct. 7, 2008 Presidential Decree No. 21299, Feb. 4, 2009

The purpose of this Decree is to provide matters delegated by the Act for the Coordination of International Tax Affairs and matters necessary to enforce said Act. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>

(1) The term “special relationship” as referred to in Article 2 (1) 8 of the Act for the Coordination of International Tax Affairs (hereinafter referred to as the “Act”), means as follows: <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 17832, Dec. 30, 2002; Presidential Decree No. 19650, Aug. 24, 2006>1. A relationship between a domestic corporation or domestic business place, and a foreign shareholder, under which the person residing or located in a foreign state (including a shareholder and an investor; hereinafter referred to as a “foreign shareholder”) owns directly or indirectly 50% or more of the voting shares (including equities in investment; hereinafter the same shall apply) of the domestic corporation or the foreign corporation having the domestic business place;2. A relationship between a resident, domestic corporation or domestic business place, and another foreign corporation, under which the resident, domestic corporation, or foreign corporation having the domestic business place owns directly or indirectly 50% or more of the voting shares of another foreign corporation;3. A relationship between a domestic corporation or a domestic business place, and a third party foreign corporation (including a domestic business place of a third party foreign corporation), under which a person, who directly or indirectly owns 50% or more of the voting shares of the domestic corporation or the foreign corporation having the domestic business place, also owns directly or indirectly 50% or more of the voting shares of the third party foreign corporation;4. A relationship between a resident, a domestic corporation, or a domestic business place and a nonresident, a foreign corporation or its overseas business place, under which they have common interest in adjusting income through investments in capital between either party and the other party, trades of goods or service, grant of loans, etc., and either party has a power to make a decision on the whole or essential part of the other party’s business policy by any of the following means:(a) The representative director or the officers corresponding to the majority of all officers of one corporation shall assume the positions of officers or employees of the other corporation, or shall have assumed the said positions within 3 years retroactively from the end of the pertinent business year;(b) One party shall own 50% or more of the voting shares of the other party, through an association or a trust;(c) One party shall depend on the trades with the other party for 50% or more of its business activities;(d) One party shall borrow 50% or more of its funds required for business activities from the other party, or shall raise them through a payment guarantee of the other party; and(e) One party shall depend on the incorporeal property right provided by the other party for 50% or more of its business activities; or5. A relationship between a resident, a domestic corporation, or a domestic business place and a nonresident, a foreign corporation or its overseas business place, under which they have common interest in adjusting income through investments in capital between either party and the other party, trades of goods or service, grant of loans, etc., and where the relationship between one party, the other party, and a third party falls under any of the following items:(a) A relationship between one party, 50 percent or more of whose voting shares are owned directly or indirectly by a resident, a domestic corporation, or a domestic business place, and the other party who has a relationship set forth in any item of subparagraph 4 with the resident, domestic corporation, or domestic business place;(b) A relationship between one party, 50 percent or more of whose voting shares are owned directly or indirectly by a nonresident, a foreign corporation, or its overseas business place, and the other party who has a relationship set forth in any item of subparagraph 4 with the nonresident, foreign corporation, or its overseas business place;(c) A relation between one party, which is an affiliated company of a conglomerate as defined in any of subparagraphs of Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, and the other party, 50 percent or more whose voting shares are owned directly or indirectly by another affiliated company of the said conglomerate; or(d) A relationship between parties to a trade, in cases where a third party has a power to make a decision on the whole or essential part of the business policies of both parties by means set forth in any of items of subparagraph 4.(2) The indirectly-owned ratio of shares provided in paragraph (1) 1 through 3 and 5 shall be calculated according to the classifications falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17832, Dec. 30, 2002>1. Where one corporation owns 50% or more of voting shares of a corporation, which is a shareholder of the other corporation (hereinafter referred to as the “shareholding corporation”), the ratio occupied by the voting shares of the other corporation, which are owned by the shareholding corporation, in the voting shares of the relevant other corporation (hereinafter referred to as the “shareholding ratio of the shareholding corporation”) shall be the indirectly-owned ratio of one corporation against the other corporation: Provided, That where there exist two or more shareholding corporations, the ratio obtained by summing up that calculated by shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation;2. Where one corporation owns less than 50% of voting shares of the shareholding corporation of the other corporation, the ratio obtained by multiplying the relevant owning ratio by shareholding ratio of the shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation: Provided, That where there exist two or more shareholding corporations, the ratio obtained by summing up that calculated by shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation; and3. The calculation methods under subparagraphs 1 and 2 shall also be applicable mutatis mutandis where there interpose one or more corporations between one corporation and a shareholding corporation of the other corporation, and where these corporations are linked through the share ownership.

(1) The scope of a foreign controlling shareholder of a domestic corporation under Article 2 (1) 11 (a) of the Act, shall be any which falls under any of the following subparagraphs as of the end of each business year: <Amended by Presidential Decree No. 17832, Dec. 30, 2002; Presidential Decree No. 19650, Aug. 24, 2006>1. A foreign shareholder who directly or indirectly owns 50% or more of voting shares of a domestic corporation;2. A foreign corporation, 50% or more of whose voting shares are directly or indirectly owned by a foreign shareholder described in subparagraph 1; and3. A foreign shareholder who has a relationship under Article 2 (1) 4 with a domestic corporation.(2) The foreign shareholders who control a domestic business place of a foreign corporation under Article 2 (1) 11 (b) of the Act shall be as follows: <Amended by Presidential Decree No. 17832, Dec. 30, 2002>1. The head office or branch offices (referring to branch offices located overseas; hereinafter the same shall apply) of a foreign corporation having a domestic business place;2. A foreign shareholder who directly or indirectly owns 50% or more of the voting shares of a foreign corporation under subparagraph 1; and3. A foreign corporation, 50% or more of whose voting shares are directly or indirectly owned by a head office or foreign shareholder described in subparagraph 1 or 2.(3) Article 2 (2) shall apply mutatis mutandis with respect to the indirectly-owned ratio of shares described in paragraphs (1) and (2). <Newly Inserted by Presidential Decree No. 17832, Dec. 30, 2002>

The term “gift, etc. of assets prescribed by Presidential Decree” as referred to in the proviso to Article 3 (2) of the Act means the following subparagraphs: <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>1. Conveying an asset without consideration (excluding a case of conveying it at a significantly low price) or discharging an obligation;2. Deleted; <by Presidential Decree No. 19650, Aug. 24, 2006>3. Purchasing assets which do not yield any profit, receiving the contribution of such assets in kind, or bearing expenses for such assets;4. Bearing contributions by proxy; and5. Other trades of capital which fall under any of the items of Article 88 (1) 8 of the Enforcement Decree of Corporation Tax Act or under subparagraph 8-2 of the same paragraph.[This Article Newly Inserted by Presidential Decree No. 17832, Dec. 30, 2002]

The term “other methods deemed to be reasonable, as prescribed by Presidential Decree” as referred to in Article 5 (1) 4 of the Act, means the methods prescribed in the following subparagraphs: <Amended by Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>1. Profit sharing method:In the international trades between a resident (including a domestic corporation and a domestic business place; hereafter in this Chapter, the same shall apply) and a foreign related party, the net trade profits realized by both parties [the amount obtained by deducting sales cost and sales expenses (which mean the expenses for sales and general administration; the same shall apply hereinafter for the purposes of this Article) from the sales proceeds realized in trades with a third party] are allocated according to the level of relative contribution between the parties to trades, which has been measured by the allocation criteria provided in each of the following items (including the case where an appropriate basic income of the parties to trade is preferentially allocated by trade type; hereinafter the same shall apply), and then the trade price, which has been computed on the basis of the profits allocated in such a way, shall be deemed the arm’s length price. In this case, the level of relative contribution shall be measured on the basis of the level of contribution attained ordinarily in the trades between the unrelated independent parties in a similar situation:(a) Expenses paid or payable for the acquisition of assets, manufacturing, sales, or the provision of services;(b) Capital expenditures required to develop assets or to provide services, total amount of assets used, or the level of risks assumed;(c) Level of importance of skills performed at each phase of transactions; and(d) Other measurable rational allocation criteria;2. Net trade profit ratio method:Method of regarding a trade price calculated on the basis of net trade profit ratio prescribed in the following items, which has been realized in a trade similar to the trade concerned between a resident and an unrelated party, as the arm’s length price in the cases of international trades between a resident and a foreign related party: Provided, That a trade similar to the trade concerned has not been conducted with an unrelated party, the net trade profit ratio of a trade with the similar terms and conditions to those of the trade concerned, from among the trades between unrelated third parties, may be used;(a) Net trade profit ratio to the sales;(b) Net trade profit ratio to the assets;(c) Net trade profit ratio to sales cost and sales expense;(d) Ratio of gross sales profit (referring to the sum of net trade profit and sales expenses) to sales expenses; and(e) Other net trade profit ratio deemed to be reasonable;3. Deleted; and <by Presidential Decree No. 21299, Feb. 4, 2009>4. Other methods deemed rational in view of the substance and practice of trades.

(1) In computing the arm’s length price under Article 5 (1) of the Act, the most rational method shall be selected by taking the criteria provided in any of the following subparagraphs into account: <Amended by Presidential Decree No. 18628, Dec. 31, 2004>1. Possibility for comparison shall be high between the international trades among the related parties and the trades among the unrelated parties. In this case, “high possibility for comparison” means the cases falling under any of the following items:(a) Where a difference in the compared circumstances has no serious effect upon the price or net profit of the trades; and(b) Where a rational adjustment, which is capable of removing a difference due to the relevant effects, is possible even in the case where a difference in the compared circumstances has a serious effect upon the compared price or net profit;2. Possibility shall be high for the securing and use of the data to be used;3. The level of correspondence to the reality shall be high for an assumption on the economic conditions or business environment, etc. established in order to compare the international trades between the related parties with the trades between the unrelated parties; and4. The defects in the data to be used or in the established assumption shall have a little effect on the calculated arm’s length price.(2) In assessing whether or not a high comparability exists pursuant to paragraph (1) 1, such constituents shall be analyzed as the function of business activities that may affect the price or profit, the contractual terms, the risks accompanying the trades, the kinds and features of the goods or services, the fluctuation in market conditions, and the economic situations, etc.(3) The method under subparagraph 2 (d) of Article 4 may be applied to the cases where a resident carries on simple sales activities or performs a service without a burden to have goods in stock. <Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>(4) In cases where the method of computing arm’s length price is applied in accordance with the subparagraphs of Article 4, the method under subparagraph 4 of the same Article shall be applied only when the methods under subparagraphs 1 and 2 of the same Article are not applicable. <Amended by Presidential Decree No. 17832, Dec. 30, 2002; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>(5) The tax authorities may, where a trade between the unrelated parties shall not be treated as a normal trade because it is fabricated at will by the parties involved, not select the said trade as a comparable trade. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 18628, Dec. 31, 2004>

(1) The computing method of arm’s length price falling under each subparagraph of Article 4 may be used in order to supplement the computing method of arm’s length price under Article 5 (1) 1 through 3 of the Act.(2) In computing an arm’s length price under Article 5 of the Act, if any difference occurs in the price, profit margin, or net trade profit, which is applicable on account of the differences in functions performed, risks assumed, or trade terms, etc. between the relevant trades and those between the unrelated parties, the relevant difference in the price, profit margin, or net trade profit shall be rationally adjusted.(3) The method with a resale price under Article 5 (1) 2 of the Act may, where deemed necessary for computing a rational arm’s length price, be applied to the service trades and other international trades.(4) In computing an arm’s length price under Article 5 of the Act, the scope of arm’s length prices may be computed on the basis of two or more trades between the unrelated parties, and it may be applied to an adjudication of whether the tax adjustment is to be made pursuant to the arm’s length prices under Article 4 of the Act. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996>(5) Where the tax authorities make a tax adjustment under Article 5 of the Act to the trade price deviating from the scope of arm’s length price, it shall be based on the average price, median price, mode price and other rational specific prices, which have been computed in trades within the relevant scope of arm’s length price. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996>(6) In computing the arm’s length price for an intangible asset, the following elements shall be considered according to its characteristics: <Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006>1. Scale of revenues added or expenses reduced which are expected with such an intangible asset;2. Whether there is a limitation on the exercise of rights therein; and3. Whether it is allowable to convey such an intangible asset to other person or grant a license to reuse it.(7) The normal interest rate for money transactions applicable to international trades between a resident and a foreign related party shall be the interest rate applicable or deemed as applicable to ordinary money transactions between unrelated persons, taking the following matters into consideration: <Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006>1. Amount of the obligation:2. Maturity of the obligation:3. Whether the obligation is secured; and4. Credit rating of the debtor.

