ENFORCEMENT DECREE OF INCOME TAX ACT Wholly Amended by Presidential Decree No. 14467, Dec. 31, 1994 Amended by Presidential Decree No. 14682, Jun. 30, 1995 Presidential Decree No. 14721, Jul. 6, 1995 Presidential Decree No. 14860, Dec. 30, 1995 Presidential Decree No. 14988, Apr. 27, 1996 Presidential Decree No. 14999, May 3, 1996 Presidential Decree No. 15138, Aug. 22, 1996 Presidential Decree No. 15191, Dec. 31, 1996 Presidential Decree No. 15486, Sep. 30, 1997 Presidential Decree No. 15500, Oct. 25, 1997 Presidential Decree No. 15565, Dec. 31, 1997 Presidential Decree No. 15604, Dec. 31, 1997 Presidential Decree No. 15747, Apr. 1, 1998 Presidential Decree No. 15967, Dec. 31, 1998 Presidential Decree No. 15969, Dec. 31, 1998 Presidential Decree No. 16112, Feb. 8, 1999 Presidential Decree No. 16556, Sep. 18, 1999 Presidential Decree No. 16664, Dec. 31, 1999 Presidential Decree No. 16762, Mar. 28, 2000 Presidential Decree No. 16809, May 16, 2000 Presidential Decree No. 16988, Oct. 23, 2000 Presidential Decree No. 17032, Dec. 29, 2000 Presidential Decree No. 17115, Jan. 29, 2001 Presidential Decree No. 17158, Mar. 27, 2001 Presidential Decree No. 17296, Jul. 7, 2001 Presidential Decree No. 17339, Aug. 14, 2001 Presidential Decree No. 17456, Dec. 31, 2001 Presidential Decree No. 17555, Mar. 30, 2002 Presidential Decree No. 17751, Oct. 1, 2002 Presidential Decree No. 17825, Dec. 30, 2002 Presidential Decree No. 18044, Jun. 30, 2003 Presidential Decree No. 18048, Jul. 10, 2003 Presidential Decree No. 18073, Jul. 30, 2003 Presidential Decree No. 18127, Nov. 20, 2003 Presidential Decree No. 18146, Nov. 29, 2003 Presidential Decree No. 18173, Dec. 30, 2003 Presidential Decree No. 18297, Feb. 28, 2004 Presidential Decree No. 18312, Mar. 17, 2004 Presidential Decree No. 18401, May 25, 2004 Presidential Decree No. 18529, Aug. 30, 2004 Presidential Decree No. 18705, Feb. 19, 2005 Presidential Decree No. 18850, May 31, 2005 Presidential Decree No. 18903, Jun. 30, 2005 Presidential Decree No. 18988, Aug. 5, 2005 Presidential Decree No. 19010, Aug. 19, 2005 Presidential Decree No. 19254, Dec. 31, 2005 Presidential Decree No. 19327, Feb. 9, 2006 Presidential Decree No. 19463, Apr. 28, 2006 Presidential Decree No. 19507, Jun. 12, 2006 Presidential Decree No. 19513, Jun. 12, 2006 Presidential Decree No. 19687, Sep. 22, 2006 Presidential Decree No. 19890, Feb. 28, 2007 Presidential Decree No. 20212, Aug. 6, 2007 Presidential Decree No. 20222, Aug. 17, 2007 Presidential Decree No. 20323, Oct. 15, 2007 Presidential Decree No. 20330, Oct. 17, 2007 Presidential Decree No. 20516, Dec. 31, 2007 Presidential Decree No. 20618, Feb. 22, 2008 Presidential Decree No. 20720, Feb. 29, 2008 Presidential Decree No. 20763, Apr. 3, 2008 Presidential Decree No. 20931, Jul. 24, 2008 Presidential Decree No. 21025, Sep. 22, 2008 Presidential Decree No. 21062, Oct. 7, 2008 Presidential Decree No. 21138, Nov. 28, 2008 Presidential Decree No. 21148, D ec. 3, 2008 Presidential Decree No. 21195, Dec. 31, 2008 Presidential Decree No. 21214, Dec. 31, 2008 Presidential Decree No. 21215, Dec. 31, 2008 Presidential Decree No. 21301, Feb. 4, 2009

The definitions of terms used in this Decree shall be those determined by the Income Tax Act (hereinafter referred to as the “Act”). <Amended by Presidential Decree No. 18705, Feb. 19, 2005>