(1) Where the price for a transaction of service deemed necessary for business management, financial advising, payment guarantee, support to an electronic system or technical support, or any other service (hereafter referred to as a “service transaction” for the purposes of this Article) between a resident and a foreign related party is the one for a transaction of service that meets all the following requirements, such a price shall be deemed as the arm’s length price and recognizable as a loss:1. The service provider shall make an agreement in advance and actually provide such a service in accordance with the agreement;2. There shall exist an additional benefit or a reduction in expenses, which the person who has such service provided expects from the service;3. The price for the service provided shall be computed in accordance with Article 5 of the Act and Articles 4 through 6 of this Decree. In this case, it shall be computed in accordance with the following guidelines, when the cost plus method under Article 5 (1) 3 of the Act or the net trade profit ratio to sales cost and sales expenses under subparagraph 2 (c) of Article 4 of this Decree is applied:(a) The cost incurred shall include all expenses incurred directly or indirectly for providing the service;(b) In cases where the service provider requests another foreign related party other than the service provider or an unrelated third party to perform the service vicariously, in whole or in part, pays the price therefor in a lump sum, and then claims such expenses to the person to whom the service is provided, the service provider shall add an ordinary profit only to the cost incurred from the activities that the service provider performs on his/her own in connection with the service: Provided, That the foregoing shall not apply, if deemed reasonable in the light of the substance of the service, status of the transaction, and customary practices; and4. There shall be documents prepared and preserved for proving the facts set forth in subparagraphs 1 through 3.(2) Notwithstanding paragraph (1), it shall not be deemed as a service transaction under paragraph (1), in cases where other foreign related party itself performs the same service as the one provided to the person who has the service provided, or in cases where an unrelated person provides the service for other foreign related party; Provided, That the foregoing shall not apply where the service provided is temporarily overlapped on any reasonable ground such as reorganization of the business or organizational structure, restructuring, an effort to reduce errors in making decision on business management.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) A resident shall select the most rational computing method of arm’s length price in accordance with the criteria under Article 5, and shall submit the selected method and the reasons therefor to the head of a tax office having jurisdiction over the tax payment place at the time of a final return on tax base and tax amount: Provided, That this shall not apply where it falls under any of the following subparagraphs out of the amount of international trades during the pertinent business year: <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>1. Where the total amount of transactions of goods is less than five billion won and the total amount of transactions of services is less than 500 million won; or2. Where total amount of transactions of goods for each foreign related party is less than one billion won and the total amount of transactions of services is less than 100 million won.(2) A resident may, where an actual trade price differs from the arm’s length price under the computing method of arm’s length price, file a return on the tax base and tax amount adjusted by treating the arm’s length price as a trade price, and apply for a rectification thereof within the time limit listed in any of the following subparagraphs, along with a written report on trade price adjustment as prescribed by Ordinance of the Ministry of Strategy and Finance. In this case, Articles 15, 15-2, 16 and 18 shall be applied mutatis mutandis to the income amount so adjusted: <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Time limit for filing a return under Articles 70 through 74 of the Income Tax Act, or Article 60 (1) of the Corporation Tax Act;2. Time limit for filing a revised return under Article 45 of the Basic Act for National Taxes; and3. Time limit for filing a request for rectification under Article 45-2 (1) of the Basic Act for National Taxes.

(1) For the purpose of Article 5 (1) 2 of the Act, the term “normal profits of the purchaser” means the amount calculated by multiplying the sale price of assets, which is charged by the purchaser to an unrelated party, by a sale-basis normal profit ratio. In this case, the term “a sale-basis normal profit ratio” means the gross profit ratio of sales realized in the trades, whose level of functions performed, assets used and risks assumed are similar to the relevant trade, from among the trades between the purchaser and the unrelated parties.(2) For the purpose of Article 5 (1) 3 of the Act, the term “normal profits of the seller of asset or the service provider” means the amount calculated by multiplying the costs required for the purchase, construction or manufacture of the relevant property at the arm’s length prices by the seller of assets, or the costs incurred at the arm’s length prices in the course of providing the relevant services by the service provider by a cost-basis normal profit ratio. In this case, a cost-basis normal profit ratio means, in the trades between the seller of assets or the service provider and the unrelated parties, the ratio of gross sales profits to the costs incurred in the trades whose level of functions performed, assets used and risks assumed are similar to the relevant trade.(3) Where the purchaser of assets under Article 5 (1) 2 of the Act, or the seller of assets or the service provider under subparagraph 3 of the same paragraph is unable to pertinently compute the normal profit ratio from the trades with the unrelated parties, the normal profit ratio realized in the trades whose level of functions performed, assets used and risks assumed are similar to the relevant trades from among the third trades between the unrelated parties, may be used as the sale-basis normal profit ratio in paragraph (1) or the cost-basis normal profit ratio in paragraph (2). <Amended by Presidential Decree No. 18628, Dec. 31, 2004>

(1) A resident who intends to apply for a prior approval of his/her arm’s length price computation method to the Commissioner of the National Tax Service under Article 6 (1) of the Act (hereafter in this Chapter, referred to as the “applicant”) shall submit to the said Commissioner four respective copies of the documents falling under each of the following subparagraphs as to the whole or part of his/her international trades not later than the end of the first taxable year during the term subject to an application for the arm’s length price computation method: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>1. A written application for a prior approval of arm’s length price computation method as provided by Ordinance of the Ministry of Strategy and Finance, indicating the subjected period, the subjected international trades, the parties to trades and the arm’s length price computation method, etc.;2. Explanatory data on the business history, business details, organization, and investment relationships, etc. of the parties to trades;3. Financial statements, copies of tax returns, and copies of contracts for international trades and other accompanying documents of the parties to trades for the latest three years;4. Data falling under each of the following items, explaining concretely the details of the arm’s length price computation method applied for:(a) The methods to assess the comparability, and to adjust the difference by factor, under Articles 5 (2) and 6 (2);(b) Where the financial statements of enterprises subject to comparison are employed, the difference in the accounting standards employed and the adjustment method therefore;(c) Where the financial data or cost data by classification of transactions are employed, the criteria for preparing them;(d) Where two or more trades subject to comparison are employed, the scope deemed to be an arm’s length price and its inducing method; and(e) Explanatory data on the conditions or assumptions to form a premise of the arm’s length price computation method;5. Where the provision of Article 7 (2) is applied, the explanatory data on how to adjust the difference between the actual trade price and the arm’s length price;6. Where an application is filed for a mutual agreement with the Contracting State for the arm’s length price computation method applied for an approval, a written application for commencing the mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance; and7. Other data attesting the propriety of the arm’s length price computation method applied for a prior approval.(2) Where the documents submitted to the competent authority of the Contracting State are different from those submitted under paragraph (1), the documents submitted to the competent authority of the Contracting State shall be additionally submitted. <Amended by Presidential Decree No. 17045, Dec. 29, 2000>(3) The period subject to an application for prior approval of the arm’s length price computation method shall be the period during which the taxpayer intends to obtain a prior approval of the arm’s length price computation method. <Amended by Presidential Decree No. 17045, Dec. 29, 2000>(4) An applicant may change the details of application for a prior approval, or withdraw his/her application for a prior approval not later than before acquiring a prior approval of the Commissioner of the National Tax Service. In this case, the Commissioner of the National Tax Service shall, when the application is withdrawn, return to the applicant all data submitted under paragraph (1) or (2). <Amended by Presidential Decree No. 17832, Dec. 30, 2002>(5) The Commissioner of the National Tax Service shall not use the data submitted under paragraph (1) or (2) for other purposes than an examination of prior approval and an ex post facto management. <Amended by Presidential Decree No. 17832, Dec. 30, 2002>

(1) The Commissioner of National Tax Service may, in examining an application for prior approval, refer to the opinion of the head of tax office having jurisdiction over the tax payment place of the applicant and the director of the regional tax office. <Amended by Presidential Decree No. 17045, Dec. 29, 2000>(2) The Commissioner of National Tax Service may, in examining an application for prior approval, designate a specialist who is in a neutral relationship with the applicant if the latter consents thereto, and refer to the reviewing opinion of the specialist on the arm’s length price computation method applied for. In this case, the Commissioner of the National Tax Service may, if the applicant consents thereto, have the applicant bear part of the relevant expenses.(3) The specialist under paragraph (2) shall not provide or disclose any information related to an application for prior approval to other persons than the applicant, his/her agents and the Commissioner of the National Tax Service.

(1) The Commissioner of National Tax Service shall, where he/she does not grant a prior approval as he/she deems that the application for prior approval is inappropriate, return to the applicant all data submitted under Article 9 (1) or (2). <Amended by Presidential Decree No. 17832, Dec. 30, 2002>(2) The Commissioner of National Tax Service shall, where the applicant applies for commencing the mutual agreement procedures at the time of applying for a prior approval, request the competent authority of the Contracting State to commence the mutual agreement procedures, and notify the applicant thereof.(3) The Commissioner of the National Tax Service shall, where an agreement is achieved with a Contracting State in the procedures of mutual agreement under paragraph (2), notify the applicant of the details of agreement within 15 days from the day following the completion of mutual agreement procedures. In this case, the applicant shall submit in writing whether he/she consents thereto to the Commissioner of the National Tax Service within 2 months from the date of receiving a notification on the details of agreement.(4) Where the applicant fails to notify the Commissioner of the National Tax Service of whether he/she consents thereto within the term under paragraph (3), it is deemed that he/she has not consented, and the original application for prior approval is deemed to have been withdrawn by the applicant.(5) Even if the agreed details under the mutual agreement procedures are not identical with the original content of application for prior approval, if the applicant consents to the agreed details under paragraph (3), it shall be deemed that the applicant has applied for the relevant details from the outset.(6) The Commissioner of the National Tax Service shall, when he/she accepts the submission of whether the applicant consents to the contents of mutual agreement under paragraph (3), grant a prior approval for the arm’s length price computation method within 15 days from the date of accepting such submission, and notify the applicant thereof.(7) The Commissioner of the National Tax Service shall, where falling under any of the following subparagraphs, notify the applicant of suspension of the mutual agreement procedures within 15 days:1. Where the Commissioner of the National Tax Service suspends ex officio the mutual agreement procedures, because the mutual agreement has not been reached within 3 years from the date of accepting the application for prior approval; and2. Where it is agreed to complete the mutual agreement procedures with a Contracting State, because an agreement under the mutual agreement procedures is impossible.(8) A resident who has obtained a prior approval of an arm’s length price computation method in accordance with paragraph (6) shall file an revised return or an application for rectification pursuant to Article 17 (1). In this case, the provisions of Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006>(9) Deleted. <by Presidential Decree No. 17045, Dec. 29, 2000>

(1) For the purpose of the proviso to Article 6 (2) of the Act, the term “such cases as are prescribed by Presidential Decree” means the cases falling under any of the following subparagraphs:1. Where a taxpayer fails to request the mutual agreement procedures at the time of applying for prior approval of an arm’s length price computation method under Article 9 (1); and2. Where the mutual agreement procedures for an arm’s length price computation method are suspended due to the causes falling under any subparagraph of Article 11 (7).(2) The Commissioner of the National Tax Service may, in a case falling under any subparagraph of paragraph (1), grant a prior approval of the arm’s length price computation method without proceeding the mutual agreement procedures (hereinafter referred to as the “unilateral prior approval”). In this case, the Commissioner of the National Tax Service may, where the mutual agreement procedures are commenced, attach the condition that the unilateral prior approval may be cancelled.(3) A taxpayer shall, where he/she intends to obtain an unilateral prior approval as he/she falls under paragraph (1) 2, present his/her intention in writing to the Commissioner of the National Tax Service within 15 days from the day on which he/she is notified thereof. In this case, the original application for prior approval shall, where the applicant fails to present his/her opinion in writing, be deemed to be withdrawn.(4) The Commissioner of the National Tax Service shall, where the applicant applies for an unilateral prior approval, decide upon whether to grant a prior approval within 2 years from the date of application.(5) The provisions of Article 11 (1), (3) through (6) shall apply mutatis mutandis respectively to the return of documents submitted as regards an unilateral prior approval, the notification of details of a decision on prior approval and whether to consent, the withdrawal of an application for prior approval, the validity of modified approval of prior approval, and the notification of prior approval.(6) A resident who has obtained a prior approval for an arm’s length price computation method shall file a revised return or an application for rectification pursuant to Article 17 (2). In this case, the provisions of Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>[This Article Newly Inserted by Presidential Decree No. 17045, Dec. 29, 2000]

(1) A resident shall, where he/she has won the prior approval on the arm’s length price computation method, file an annual report reflecting the details of approval with the head of a tax office having jurisdiction over the tax payment place within the deadline under Article 7 (2) 1, and submit four copies of the annual report containing the matters in the following subparagraphs to the Commissioner of the National Tax Service within six months from the date following the deadline of report, as prescribed in Article 6 (5) of the Act. In such cases, the provisions of Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 21299, Feb. 4, 2009>1. Whether or not the grounds or assumptions are realized, which form a premise for the arm’s length price computation method approved in advance;2. The arm’s length price computed by the arm’s length price computation method approved in advance, and the relevant computation process;3. Where the actual trade price differs from the arm’s length price, the details of dealing with the relevant difference; and4. Other matters stipulated to be contained in the annual report at the time of a prior approval.(2) The Commissioner of the National Tax Service may, where any additional data are needed in reviewing the annual report pursuant to paragraph (1), request the relevant resident to furnish them.

(1) For the purpose of the proviso to Article 6 (4) of the Act, the term “cases as prescribed by Presidential Decree” means the cases falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17045, Dec. 29, 2000>1. Where the important portions of data pursuant to Article 9 or 12 are not submitted or falsely prepared;2. Where the resident fails to comply with the details of prior approval or the conditions thereof;3. Where the important portions of conditions or assumptions are not realized which form a premise for the arm’s length price computation method approved in advance; and4. Where the content of the prior approval has become improper due to the changes in the relevant Acts and subordinate statutes or the tax treaties.(2) The Commissioner of the National Tax Service may, where it falls under any subparagraph of paragraph (1), cancel or withdraw the prior approval.(3) A resident may, in the case of paragraph (1) 3 or 4, apply for a change in the details of the original prior approval not later than the deadline for a final return on tax base and tax amount for a taxable year in which the relevant causes occur, with respect to the remaining subjected period thereafter including the relevant taxable year. In this case, the provisions of Articles 9 through 12 shall apply mutatis mutandis, but the data to be furnished under Article 9 (1) shall be limited to the changed portions.(4) The Commissioner of the National Tax Service shall, where he/she cancels or withdraws a prior approval, notify the competent authority of a Contracting State, without delay, of such facts.

Where a resident or a foreign related party applies for a prior approval of an arm’s length price computation method corresponding to Article 6 of the Act to the competent authorities of a Contracting State, and where it is necessary to commence the mutual agreement procedures with the Republic of Korea, the relevant resident shall without delay apply for the prior approval of such arm’s length price computation method under Article 9 to the Commissioner of the National Tax Service.

(1) The term “intangible asset” in Article 6-2 (1) of the Act means what falls under any of the following subparagraphs: <Amended by Presidential Decree No. 20494, Dec. 31, 2007>1. The one falling under any of the following items:(a) Patent right under the Patent Act;(b) Utility model right under the Utility Model Act;(c) Design right under the Design Protection Act;(d) Trademark right or service mark right under the Trademark Act;(e) Copyright under the Copyright Act; or(f) Computer program work under the Computer Programs Protection Act; or2. Any other intangible asset including a plan, a model, and knowhow, which can be used as it is or can be conveyed or licensed for use to other person.(2) The term “allotted arm’s length cost” in Article 6-2 (1) of the Act means an allotted amount applicable or deemed as applicable in an agreement that a resident makes with a foreign unrelated person on the allotment of ordinary cost, expenses, and risks (hereinafter referred to as “cost or such”), and the cost or etc. for the development of an intangible asset, which shall be allocated in proportion to the expected benefits from the intangible asset: Provided, That the price for using the intangible asset and the interest incurred and paid at the time of borrowing the allotted amount shall not be included in the allotted arm’s length cost.(3) The allotted arm’s length cost shall be included in losses at the time of computing the taxable income of the resident, only where the resident makes an agreement on the allotted arm’s length cost and subsequently bears the allotted cost or etc..[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) The term “expected benefits” in Article 6-2 (2) of the Act means benefits expected from an intangible asset and falling under any of the following subparagraphs:1. Cost reduction; or2. Increase of any of the following by making use of the intangible asset:(a) Sales;(b) Trade profit; or(c) Quantity consumed, produced, or sold.(2) Expected benefits shall be computed by applying the benefits under each subparagraph of paragraph (1), which are estimated to be realized after joint development of the intangible asset.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) The expression “in cases where …… subsequently changed at a rate equivalent to or more than as specified by Presidential Decree” in Article 6-2 (2) of the Act means the case where the resident’s expected benefits out of the total benefits expected originally at the time of making an agreement increase or decrease by 20/100 or more in comparison with the benefits realized after the development of the intangible asset.(2) In cases where the share of the residents as a participant is adjusted in accordance with Article 6-2 (2) of the Act, the allotted cost or etc. borne excessively by computing again the total allotted cost or etc. borne by the resident in proportion to the resident’s share as adjusted shall be adjusted at the time of calculating the tax base for the business year during which such change occurred.(3) In the event that another change under paragraph (1) occurs after the allotted cost or etc. was adjusted in accordance with paragraph (2), a report or a request for rectification may be filed within the time limit falling under any of the following subparagraphs. In this case, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the income so adjusted:1. Time limit for filing a return under Articles 70 through 74 of the Income Tax Act, or Article 60 (1) of the Corporation Tax Act;2. Time limit for filing a revised return under Article 45 of the Basic Act for National Taxes; or3. Time limit for filing a request for rectification under Article 45-2 (1) of the Basic Act for National Taxes.(4) No tax authority shall, when it intends to determine or rectify a resident’s tax base or tax amount pursuant to Article 6-2 (2) of the Act, adjust the resident’s tax base and tax amount after the lapse of five years from the day immediately following the time limit for filing a return on tax base for the taxable year on which the day when the joint development of an intangible asset is completed falls.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

With regard to the price received for expected benefits that a person, who participates later in an agreement on the cost allotment under Article 14-2 (2), gets through such participation or the price paid for expected benefits that other participants get as a consequence of a participant’s early withdrawal from such an agreement, tax authorities may determine or rectify the resident’s tax base and tax amount based on the arm’s length price, if the price is less than or exceeds the arm’s length price.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

A resident, who desires to become eligible for the application of Article 14-2 or 14-4, shall submit to the competent tax authority a statement of allotted cost or etc., as prescribed by Ordinance of the Ministry of Strategy and Finance, along with the return under Article 70 of the Income Tax Act or Article 60 of the Corporation Tax Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) Tax authorities shall, whenever they intend to make an income disposition or tax adjustment pursuant to Article 9 of the Act, make a disposition of temporary suspension until it is verified that the return under Article 15-2 has been properly done.(2) Tax authorities shall, whenever they make a disposition of temporary suspension under paragraph (1), give notice of such disposition by serving a notice of disposition of temporary suspension prescribed by Ordinance of the Ministry of Strategy and Finance by applying Articles 192 (1) and (4) of the Enforcement Decree of Income Tax Act mutatis mutandis. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21299, Feb. 4, 2009>(3) Notwithstanding paragraph (1), in cases where the imposition limitation period expires within four months from the date when tax base and tax amount were determined or rectified, as prescribed in Article 4 or 6-2 of the Act, it shall not be disposed of as temporary suspension but shall be disposed of or adjusted as prescribed in the subparagraphs of Article 16 (1). <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>[This Article Wholly Amended by Presidential Decree No. 19650, Aug. 24, 2006]

The term “where it is not verified that the amount has been returned as prescribed by Presidential Decree” in Article 9 (1) of the Act means the cases where the documents (referring to the certificate of return of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance) certifying that the amount intended by a foreign related party to return to a domestic corporation out of the amount to be included in the gains as prescribed in Article 4 or 6-2 of the Act plus interests for return calculated in accordance with the following calculation formula were returned have not been submitted to the tax authorities within 90 days from the day when a notice of disposition of temporary suspension under Article 15 was received or from the day when a revised return of tax base and tax amount was filed: Provided, That in the cases of falling under Article 15 (3), it refers to the cases where the amount to be included in the gains at the time when the tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act has not been verified to be returned to a domestic corporation by a foreign related party:Interests for return = amount to be returned × period from the date next to the end of the business year to which the transaction day belongs to the date of return of transferred income × interest rate determined and publicly notified by the Commissioner of the National Tax Service, considering the prevailing interest rate in the international financial market / 365 (366 for a leap year)[This Article Wholly Amended by Presidential Decree No. 21299, Feb. 4, 2009]