(1) The address under Article 1 of the Act shall be determined by the objective facts of living relationship, such as the existence of a family living together in Korea and of the property located in Korea.(2) The term “domicile” in Article 1 of the Act means the place where a person has lived for a long time besides his/her address, and in which there is no general living relationship as close as an address.(3) Where a person who lives in Korea falls under any of the following subparagraphs, he/she shall be deemed to have his/her address in Korea:1. When a person has an occupation which requires him/her to continually reside in Korea for one year or longer; and2. When a person has family members living with him/her in Korea, and is deemed to continually reside in Korea for one year or longer in view of his/her occupation or property status.(4) Where a person living or working overseas falls under any of the following subparagraphs, he/she shall be deemed to have no address in Korea:1. When a person has an occupation which usually requires him/her to continually reside abroad for one year or longer; and2. When a person with a foreign nationality or denizenship under foreign laws, who has no family living together with him/her in Korea, and is not deemed to return home again to reside mainly in Korea in view of his/her occupation or property status.(5) In cases of a crew member of a vessel or aircraft serving an overseas route, if the domicile of his/her family living together with the relevant crew member, or his/her usual domicile in the period other than duty hours, is located in Korea, the address of relevant crew member shall be deemed to be in Korea; and when such place is located overseas, the address of the relevant crew member shall be deemed located overseas.

(1) Time when a non-resident becomes a resident shall be time under the following subparagraphs:1. The date when a non-resident has an address in Korea;2. The date when a reason that it is deemed that a non-resident has an address in Korea pursuant to Article 2 (3) or that it is deemed that he/she has an address in Korea pursuant to Article 2 (5) has arisen;3. The date when one year has passed after he/she had a domicile in Korea.(2) Time when a resident becomes a non-resident shall be time under the following subparagraphs:1. The next day of the date when a resident leaves Korea to move his/her address or domicile overseas; and2. The next day of the date when a reason that it is deemed that a resident has no address in Korea pursuant to Article 2 (4) or that it is deemed that he/she has an address overseas pursuant to Article 2 (5) has arisen.[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]

Public officials or residents working overseas, or executives or employees dispatched to places of business abroad or overseas local corporations (limited to cases where a domestic corporation has invested 100/100 of the total number of stocks issued or the investment stakes) of a domestic corporation shall be deemed as residents, notwithstanding the provisions of Article 2 (4) 1. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>

(1) Period of domicile in Korea shall be from the date after the date of a person’s arrival in Korea to the date of his/her departure.(2) In cases where a person having residence in Korea returns home again after his/her departure from Korea, and where the purpose of his/her departure is deemed apparently temporary in view of the domicile of family living together with him/her and the location of his/her property, the relevant period of his/her absence shall be deemed as the period of domicile in Korea.(3) In cases where the period of domicile in Korea is one year or more over two taxable periods, it shall be deemed as having a domicile in Korea for one year or more.

(1) When calculating the amount of income each year, persons who operate trust business shall account for income belonging to trust assets separately from miscellaneous income.(2) Whether a beneficiary is specified or exists under Article 2 (6) of the Act shall be governed by the conditions at the time when income or expenditure related to trust assets have been incurred.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The determination of the place of tax payment pursuant to Article 6 (3) of the Act shall, if the place of tax payment is indistinct, be governed by any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>1. When a person has two or more addresses, the place registered under the Citizen Registration Act shall be the place of tax payment, and when a person has two or more domiciles, the place in which his/her living relationship is the closest shall be the place of tax payment;2. In cases where a nonresident has two or more places of business and where it is difficult to determine his/her principal place of business, the place reported by the relevant nonresident as a place of tax payment pursuant to paragraph (5) shall be the place of his/her tax payment;3. In cases where a nonresident having no domestic place of business earns income from domestic sources under subparagraph 3 or 9 of Article 119 of the Act from two or more domestic places, the place reported by such nonresident as a place of tax payment pursuant to paragraph (5) from among the places from which such income from domestic sources is generated shall be the place of his/her tax payment; and4. In cases where a nonresident fails to file any report under subparagraph 2 or 3, the place designated by the Commissioner of the National Tax Service or the commissioner of the competent regional tax office in consideration of the status of income and the propriety of tax management, shall be the place of tax payment.(2) The Commissioner of the National Tax Service or the superintendent of the competent tax office shall, where he/she has designated the place of tax payment under paragraph (1) 4, notify a taxpayer in writing before the final return on the tax base of relevant taxable period or before the commencement date of the period for tax payment (in cases where any of the causes for an interim prepayment or an occasional imposition occur, within 15 days before the commencement date of such period for tax payment).(3) The term “cases prescribed by Presidential Decree” in the proviso to Article 7 (1) 4 of the Act means cases where a corporation falls under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Where the location of the head office or principal office has been approved by the Commissioner of the National Tax Service as the place to pay income tax withheld that has been hitherto paid at the branch offices, business offices and other places of work of the corporation concerned. In such cases, the Commissioner of the National Tax Service may approve the place to pay the amount of income tax withheld by income; or2. Where a corporation has registered as the unit of a business operator pursuant to Article 5 (2) and (3) of the Value-Added Tax Act.(4) The term “places prescribed by Presidential Decree” in Article 7 (1) 5 of the Act means places under the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17339, Aug. 14, 2001; Presidential Decree No. 21301, Feb. 4, 2009>1. Locations of business of a domestic corporation or foreign corporation which has issued securities under the relevant provisions, in cases where there is an income falling under subparagraph 9 (b) of Article 119 of the Act and any of subparagraphs of Article 179 (11); and2. Places designated by the Commissioner of the National Tax Service, in cases other than those indicated in subparagraph 1.(5) A person who intends to report the place of tax payment under Article 8 (1) and (2) of the Act shall submit a written report on the place of tax payment determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications networks) to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(6) The place of tax payment of a public official having no address in Korea under Article 8 (5) of the Act, or of a person deemed as a resident under Article 3, shall be the principal place of his/her family’s living or the location of any agency to which he/she belongs.

(1) Any person who intends to apply for the designation of the place of tax payment under Article 9 (1) 1 of the Act shall submit a written application for the designation of the place of tax payment determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of national tax information and communications networks) to the superintendent of the competent tax office of the place of business from October 1 to December 31 of the year concerned. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(2) The commissioner of the competent regional tax office (the Commissioner of the National Tax Service, in cases where the commissioner of the competent regional tax office to be newly designated is different from the commissioner of the competent regional tax office of the former place of tax payment) shall, upon receipt of an application for designation of the place of tax payment stipulated under paragraph (1), designate the place of business as the place of tax payment, except in cases as determined by Ordinance of the Ministry of Strategy and Finance, and shall notify in writing as to whether the designation is granted to the applicant, by not later than the end of February of the following year. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(3) The Commissioner of the National Tax Service or the commissioner of the competent regional tax office shall, where he/she designates a place of tax payment under Article 9 (1) 2 of the Act, notify the applicant thereof before the final return of tax base in the relevant taxable period or before the commencement date of the period for tax payment: Provided, That if there exist any causes for interim prepayment or occasional imposition, he/she shall notify the applicant within 15 days before the commencement date of the period for tax payment.(4) When the said notification has not been made within the period designated under paragraph (2), the place of tax payment for which designation applied for shall be the place of tax payment. <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995>

(1) A person who intends to change the place of tax payment under Article 10 of the Act shall submit a written report on change of the place of tax payment, as prescribed by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications networks) to the superintendent of the competent tax office of such changed place of tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(2) When a person revises the business registration under Article 11 of the Enforcement Decree of the Value-Added Tax Act as the taxpayer’s address has been changed, he/she shall be deemed to have made the report on the change of the place of tax payment under paragraph (1). <Amended by Presidential Decree No. 18705, Feb. 19, 2005>

Where the commissioner of the competent regional tax office determines or changes the tax base and amount of tax under Article 11 of the Act, the provisions related to the authority of the superintendent of the competent tax office shall apply mutatis mutandis.

(1) The term “rental income from a house prescribed by Presidential Decree” in subparagraph 2 of Article 12 of the Act means income from the rental of a house (excluding income from the renting of an expensive house) of a person who owns only one house: Provided, That income from the rental of a house located outside Korea shall be taxable regardless of the number of houses. <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>(2) In the application of the provisions of paragraph (1), the number of houses shall be counted based on the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000>1. A tenement house shall be deemed one house, and in cases of subdivided registration, each one shall be counted as one house;2. A jointly-owned house shall be counted as owned by the holder of the largest share, and if there are two or more holders of the largest share, it shall be counted as owned by each such owner respectively: Provided, That where there are two or more holders of the largest share, and if they agree that one of them is to be the person to whom the income from rent of the relevant house reverts, it shall be counted as owned by such person;3. In cases of a subletting or a subletting on deposit basis of the houses that are rented or rented on deposit basis, the relevant house rented or rented on deposit basis shall be deemed the house of a tenant or a tenant on deposit basis; and4. Where a principal and spouse each own houses, the total number of houses owned by them.(3) The term “expensive house” in paragraph (1) means a house, the standard market price of which, under Article 99 of the Act, exceeds 900 million won as of the end of taxable period or the transfer date of the relevant house. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 21301, Feb. 4, 2009>(4) Matters necessary for the calculation of house rental income, other than the matters stipulated in paragraphs (1) through (3), shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999]