(1) If the return under Article 15-2 is not verifiable, the amount of which the return has not been verified may be disposed of or adjusted in accordance with the following subparagraphs: <Amended by Presidential Decree No. 20494, Dec. 31, 2007; Presidential Decree No. 21299, Feb. 4, 2009>1. If the foreign related party, who is a party to an international trade, is one of shareholders of the relevant domestic corporation [including the cases where the party falls within Article 2 (1) 1], it shall be treated as the dividend imputed to the foreign related party;2. If the foreign related party, who is a party to an international trade, is a corporation in which the relevant domestic corporation invests [including the cases where the party falls within Article 2 (1) 2], it shall be treated as the increase of investment in the foreign related party;3. Deleted; and <by Presidential Decree No. 21299, Feb. 4, 2009>4. If the foreign related party, who is a party of an international trade, is a person other than those under subparagraphs 1 and 2, it shall be treated as the dividend imputed to the foreign related party.(2) Where tax authorities make disposition or adjustment under paragraph (1), it shall notify the fact by serving a notice of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance within 15 days from the expiry [the day when tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act in the cases falling under Article 15 (3)] of deadline for the submission of the certificate of return of transferred income under Article 15-2 by applying Article 192 (1) and (4) of the Enforcement Decree of Income Tax Act mutatis mutandis. In this case, it shall be deemed that the dividend is paid on the day when the notice is delivered. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21299, Feb. 4, 2009>(3) Where a taxpayer submits a certificate of return of transferred income under Article 15-2 within 90 days from the date he/she received a notice under paragraph (2) after tax authorities made disposition or adjustment under Article 15 (3), it shall be deemed that no disposition or adjustment under Article 15 (3) was made. <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>(4) The amount disposed of as retained earning, which was deemed as loan to a foreign related party under paragraph (1) 4 before May 24, 2006 because it had not been returned by the foreign related party concerned to a domestic corporation may be disposed of by the domestic corporation as dividend under paragraph (1) 4. <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>[This Article Wholly Amended by Presidential Decree No. 19650, Aug. 24, 2006]

(1) A resident who intends to be subjected to the adjustment of his/her income amount and final tax amount under Article 10 (1) of the Act, shall file a revised return or an application for rectification (including an application by the national tax information and communications networks), within two months from the date of receiving a notification under Article 27 (2) of the Act, with the head of a tax office having jurisdiction over the tax payment place by presenting a written application for special cases of income calculation as provided by Ordinance of the Ministry of Strategy and Finance, together with a notice of the conclusion of mutual agreement procedures issued by the Commissioner of the National Tax Service pursuant to Article 42 (2). <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(2) Where a resident who has obtained an unilateral prior approval under Article 11-2 (2) intends to be subjected to the adjustment of income amount and final tax amount, he/she shall file a revised return or an application for rectification with the head of a tax office having jurisdiction over the tax payment place, under paragraph (5) of the same Article, by presenting a written application for special cases of income calculation as provided by Ordinance of the Ministry of Strategy and Finance, together with a notice issued by the Commissioner of the National Tax Service, within two months from the day on which he/she has received a notice issued by the said Commissioner. <Newly Inserted by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(3) The head of a tax office having jurisdiction over the tax payment place who has received an application for rectification under paragraphs (1) and (2) may rectify the tax base and tax amount within two months from the date of receiving an application for rectification. In this case, if there is no reason for making a rectification, he/she shall notify the person applying for a rectification thereof. <Amended by Presidential Decree No. 17045, Dec. 29, 2000>

(1) The amount obtained by a reduced adjustment of a domestic corporation’s income under Article 10 (1) of the Act, and retained in the corporation without returning to the foreign related party shall be treated as the carried-over profit as provided in subparagraph 2 of Article 18 of the Corporation Tax Act, and shall not be included in gains of the domestic corporation. <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006>(2) The income amount to be reduced as a result of an adjustment of the income amount of a resident who is not a domestic corporation under Article 10 (1) of the Act, and not returned to a foreign related party shall not be deemed to be an income amount of the relevant resident.

(1) The scope of materials which tax authorities may demand a taxpayer to submit pursuant to Article 11 (2) of the Act shall include the materials concerning the taxpayer or his/her foreign related party, which shall fall under any of the following subparagraphs: <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Various relevant contract documents concerning the transfer or purchase of assets;2. Price list of products;3. Statement of manufacturing costs;4. Specification of trades by item, discriminating between the related parties and the unrelated parties;5. Documents corresponding to subparagraphs 1 through 4, in the cases of the offer of services or other trades;6. Organizational chart of a corporation and a table of division of office duties;7. Data for determination of international trade prices;8. Internal guidelines for pricing among the related parties;9. Accounting standards and methods relating to the relevant trades;10. Details of business activities of the parties involved in the relevant trades;11. Current status of mutual investments with the specially related parties;12. Forms or items omitted at the time of returns on the corporation tax and income tax;13. Materials with which it is possible to grasp the details of a transaction in connection with a service transaction under Article 6-2, as specified by Ordinance of the Ministry of Strategy and Finance;14. Materials specified further by Ordinance of the Ministry of Strategy and Finance including an agreement on cost allotment in connection with the tax adjustment by the allotted arm’s length cost under Article 6-2 of the Act; and15. Other data necessary for computing proper prices.(2) The data falling under paragraph (1) shall be prepared and submitted in Korean: Provided, That the data prepared in English may be submitted in cases where the tax authorities permit to do so.

(1) A person who applies for an extension of the time limit to submit the data pursuant to the provisos to Articles 11 (1) and (3) of the Act shall submit (including a submission by the national tax information and communications networks) to the tax authorities a written application for an extension of the time limit for submission as provided by Ordinance of the Ministry of Strategy and Finance, not later than 15 days before the time limit of data submission. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(2) The tax authorities shall, within 7 days from the date of receiving an application for extending the time limit of data submission under paragraph (1), notify the applicant of whether such an extension is to be granted. In this case, where no notification has been given within 7 days, the time limit of data submission shall be deemed to have been extended up to the time limit requested for extension.

For the purpose of the proviso to Article 11 (1) of the Act, the term “justifiable reasons as prescribed by Presidential Decree”, and of the proviso to Article 11 (3) and Articles 11 (4) and 12 (1) of the Act, the term “justifiable reasons as prescribed by Presidential Decree”, mean the cases falling under any of the following subparagraphs, respectively: <Amended by Presidential Decree No. 17045, Dec. 29, 2000>1. Where a person requested to submit the data is unable to submit such data due to a fire, disaster and robbery, etc.;2. Where a person requested to submit the data is in a serious business crisis, and the submission of data is extremely difficult;3. Where the relevant books and documents are seized or held provisionally by an agency of authority;3-2. Where the closing date of taxable year of a foreign related party does not arrive yet;4. Where it is impossible to submit the data within the time limit, as it takes a considerable time to collect and prepare the data; and5. Where it is deemed impossible to submit the data within the time limit, due to the causes corresponding to subparagraphs 1 through 4.

(1) The tax authorities shall, when imposing a fine for negligence pursuant to Article 12 (2) of the Act, notify the person subject to a disposition of fine for negligence to pay the said fine, by clarifying in writing the fact of offense, method of objection, period of objection and amount of such fine, after an investigation and verification of the offenses.(2) The tax authorities shall, where they intend to notify pursuant to paragraph (1), provide the person subject to a disposition of a fine for negligence with an opportunity to state his/her opinion orally or in writing by fixing in advance the period of not less than 10 days. In this case, if he/she fails to make the statement of his/her opinion by the fixed date, he/she shall be deemed to have no opinions.(3) The tax authorities shall, when determining a fine for negligence, take account of the motive of offense and consequences thereof, etc.(4) The tax authorities may, where the person requested to submit the data fails to submit a part of data or causes some mistakes in a part of items due to a minor error, waive the imposition of a fine for negligence, after receiving the supplementary data.(5) Where failing to submit the data falling under Article 19 (1) 15, the fine for negligence shall not be imposed. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>

(1) When judging whether a taxpayer has been negligent as prescribed in Article 13 (1) 1 of the Act, the taxpayer shall be deemed not to have been negligent, if he/she falls under the requirements in the following subparagraphs: <Amended by Presidential Decree No. 21299, Feb. 4, 2009>1. The taxpayer shall demonstrate the process to have selected the most rational method, from among those as provided in Article 5 (1) 1 through 3 of the Act and Article 4 of this Decree, by means of the documents prepared at the time of the final return on tax base and tax amount;2. The taxpayer shall actually apply the method selected under subparagraph 1; and3. The taxpayer shall keep and store the data required in connection with the arm’s length price computation method under subparagraphs 1 and 2.(2) The taxpayer who intends to be treated as an exception to the application of additional tax as prescribed in Article 13 (1) 2 of the Act shall keep and retain the data in the following subparagraphs and, upon request by the tax authorities, submit the data retained and kept as such within 30 days from the day on which such request is made: <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>1. Data describing the outline of business (including the data analyzing the elements that exercise influence over the price of assets and services);2. Data describing the structures, etc. with foreign related parties and related persons, who can exercise influence over the transfer price; and3. Data in the following items enabling to verify the details how the arm’s length price computation method was adpoted at the time of filing a return:(a) Data analyzing and predicting economy, which have served as a basis for selecting the arm’s length price computation method at the time of filing a return;(b) Data describing the numbers of comparative objects used for the computation of arm’s length price and the details of adjustment in the course of comparison and appraisal of the numbers;(c) Data describing the arm’s length price computation method that could have been applied as an alternative and the reason why the alternative has not to be selected; and(d) Relevant data, etc. added in order to compute the arm’s length price after the expiration of the taxable period until filing a return of income tax or corporation tax.(3) Whether a taxpayer has determined reasonably under Article 13 (1) 2 of the Act shall be judged in consideration of the requirements in the following subparagraphs: <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>1. The numbers being the object of comparison, which have been collected at the time of expiration of the taxable period, shall be representative data, and none of the particular numbers being the object of comparison which must be included has been omitted, thus not drawing any favorable results to the taxpayer;2. The arm’s length price computation method has been selected and applied after systematically analyzing the collected data; and3. There shall be an appropriate reason for selecting and applying another arm’s length price computation method in cases where there was an arm’s length price computation method agreed upon at the prior approval in the previous taxable year, or there was an arm’s length price computation method selected in the course of tax audit by the tax authorities.(4) Where a resident who has obtained a prior approval of the arm’s length price computation method under Articles 11 (6) and 11-2 (2) files a revised return on the tax base and tax amount of the corporation tax under Article 17, an additional tax shall not be imposed pursuant to Article 13 of the Act. <Amended by Presidential Decree No. 17045, Dec. 29, 2000>

(1) The scope of borrowings under Article 14 (1) of the Act shall be the liabilities which generate the interest and discount fees: Provided, That the amount borrowed in foreign currency by a domestic branch of a foreign bank under the Banking Act upon request of the Government (including the Bank of Korea under the Bank of Korea Act), or the amount deposited by and borrowed from, in foreign currency, the head office or branch office of the relevant foreign bank in order to use it by one of the following methods, shall be excluded: <Amended by Presidential Decree No. 15325, Mar. 29, 1997; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006>1. Method to deposit or loan out in foreign currency to a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act; and2. Method to accept or trade the bonds in foreign currency issued by a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act.(2) In applying paragraph (1), where it is unclear that the amount is deposited by or borrowed from, in foreign currency, the head office or branch office of the foreign bank, and where it may be discriminated by the source ratio of funds stated on the balance sheet, etc. for the relevant business year (based on the annual average balances), the amount obtained by calculating under the said ratio shall be treated as the amount borrowed from the head office or branch office. In this case, the annual average balances may be calculated by day or month. <Newly Inserted by Presidential Decree No. 17045, Dec. 29, 2000>(3) Where a foreign shareholder under Article 3 (1) 1 and a foreign corporation under subparagraph 2 of the same paragraph are both included in a foreign controlling shareholder when Article 14 (1) of the Act is applied, the amount borrowed from the foreign corporation and the amount borrowed from a third party according to the payment guarantee of the foreign corporation (including the cases of substantially guaranteeing payment, such as the provision of security, etc; hereinafter the same shall apply) shall be added to the amount borrowed from the foreign shareholder and the amount borrowed from a third party according to the payment guarantee of the foreign shareholder. <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>(4) When Article 14 of the Act is applied, the amount borrowed by a domestic corporation from a foreign controlling shareholder or from a third party according to the payment guarantee of a foreign controlling shareholder shall be converted by applying the reference exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as of the end of the business year concerned. <Newly Inserted by Presidential Decree No. 21299, Feb. 4, 2009>

(1) The method of computing the amount deemed to be the non-deductible expenses under Article 14 (1) of the Act shall be as follows: <Amended by Presidential Decree No. 20494, Dec. 31, 2007>Non-deductible expenses = Interest and discount fees payable by a domestic corporation (including a domestic business place of a foreign corporation; hereafter in this Chapter, the same shall apply) to its foreign controlling shareholders (including a third party providing loans to the domestic corporation under the foreign controlling shareholder’s guarantee; hereinafter the same shall apply)



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Multiplied number of total debts of domestic corporation from its foreign controlling shareholder - Three times of Multiplied number of equity investment of foreign controlling shareholder in the domestic corporation
Multiplied number of total debts of domestic corporation from its foreign controlling shareholder
(2) The term “interest and discount fees payable by a domestic corporation to the foreign controlling shareholder” in paragraph (1) shall mean all interest incomes generated from the borrowings under Article 24,such as an amortization of differences in issuing the bond at discount and a discount charge of a kite bill, etc., whose economic substance corresponds to interests: Provided, That the interest of construction capital funds shall be excluded from the scope of interests and discount fees.(3) The term “equity investment of a foreign controlling shareholder in a domestic corporation” in paragraph (1) and Article 27 (2) means an amount obtained by multiplying an amount which is bigger among the amounts in the following subparagraphs by the ratio [in cases where a foreign shareholder and a foreign corporation of which debts must be added up pursuant to Article 24 (3) are all included in a foreign controlling shareholder, the ratio of the foreign shareholder’s paid-in capital shall be deemed to be that of the paid-in capital of the foreign shareholder and the foreign corporation] of the capital paid by the foreign controlling shareholder to the total amount of paid-in capital of the domestic corporation concerned as of the end of the business year concerned: Provided, That in the case of the domestic business place, such amount means the amount that is obtained by deducting the total liabilities from the total assets on the balance sheet of the business place as of the end of each business year: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20494, Dec. 31, 2007; Presidential Decree No. 21299, Feb. 4, 2009>1. An amount obtained by deducting the total liabilities (including reserves and excluding the unpaid corporation tax) from the total assets on the balance sheet as of the end of the relevant business year; and2. The paid-in capital as of the end of the relevant business year (an amount obtained by adding capital in excess of par value of shares issued and gains from capital reduction to the capital and subtracting discount on capital stock and loss arising from the reduction of legal capital from the capital.(4) If there is any change in capital due to a merger or division, or increase or reduction of capital during the relevant business year, the sum of multiplied numbers, which are calculated separately into the period starting from the first day of the relevant business year to the day before the date of any change, and the period starting from the date of such change to the last day of the relevant business year, shall be the multiplied amount as referred to in paragraph (3) 1, or the multiplied paid-in capital as referred to in subparagraph 2 of the same paragraph. <Newly Inserted by Presidential Decree No. 20494, Dec. 31, 2007>(5) Where the foreign controlling shareholder indirectly owns the shares of a domestic corporation when paragraph (3) is applied, the ratio occupied by the foreign controlling shareholder’s paid-in capital in the total paid-in capital shall be calculated by the methods in the following subparagraphs: <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 21299, Feb. 4, 2009>1. Where one or more corporations interpose between a foreign controlling shareholder and a domestic corporation by means of a stock ownership, and all of them correspond to the relationship connected in tandem (hereinafter referred to as the “tandem investment relationship”), the ratio of foreign controlling shareholder’s paid-in capital in the domestic corporation shall be computed by multiplying all equity ratios in every phase: Provided, That where a foreign shareholder and a foreign corporation whose debts are added up as prescribed in Article 24 (3) are all included in the tandem investment relationship, it shall be computed by applying Article 2 (2) mutatis mutandis. In such cases, the “indirectly-owned ratio” shall be deemed the “ratio of paid-in capital”; and2. Where there exist two or more tandem investment relationships between a foreign controlling shareholder and a domestic corporation, the ratio of foreign controlling shareholder’s paid-in capital in the domestic corporation shall be computed by adding up all paid-in capital ratios computed in a respective tandem investment relationship.(6) In applying Article 14 (1) of the Act, the interest on the debt from a foreign controlling shareholder which is not included in deductible expenses shall be deemed to have been disposed of as dividend under Article 67 of the Corporation Tax Act, and the interest on the debt from a third party under a payment guarantee of a foreign controlling shareholder which is not included in deductible expenses shall be deemed to have been disposed of as outflow of income under Article 67 of the Corporation Tax Act. <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006>(7) Where interests on the debt from a foreign controlling shareholder and interests on the debts from a third party under a payment guarantee of a foreign controlling shareholder have concurrently incurred within the same taxable period when paragraph (6) is applied, the non-deductible interests shall be divided in proportion to the ratio of debts from a foreign controlling shareholder to the debts under the payment guarantee of a foreign controlling shareholder, and shall be deemed to have been disposed as dividend and other outflows of income, respectively, under Article 67 of the Corporation Tax Act. In such cases, where a foreign shareholder and a foreign corporation whose debts are added up as prescribed in Article 24 (3) are all included in the foreign controlling shareholder, non-deductible interests shall be divided in proportion to the ratio of debts from the foreign shareholder to the debts from the foreign corporation, and non-deductible interests shall be divided in proportion to the ratio of the amount borrowed according to the payment guarantee of the foreign shareholder to the amount borrowed according to the payment guarantee of the foreign corporation. <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20494, Dec. 31, 2007; Presidential Decree No. 21299, Feb. 4, 2009>

The multiple of a loan to apply with respect to equity in investment held by a foreign controlling shareholder shall be six times in accordance with Article 14 (2) of the Act in cases of financial industry under the Korean Standard Industrial Classification announced by the Commissioner of the Korea National Statistical Office pursuant to Article 22 of the Statistics Act.[This Article Newly Inserted by Presidential Decree No. 21066, Oct. 7, 2008]

(1) Where a domestic corporation, whose multiplier of borrowings against a foreign controlling shareholder’s equity in investment exceeds as much as three times, intends to be subjected to the application of Article 14 (3) of the Act, it shall submit the data falling under any of the following subparagraphs to a tax authority within the time limit for filing a return under Article 60 (1) of the Corporation Tax Act: <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20494, Dec. 31, 2007>1. Data attesting that the relevant borrowings shall actually not correspond to the capital contribution, when taking account of the interest rate, maturity, payment method, possibility of conversion into capital, priority over other claims, etc.; and2. Data on the multiplier of borrowings against the equity capital of a comparable corporation carrying on the same business type as that of the relevant domestic corporation (hereinafter referred to as the “comparable multiplier”). In this case, the term “comparable corporation” means the corporation having a representative nature in its multiplier of borrowings from among the domestic corporations having a business size and managerial conditions, etc. similar to those of the relevant domestic corporation.(2) Where the multiplier of borrowings against a foreign controlling shareholder’s equity in investment in a domestic corporation exceeds the comparable multiplier, the computing method of the non-deductible expense of the domestic corporation shall be as follows: <Amended by Presidential Decree No. 17045, Dec. 29, 2000>Non-deductible expenses =


Interest and discount fees payable by a domestic corporation to its foreign controlling shareholder

Multiplied number of total debts of a domestic corporation from its foreign controlling shareholders - Multiplied number of the foreign controlling shareholder’s investment amount in a domestic corporation × comparable multiplier
×
Multiplied number of total debts of a domestic corporation from its foreign controlling shareholders

A domestic corporation shall, where it has a payable tax amount after offsetting the withholding taxes under Article 14 (4) of the Act, it shall pay the tax amount to the head of a tax office having jurisdiction over the tax payment place not later than the tenth of the month next to that on which the time limit for filing a return under Article 60 (1) of the Corporation Tax Act falls, and where it has a refundable tax amount, it may ask the head of a tax office having jurisdiction over the tax payment place for a refund of the relevant amount. <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006>

A domestic corporation which has borrowed funds from a foreign controlling shareholder (including a payment guarantee) shall submit a specification of adjustment of interests payable to a foreign controlling shareholder and a specification of adjustment of withholding taxes as provided in Ordinance of the Ministry of Strategy and Finance, to the head of a tax office having jurisdiction over the tax payment place at the time of a final return of tax base and tax amount of corporation tax under Article 60 (1) of the Corporation Tax Act. <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996]

(1) The scope of a corporation’s actually accrued income under Article 17 (1) of the Act shall refer to the net income per books before deducting the corporation tax, which has been computed under the generally accepted accounting principles applied to the preparation of financial statements in a state or region where the head or main office of the relevant corporation is located (hereafter in this Chapter, referred to as the “resident state”): Provided, That where the accounting principles generally accepted in the resident state are remarkably different from the Korean corporate accounting principles, the net income per books before deducting the corporation tax on the financial statements computed by applying the Korean corporate accounting principles shall be deemed the actually accrued income. <Amended by Presidential Decree No. 15196, Dec. 31, 1996>(2) The net income per book before deducting the corporation tax under paragraph (1) shall refer to the net income before deducting the taxes imposed on the corporate income computed under the tax laws of the resident state of the relevant foreign corporation, and other taxes incidental to them. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996>(3) In cases where the appraised gain or loss (hereinafter referred to as “appraised gain or loss”) in an asset specified by Ordinance of the Ministry of Strategy and Finance has been reflected in the net income per books before deducting the corporation tax pursuant to paragraph (1), such an amount shall be deducted, while the appraised gain or loss in an asset shall be included in the amount, in cases where such an asset is sold in the pertinent business year and there is such appraised gain or loss in the asset before the pertinent business year: Provided, That the appraised gain or loss shall not be added nor subtracted if the appraised gain or loss, in whole or in part, was reflected in the relevant resident state at the time of calculating the taxable income of the corporation. <Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>

(1) For the purpose of Article 17 (1) of the Act, the term “a state or a region where taxes are not imposed on the entire or a substantial part of a corporation’s actually accrued income” means a state or a region designated and publicly notified by the Commissioner of the National Tax Service with a prior approval of the Minister of Strategy and Finance, taking into consideration the states or regions designated and publicly notified as tax havens by the Organization for Economic Cooperation and Development (OECD) or any of its member states. <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(2) For the purpose of Article 17 (1) of the Act, the term “a state or a region where a corporation’s tax burden is 15% or less of the actually accrued income” means a state or a region in which the taxes imposed on the aggregate of the net income per books before deducting the corporation tax of the relevant corporation for the latest three business years (in the case of the business year when the net income per books before deducting the corporation tax is deficit, the deficit shall not be deemed to exist; hereinafter the same shall apply in this Article) under the tax laws of the said resident state is not more than 15% of the aggregate of the net income per books before deducting the corporation tax of the relevant corporation for the latest three business years including the relevant business year (or it shall be the period until the relevant business year, if the period is less than three business years; hereinafter referred to as the “latest three business years”). In this case, the tax amount actually borne shall include the tax amount on the corporation’s actually accrued income paid to other states than the relevant resident state. <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 19650, Aug. 24, 2006>(3) Deleted. <by Presidential Decree No. 19650, Aug. 24, 2006>

(1) The distributable retained earnings under Article 17 (1) of the Act shall be the amount obtained by deducting (excluding the appraised loss under subparagraph 7; the same shall apply hereinafter for the purposes of this Article) or adding up (applicable only to the appraised loss under subparagraph 7; the same shall apply hereinafter for the purposes of this Article) the amount falling under any of the following subparagraphs from or to the amount resulting from adjusting the matters as provided in Ordinance of the Ministry of Finance and Economy in the unappropriated surplus earnings computed under the generally accepted accounting principles at the time of preparing financial statements in the resident state of the relevant foreign corporation: Provided, That where the accounting principles generally accepted in the resident state are remarkably different from the Korean corporate accounting principles, the amount obtained by deducting or adding up the amount falling under any of the following subparagraphs from or to the amount resulting from adjusting the matters as provided in Ordinance of the Ministry of Strategy and Finance in the unappropriated surplus earnings computed under the Korean corporate accounting principles shall be deemed the distributable retained earnings: <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Distribution of profits or surplus appropriation pursuant to the appropriation of surplus earnings executed in the relevant business year;2. Bonus, severance pay and any other outflow of incomes pursuant to the appropriation of surplus earnings executed in the relevant business year;3. Obligatory reserve or obligatory appropriation of surplus earnings as determined by the Acts and subordinate statutes of the relevant resident State in the relevant business year;4. The amount yet subjected to the appropriation of surplus earnings under subparagraphs 1 and 2, out of those already taxed by deeming to have been distributed to the relevant national under Article 17 (1) of the Act before the date of commencing the relevant business year;5. The amount of surplus earnings under subparagraphs 1 and 2 not appropriated yet out of the surplus earning (excluding the amount under subparagraphs 6 and 7) accrued when Article 17 of the Act was not applied;6. The amount of surplus earnings under subparagraphs 1 and 2 not appropriated yet out of the appraised gains under Article 29 (3);7. The appraised loss under Article 29 (3); and8. The amount under Article 34-2.(2) In cases where a specific foreign corporation has retained any income distributable, as computed in accordance with paragraph (1), before the enforcement date of the amendment to the Enforcement Decree of the Act for the Coordination of International Tax Affairs (Presidential Decree No. 15196) and the amount under paragraph (1) 4 through 6 before the commencement date of the pertinent business year, it shall be deemed that the said amounts have been appropriated preferentially as surplus earnings, when the surplus earnings under paragraph (1) 1 and 2 are appropriated. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>

(1) The amount deemed to be a dividend under Article 17 (1) of the Act shall be calculated by multiplying the distributable retained earnings of a specific foreign corporation by a shareholding ratio of relevant national in a specific foreign corporation.(2) Where one or more corporations interpose between a national and a specific foreign corporation by means of a stock ownership, and all of them are connected in the tandem investment relationship, the shareholding ratio of a national in a specific foreign corporation shall be computed by multiplying all equity ratios in every phase.(3) When there exist two or more tandem investment relationships between a national and a specific foreign corporation, the shareholding ratio of a national in a specific foreign corporation shall be computed by summing up all shareholding ratios computed at the respective tandem investment relationship.(4) Where one or more domestic corporations interpose between a national and a specific foreign corporation by means of a stock ownership in applying paragraph (2), the amount deemed to be a dividend shall not be computed among the nationals. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996>

In applying Article 32, the amount deemed a dividend shall be converted by applying the exchange rate as of the 60th day next to the end of each business year of the relevant specific foreign corporation, but the said exchange rate shall be governed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>

In applying Article 17 (2) of the Act, the provisions of Article 2 (2) shall apply mutatis mutandis to the calculation of the indirect shareholding ratio.

The term “the amount specified by Presidential Decree” in Article 17 (3) of the Act means the amount obtained by converting an amount computed in accordance with Article 29 (1) through (3) by the reference exchange rate or the arbitrated exchange rate under the Foreign Exchange Transactions Act as of the end of each business year, which shall not exceed 100 million won. In this case, the amount shall be computed by dividing 100 million won by 12 and multiplying the sum by the number of months of the pertinent business term, if the pertinent business term is less than one year.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) For the purpose of Article 18 (1) 1 of the Act, the term “requirements prescribed by Presidential Decree” refers to those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19650, Aug. 24, 2006>1. The aggregate of the revenue amount or of the purchase cost generated from the business lines listed in Article 18 (1) 1 of the Act shall exceed 50/100 of the total revenue amount or the total purchase cost: Provided, That it shall be based on the aggregate for the latest three business years, in case of a wholesale business; or2. The amount of trades with a specially-related party, out of the aggregate of the revenue amount or of the purchase amount generated from the business lines listed in Article 18 (1) 1 of the Act, shall exceed 50/100 of the aggregate of the revenue amount or of the purchase cost generated from the said business lines.(2) For the purpose of Article 18 (1) 1 of the Act, the term “business services as prescribed by Presidential Decree” means other business services than those as described in the following subparagraphs: <Newly Inserted by Presidential Decree No. 17832, Dec. 30, 2002>1. Data processing-and computer operation-related services; and2. Construction technology and engineering services.[This Article Wholly Amended by Presidential Decree No. 15196, Dec. 31, 1996]

For the purpose of Article 18 (1) 2 of the Act and the part above subparagraphs of Article 18-2 of the Act, the term “primary business” means the business which generates the revenue amount exceeding 50/100 of the total revenue amount of the relevant specific foreign corporation. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>

The term “cases of meeting the requirements prescribed by Presidential Decree” in Article 18 (4) of the Act means the cases where the amount of sales to an unrelated party in the same region or country prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “same region, etc.”) exceeds 50/100 of total sales. In such cases, a “domestic corporation” shall be deemed a “specific foreign corporation” when Article 2 is applied to a special relationship.[This Article Wholly Amended by Presidential Decree No. 21299, Feb. 4, 2009]

(1) The term “foreign corporation that meets the requirements prescribed by Presidential Decree” in the part other than the subparagraphs of Article 18-2 of the Act means a foreign corporation that meets all the requirements in the following subparagraphs: <Amended by Presidential Decree No. 21299, Feb. 4, 2009>1. It shall have its head office or principal place of business in the same region, etc. as the one of a specific foreign corporation;2. The specific foreign corporation shall own 50 percent or more of total number of its outstanding stocks or total amount of its investment; and3. It shall not be subject to the application of Article 17 (1) of the Act.(2) The term “ratio specified by Presidential Decree” in subparagraph 2 of Article 18-2 of the Act means 90/100. <Amended by Presidential Decree No. 20494, Dec. 31, 2007; Presidential Decree No. 21299, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) A person who intends to have Article 19 (2) of the Act applied shall compute again the tax base and tax amount of income tax or corporation tax for the year for which the deemed dividend was included in gains according to Article 19 (1) of the Act, and shall file a request for rectification concerning the refund of the same amount along with an accompanying statement of the tax credit for the taxes paid in a foreign state prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21299, Feb. 4, 2009>(2) A person who intends to request the rectification under paragraph (1) may file a request for rectification along with evidencing documents within 45 days from the day on which a foreign government notifies him of the determination of tax amount for the overseas dividend income, if it is impossible to file a request for rectification at the time of filing the return on income tax or corporation tax because of delay in determination and notice of the tax amount for the dividend income by the foreign government, difference in the taxable period, etc.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) Where a specific foreign corporation has paid dividends actually (including dividends or distributions under any subparagraph of Article 16 (1) of the Corporation Tax Act) to a national, it shall be deemed that the actual dividends have been paid from retained earnings in the order of accrual of the distributable retained earnings. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>(2) Where a national has invested in a foreign corporation, and the said foreign corporation (hereinafter referred to as the “intermediate corporation”) has in turn invested in a specific foreign corporation, if the intermediate corporation pays dividends actually to the national, such dividends shall be treated as the earnings carried forward under subparagraph 2 of Article 18 of the Corporation Tax Act or the one that does not fall within the dividend income under Article 17 (1) of the Income Tax Act (hereinafter referred to as “carried forward earnings, etc.”): Provided, That such carried forward earnings, etc. shall not exceed the lesser amount of the following subparagraphs: <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006>1. The amount calculated by deducting the actual dividends, which have been already paid by the intermediate corporation to the national during the bygone business year, from the aggregate of the amount obtained by multiplying the actual dividends paid by a specific foreign corporation to the intermediate corporation (including the dividends or distributions under each subparagraph of Article 16 of the Corporation Tax Act) by the shareholding ratio of the national to the intermediate corporation at the time of actual dividends; or2. The amount calculated by deducting the amount already treated as the carried forward earnings, etc. from the aggregate of the amount deemed to be a dividend to the relevant national for ten years retrospectively from the date of commencing the relevant business year.(3) The provisions of paragraph (2) shall apply mutatis mutandis to the case where two or more intermediate corporations interpose between the national and the specific foreign corporation.[This Article Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996]

(1) A national subject to Articles 17 through 20 of the Act shall submit to the head of a tax office having jurisdiction over the tax payment place the related documents, such as financial statements, corporation tax return and supplementary documents, basis for computing distributable retained earnings of the specific foreign corporation, and other documents as prescribed by Ordinance of the Ministry of Strategy and Finance, at the time of final return on tax base and tax amount of corporation tax for respective business years, or of final return on tax base and tax amount of composite income tax for respective taxable years. <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) A national who has directly or indirectly invested in a foreign corporation setting up the head or main office or the substantial management venue of the business described in Article 18 (2) of the Act in the state or region under Article 30 (1) or (2) (applicable only to a national to whom Articles 17, 18, 18-2, 19, and 20 of the Act shall apply), shall submit to the head of tax office having jurisdiction over the tax payment place a specification of overseas investment as determined by Ordinance of the Ministry of Strategy and Finance at the time of final return on tax base and tax amount of corporation tax for respective business years, or of final return on tax base and tax amount of composite income tax for respective taxable years. <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In computing the market price of the gift property pursuant to the purview of Article 21 (2) of the Act, where any value falling under any of the following subparagraphs is verified, such value shall be treated as the market price of the relevant gift property:1. Actual sale price, realized within 6 months before and after the date of donation of a gift property;2. Appraised value by an appraisal institution with public confidence, evaluated within 6 months before and after the date of donation of a gift property; and3. Compensation price for a gift property, fixed through an expropriation, etc. within 6 months before and after the date of donation of a gift property.(2) For the purpose of the proviso to Article 21 (2) of the Act, the term “method as specified by Presidential Decree” means an evaluation of the value of a gift property by applying mutatis mutandis Articles 61 through 65 of the Inheritance Tax and Gift Tax Act: Provided, That where it is inappropriate to evaluate the value of a gift property by applying mutatis mutandis Articles 61 through 65 of the Inheritance Tax and Gift Tax Act, it shall refer to an evaluation by the land appraisal corporation incorporated pursuant to the Public Notice of Values and Appraisal of Real Estate Act. <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 19650, Aug. 24, 2006>(3) The evaluation method pursuant to Article 63 of the Inheritance Tax and Gift Tax Act shall be applied mutatis mutandis to the computation of the value of securities. <Amended by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 19650, Aug. 24, 2006>

(1) Any taxation that is not coinciding with the provisions of the tax treaty under Article 22 (1) 2 of the Act shall contain the taxation falling under any of the following subparagraphs:1. Unjustifiable taxation by a Contracting State, which fails to coincide with the tax laws or the method of tax imposition is in error; and2. Unjustifiable taxation by a Contracting State, which is remarkably inequitable or imposed discriminately.(2) Any national, resident or domestic corporation intending to apply for commencing the mutual agreement under Article 22 of the Act (hereafter in this Chapter, referred to as the “applicant”) shall submit the documents falling under any of the following subparagraphs to the Minister of Strategy and Finance or the Commissioner of the National Tax Service: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>1. A written application for commencing the mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance;2. Financial statements and tax returns relevant to an application for commencing the mutual agreement procedures;3. An appeal, in cases where the applicant or his/her foreign related party files an appeal for dissatisfaction;4. A confirmation note of a special case application to imposition limitation periods as provided by Ordinance of the Ministry of Strategy and Finance; and5. A written opinion of the applicant on the period of the mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance.(3) The Commissioner of the National Tax Service shall, pursuant to Article 22 (3) and (5) of the Act, submit to the Minister of Strategy and Finance a quarterly report on the current status of applications for commencement, and progresses, of the mutual agreement procedures (including the current status of progress of the mutual agreement procedures, whose commencement has been requested by the Contracting State) within 15 days from the expiration of each quarter. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(4) The Minister of Strategy and Finance or the Commissioner of the National Tax Service shall, upon receipt of an application for commencing the mutual agreement procedures under Article 22 of the Act, review whether or not to accept the application for commencing the mutual agreement procedures, taking account of matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>1. Whether or not to fall under Article 22 (1) 1 through 3 of the Act; and2. Whether or not the tax authorities are able to make a rational adjustment by taking necessary measures, without bothering with commencing the mutual agreement procedures.(5) The Minister of Strategy and Finance or the Commissioner of the National Tax Service may, when it fails to meet the requirements for an application for the mutual agreement procedures as a result of reviews under paragraph (4), request the applicant to supplement it and refile the said application. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(6) The Minister of Strategy and Finance or the Commissioner of the National Tax Service may, where the applicant consents thereto even after filing an application for commencing the mutual agreement procedures, refrain from requesting a Contracting State to commence the mutual agreement procedures, or discontinue the mutual agreement procedures which have already commenced. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>

(1) and (2) Deleted. <by Presidential Decree No. 19650, Aug. 24, 2006>(3) A person who intends to be subjected to an application of special cases of the deferment of tax payment notice, of collection of taxes, or of disposition for arrears under Article 24 (2) and (3) of the Act, shall submit the documents falling under any of the following subparagraphs to the head of a tax office having jurisdiction over the tax payment place or the head of a local government: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>1. A written application for the special exception to deferment of collection, etc., as provided by Ordinance of the Ministry of Strategy and Finance; and2. A copy of the notification of commencing the mutual agreement procedures issued by the Commissioner of the National Tax Service.(4) The head of a tax office having jurisdiction over the tax payment place or the head of a local government in receipt of an application under paragraph (3) shall, in applying Article 24 (2) and (3) of the Act, not grant to the deferment of tax payment notice, of collection of taxes, or of disposition in the arrears in the case falling under any of the following subparagraphs. In this case, where the deferment of tax payment notice, of collection of taxes, or of disposition in arrears has been already granted, such deferments shall be canceled without delay, and the tax amount and delinquent taxes related to such deferments shall be at once collected:1. Where the applicant has defaulted on his/her taxes in the past;2. Where the applicant fails to comply with an obligation to submit the data under Article 11 of the Act; and3. Where there exists a remarkable possibility for losing a taxation right.

Where any deferment of collection of taxes or of disposition in arrears is granted under Article 24 (5) of the Act, the method of calculating the additional amount equivalent to the interest to be added to the national taxes or local taxes, shall be as follows: <Amended by Presidential Decree No. 15970, Dec. 31, 1998; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20494, Dec. 31, 2007>Additional amount equivalent to interest = Relevant national tax or local tax subjected to the deferment of collection or of disposition for arrears (where an adjustment is made under the mutual agreement procedures, the relevant adjusted amount) × Number of days until the closing day of mutual agreement from the day arriving later between the day next to the deadline of tax payment, and the commencing day of mutual agreement × the rate provided in subparagraph 4 of Article 27 of the Enforcement Decree of the Basic Act for National Taxes.

Where any deferment of notification, notification of installed payment, deferment of tax collection, or deferment of disposition for arrears (hereafter in this Article, referred to as the “deferment of notification, etc.”) is applied on the income tax amount or the corporation tax amount under Article 24 (7) of the Act, the fact of the deferment of notification, etc. shall, when the taxpayer is notified of the deferment of notification, etc., be notified to the head of a local government having jurisdiction over the local taxes to be added to the relevant income tax amount or corporation tax amount, by applying mutatis mutandis Article 24 of the Enforcement Decree of National Tax Collection Act. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>[This Article Newly Inserted by Presidential Decree No. 17045, Dec. 29, 2000]

(1) The Commissioner of the National Tax Service shall, when the mutual agreement procedures are concluded, submit without delay to the Minister of Strategy and Finance a copy of the mutual agreement under Article 27 (1) of the Act. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) A notification of a conclusion of mutual agreement procedures under Article 27 (2) of the Act shall be made by the notification form of a conclusion of mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(3) The heads of tax authorities or of local governments shall, where they have made a tax imposition, revised decision, and taken the measures required under tax laws under Article 27 (3) of the Act, notify the Minister of Strategy and Finance or the Commissioner of the National Tax Service of the said fact, within 15 days from the day next to that on which such measures have been taken. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>

(1) A person who intends to apply for the extended application of the terms and conditions mutually agreed upon in accordance with Article 27-2 (1) of the Act shall file an application with the head of the competent tax authority or local government along with the following documents: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Application for the extended application of terms and conditions mutually agreed upon, as prescribed by Ordinance of the Ministry of Strategy and Finance; and2. Documents proving that the requirements under subparagraphs of Article 27-2 (1) of the Act are all met.(2) The term “requirements prescribed by Presidential Decree” in Article 27-2 (1) 3 of the Act means that the ordinary profit or net income rate from the transaction as applied at the time of computing the arm’s length price shall be identical.[This Article Newly Inserted by Presidential Decree No. 19650, Aug. 24, 2006]

(1) A person who intends to submit the resident certificate to a Contracting State in order to be subjected to the application of limited tax rate in a Contracting State under Article 29 (2) of the Act, shall submit a written application for an issuance of resident certificate as provided in Ordinance of the Ministry of Strategy and Finance to the head of tax office having jurisdiction over the tax payment place. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) The head of tax office having jurisdiction over the tax payment place shall, upon receipt of an application for issuance of the resident certificate under paragraph (1), issue the resident certificate as prescribed by Ordinance of the Ministry of Strategy and Finance, after confirming the facts thereof. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20720, Feb. 29, 2008>

(1) Where the head of tax office having jurisdiction over the tax payment place or of local government requests, under Article 30 of the Act, the Commissioner of the National Tax Service to ask the Contracting State to take measures required for a tax collection, he/she shall submit the documents falling under any of the following subparagraphs: Provided, That the documents under subparagraphs 2 and 3 shall be limited to those which may be collected at home: <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. A written request to entrust the tax collection between the states as provided by Ordinance of the Ministry of Strategy and Finance;2. Documents related to the nationality and current status of residence of the person liable for tax payment, a person jointly and severally liable for tax payment under Article 25 of the Basic Act for National Taxes or Article 18 of the Local Tax Act, and a person secondarily responsible for tax payment under Articles 38 through 41 of the Basic Act for National Taxes or Articles 19 through 24 of the Local Tax Act; and3. Documents related to the current status of properties owned home and abroad by a person liable for tax payment, a person jointly and severally liable for tax payment, and a person secondarily responsible for tax payment.(2) The Commissioner of the National Tax Service shall, upon receipt of a request to entrust the tax collection under paragraph (1), decide whether or not to comply with such request for tax entrustment, after reviewing matters falling under any of the following subparagraphs:1. The nationality, residence and property ownership of the person liable for tax payment;2. Current status of the joint and several tax liability and of a security for tax payment;3. Possibility for losing the taxation rights;4. Extinctive prescription of taxation right; and5. Other matters necessary for tax collection.(3) The Commissioner of the National Tax Service shall, where he/she makes a decision on the entrustment of tax collection under paragraph (2), request the competent authority of a Contracting State to collect such tax.(4) The Commissioner of the National Tax Service shall, upon receipt of a notification of disposition results of tax collection from a Contracting State, immediately notify the head of tax office having jurisdiction over the tax payment place or of local government of the details of such notification.

(1) The Minister of Strategy and Finance shall, upon receipt of an entrustment of tax collection from the competent authority of a Contracting State, delegate the disposition thereof to the Commissioner of the National Tax Service. In this case, the Commissioner of the National Tax Service shall make a report on the results of such disposition to the Minister of Strategy and Finance. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) The Commissioner of the National Tax Service shall, where he/she is entrusted with a tax collection by the competent authority of a Contracting State or is delegated to dispose of the tax collection by the Minister of Strategy and Finance under paragraph (1), without delay notify the person subject to a tax collection who resides in Korea of the fact of being entrusted with such tax collection. In this case, the Commissioner of the National Tax Service may demand the said subjected person to submit the vindicating data thereof. <Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(3) The Commissioner of the National Tax Service may require the competent authority of a Contracting State to furnish the data verifying the obligation for tax payment of the person subject to tax payment, such as the court’s final judgment, results of appeal for dissatisfaction, etc., related to the entrusted tax collection.(4) The Commissioner of the National Tax Service shall, where he/she examines whether or not he/she cooperates in a tax collection for a Contracting State, take account of matters falling under any of the following subparagraphs:1. Documents secured under paragraphs (2) and (3);2. Matters provided in each subparagraph of Article 44 (2); and3. Whether or not a Contracting State provides the Republic of Korea with a cooperation in tax collection under the principle of reciprocity.(5) The Commissioner of the National Tax Service may, if deemed necessary in connection with an examination under paragraph (4), request a Contracting State to make a consultation thereon.(6) The Commissioner of the National Tax Service shall, where he/she decides to cooperate with a Contracting State for a tax collection, without delay instruct the head of tax office having jurisdiction over the tax payment place to collect the relevant taxes.(7) The head of tax office in receipt of an instruction to collect taxes under paragraph (6), shall collect the relevant tax under the conditions as provided by the National Tax Collection Act, and report the results thereof to the Commissioner of the National Tax Service. In this case, any expenses incurred in excess of the regular collection expense in connection with tax collection shall be deducted from the collected taxes and paid to the National Treasury, and the details of such calculation shall be reported to the Commissioner of the National Tax Service.

(1) The Commissioner of the National Tax Service in receipt of the report from the head of tax office under Article 45 (7) shall notify a Contracting State of the results of tax collection under entrustment, together with the details of deductions of collection expenses.(2) The method of remitting a Contracting State’s taxes collected in Korea or the Korean taxes collected in a Contracting State shall be determined by a consultation with the competent authority of the Contracting State.(3) The Commissioner of the National Tax Service shall, where he/she has received a remittance of Korean taxes collected in a Contracting State, revert such amount to the National Treasury or to the tax income account of a local government.

(1) The term “nonresident as prescribed by Presidential Decree” as referred to in Article 31 (2) of the Act, excluding its subparagraphs, means any nonresident except for a person having the nationality of the Republic of Korea and any resident having foreign nationality.(2) Where the Commissioner of the National Tax Service requests the offering of financial information pursuant to Article 31 (2) of the Act, such a request shall be made in accordance with the standard form as prescribed in Article 4 (2) of the Act on Real Name Financial Transactions and Guarantee of Secrecy. In this case, it shall be accompanied by a copy of a request for the offering of financial information submitted by the Contracting State concerned. <Amended by Presidential Decree No. 19650, Aug. 24, 2006>(3) The Commissioner of the National Tax Service shall, where he/she provides tax or financial information of a specific taxpayer upon request of the competent authority of a Contracting State pursuant to Article 31 (1) or (2) of the Act, notify the relevant taxpayer or his/her agent of the fact that the said tax or financial information has been provided, the details of such information provided, etc. in accordance with the notice of the details of information provided, as prescribed by Ordinance of the Ministry of Strategy and Finance, within 10 days from the day of such provision (where the notification is deferred in accordance with paragraph (4), from the day when the deferment period terminates). <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(4) Where the Commissioner of the National Tax Service receives a written request for the deferment of notification from a Contracting State due to any cause falling under any of the following subparagraphs, he/she may defer the notification for the period of deferment requested (if the period of deferment requested due to any such cause as referred to in subparagraph 2 or 3 is not less than 6 months, for 6 months), notwithstanding the provisions of paragraph (3):1. Where such notification is likely to jeopardize the safety of a person’s life or body;2. Where it is evident that such notification is likely to obstruct the fair progress of judicial proceedings due to any such cause as the destruction of evidence, a threat to a witness, etc.; and3. Where it is evident that such notification is likely to obstruct or excessively delay the progress of administrative procedures such as inquiry and examination.[This Article Wholly Amended by Presidential Decree No. 17832, Dec. 30, 2002]Article 48 (Cooperation in Tax Audit)The Commissioner of the National Tax Service or any person delegated with his/her authorities may consult with the competent authority of a Contracting State on matters necessary for a cooperation in the tax audit between the states, such as the procedure, method and scope, etc. of the cooperation in the tax audit.

ADDENDA

This Decree shall enter into force on January 1, 1996: Provided, That the provisions of Articles 9 through 14, and 24 through 37 shall enter into force on January 1, 1997, but where the business year commences on January 1, 1997, in applying Article 9 (1), the applicant shall submit the relevant documents within one month after the commencement of the relevant business year.

The provisions concerning the incomes in this Decree shall apply from the portion first accruing on and after the enforcement date of this Decree.

ADDENDA <Presidential Decree No. 15196, Dec. 31, 1996>(1) (Enforcement Date) This Decree shall enter into force on January 1, 1997.(2) (Applicability concerning Income Calculation) The provisions concerning the incomes in this Decree shall apply from the portion first accruing on and after the enforcement date of this Decree.ADDENDA <Presidential Decree No. 15325, Mar. 29, 1997>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (Applicability) This Decree shall apply to the portion of the business year first closed on or after the enforcement date of this Decree.ADDENDA <Presidential Decree No. 15970, Dec. 31, 1998>

This Decree shall enter into force on January 1, 1999. (Proviso Omitted.)

ADDENDA <Presidential Decree No. 17045, Dec. 29, 2000>

This Decree shall enter into force on January 1, 2001: Provided, That the amended provisions of Articles 30 (3) and 37 (2) shall enter into force on January 1, 2002.

This Decree shall apply to the portion of a taxable year first commencing on or after the enforcement date of this Decree.

The amended provisions of Article 2 (1) 4 (a) shall apply from the cases where an ex-officer or ex-employee of a corporation becomes for the first time the representative director, or an officer, of another corporation on or after the enforcement date of this Decree.

(1) The amended provisions of Articles 9 (1) through (3), 10 (1), 11 (8), 11-2, 13 (1), and 17 shall apply from the portion of applying for approval of an arm’s length price computation method first on or after the enforcement date of this Decree.(2) The amended provisions of Article 23 (2) shall apply from the portion of approval of an arm’s length price computation method first on or after the enforcement date of this Decree.

The amended provisions of Article 16 shall apply from the portion of the final declaration, revised decision, revised return, or revised application with respect to tax base first made on or after the enforcement date of this Decree.

The amended provisions of Articles 20 (1) and 21 shall apply from the portion of taxable year first reported on or after the enforcement date of this Decree.

The amended provisions of Article 28-2 shall apply from the portion of taxable year first returned on or after the enforcement date of this Decree.

ADDENDA <Presidential Decree No. 17832, Dec. 30, 2002>

This Decree shall enter into force on January 1, 2003.

This Decree shall apply to the taxable year which begins on or after the enforcement date of this Decree.

The amended provisions of Article 2 (1) and (2) shall apply to the transaction which is made on or after the enforcement date of this Decree.

The amended provisions of Article 3 shall apply to the loan which is obtained on or after the enforcement date of this Decree.

The amended provisions of Article 3-2 shall apply to the trade which is made on or after the enforcement date of this Decree.

The amended provisions of Article 16 (1) 1 and (4) shall apply to the amount of income which is decided upon or revised on or after the enforcement date of this Decree.

The amended provisions of Article 35 (2) shall apply to the trade which is made on or after the enforcement date of this Decree.

ADDENDUM <Presidential Decree No. 18312, Mar. 17, 2004>This Decree shall enter into force on the date of its promulgation.ADDENDA <Presidential Decree No. 18628, Dec. 31, 2004>(1) (Enforcement Date) This Decree shall enter into force on January 1, 2005.(2) (Applicability) This Decree shall apply to the portion of a taxable year first commencing on or after the enforcement date of this Decree.ADDENDA <Presidential Decree No. 18706, Feb. 19, 2005>

This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)

ADDENDA <Presidential Decree No. 19650, Aug. 24, 2006>

This Decree shall enter into force on the date of its promulgation.

This Decree shall be enforceable to the taxable year on which the enforcement date of this Decree falls and thereafter.

Subparagraph 3 of Article 4, Article 5 (3) and (4) as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.

Article 6 (6) and (7) as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.

Article 6-2 as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.

The proviso to Article 7 (1) as amended shall be enforceable to the submission made on or after the enforcement date of this Decree.

Article 19 (1) 13 and 14 as amended shall be enforceable to the materials demanded by tax authorities on or after the enforcement date of this Decree.

Article 30 (1) as amended shall be enforceable to the states and regions designated and publicly notified on or after the enforcement date of this Decree.

The proviso to Article 35 (1) 1 as amended shall be enforceable from the beginning of the business year on which the enforcement date of this Decree falls and thereafter.

Article 36-4 as amended shall be enforceable to the dividends actually distributed to nationals by a specific foreign corporation on or after the enforcement date of this Decree.

Article 36-5 (1) and (2) as amended shall be enforceable to the dividends actually paid to nationals by a specific foreign corporation on or after the enforcement date of this Decree.

Article 47 (3) as amended shall be enforceable to the tax information or financial information provided on or after the enforcement date of this Decree.

ADDENDA <Presidential Decree No. 20331, Oct. 23, 2007>

This Decree shall enter into force on October 28, 2007. (Proviso Omitted.)

ADDENDA <Presidential Decree No. 20494, Dec. 31, 2007>

This Decree shall enter into force on January 1, 2008.

This decree shall initially apply from the first taxation of a tax year after this Decree enters into force.

The amended provision of Article 41 shall initially apply from the first calculation of additional amount equivalent to interest, due to the reprieve of collection or the reprieve of disposition for arrears of taxes, after this decree enters into force.

ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>

This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)

ADDENDA <Presidential Decree No. 21066, Oct. 7, 2008>

This Decree shall enter into force on the date of its promulgation.

This Decree shall apply from the year of taxation to which the enforcement date of this Decree belongs.

ADDENDA <Presidential Decree No. 21299, Feb. 4, 2009>

This Decree shall enter into force on the date of its promulgation.

This Decree shall apply, commencing from the taxable year to which the effective date of this Decree belongs.

The amended provisions of Article 7 (1) shall apply, commencing from the portion first submitted after this Decree enters into force.

The amended provisions of Article 15 (2),(3), and 16 shall apply, commencing from the portion first disposed of or adjusted after this Decree enters into force.

The amended provisions of Article 15-2 shall apply, commencing from the portion first returned after this Decree enters into force.