(1) The term “income from any side business of a farm household prescribed by Presidential Decree” in subparagraph 3 of Article 12 of the Act means income falling under any of the following subparagraphs from among income from stock breeding, fish farming, straw goods manufacturing, private house lodging, sale of foods, speciality manufacturing, traditional tea manufacturing, or other similar activities: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Income from stock breeding as a side business size of a farm household in the attached Table 1; and2. Income other than that under subparagraph 1, the total amount of which is less than 18 million won a year.(2) The term “private house lodging” in the main body of paragraph (1) means private lodging business in agricultural and fishing villages under the Rearrangement of Agricultural and Fishing Villages Act. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006>(3) The term “local speciality” in the main body of paragraph (1) means local speciality under the Fosterage of Agricultural and Fishery Products Processing Industry Act, and fishery speciality under the Quality Control of Fishery Products Act. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005>(4) The term “traditional tea” in the main body of paragraph (1) means tea designated by the Minister for Food, Agriculture, Forestry and Fisheries for the development, succession and growth of traditional foods under the Fosterage of Agricultural and Fishery Products Processing Industry Act. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21214, Dec. 31, 2008>(5) In applying the provisions of paragraph (1), matters necessary for the calculation of income from side business of a farm household shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

The term “income from making traditional liquors prescribed by Presidential Decree” in subparagraph 3-2 of Article 12 of the Act means income from making liquors falling under any of the following subparagraphs in Eup/Myeon areas other than the Seoul Metropolitan area under the Seoul Metropolitan Area Readjustment Planning Act, and where the total amount of income is not more than 12 million won per year: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. Liquors falling under Article 9 (2) 2 (b) through (d) of the Enforcement Decree of the Liquor Tax Act;2. Liquors undergone procedures referred to by Ordinance of the Ministry of Strategy and Finance on recommendation by the Minister of Land, Transport and Maritime Affairs for promotion of tourism (limited to those recommended before June 30, 1991); and3. Liquors for which a license is granted by the Governor of Jeju-do in consultation with the Commissioner of the National Tax Service pursuant to the previous Special Act on Jeju-do Development (limited to those licensed before February 5, 1999).[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]

(1) The afforestation period for the purpose of applying subparagraph 3-3 of Article 12 of the Act shall be calculated in any of the following manners:1. As regards forest trees planted voluntarily by a person, the period from the day on which planting is completed to the day on which they are cut down or transferred to a third party;2. As regards forest trees planted by contract, the period from the day on which possession of such trees is delivered to the day on which they are cut down or transferred;3. As regards forest trees planted by any other person and purchased subsequently, the period from the day on which such trees are purchased to the day on which they are cut down or transferred;4. As regards forest trees conveyed as a gift, the period from the day on which such trees are conveyed as a gift to the day on which they are cut down or transferred;5. As regards forest trees inherited, the period from the commencement date of their afforestation period by the predecessor under subparagraphs 1 through 4 to the day on which an heir cuts down or transfers them; and6. In cases where a right under a forestation contract for profit sharing (referring to a contract to which the owner of a parcel of mountainous land, a person responsible for costs and expenses, and a person responsible for afforestation become parties to the contract to agree that they shall plant trees and income from forest trees planted and cut down or transferred subsequently shall be distributed to them at an agreed ratio; hereafter the same shall apply in this Article and Article 51 (9)) is acquired, the period from the day on which such right is acquired to the day on which such right is transferred.(2) The term “business income from the cutting down or transfer of trees growing on forest land, not exceeding six million won in each year” in subparagraph 3-3 of Article 12 of the Act means the amount of income calculated in accordance with Articles 51 (8) and (9) and 55, which shall not exceed six million won in each year.(3) In determining the day on which planting is completed or the possession of trees is delivered in cases of paragraph (1) 1 or 2, the unit of stands (referring to the group of trees, which serves as a unit for forest management enabling to discern a specific forest with an identical forest floor from its surroundings) of a forest as planted shall apply.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

The term “soldiers on active service, prescribed by Presidential Decree” in subparagraph 4 (a) of Article 12 of the Act means soldiers on active service with a rank below sergeant (including staff sergeants who have been appointed without volunteering), riot policemen, guards or warders of correctional institutions, or others equivalent thereto, who have been drafted or called up, or have volunteered, to fulfill their military service obligation. <Amended by Presidential Decree No. 17158, Mar. 27, 2001; Presidential Decree No. 21301, Feb. 4, 2009>

The term “school expenses determined by Presidential Decree” in subparagraph 4 (g) of Article 12 of the Act means school expenses satisfying the following requisites (limited to the amount to be paid in the relevant school year), from among entrance fees, tuition and lecture fees and other public imposts for schools under the Elementary and Secondary Education Act and the Higher Education Act (including similar educational institutions in foreign countries) and for vocational training institutions under the Act on the Development of Occupational Abilities of Workers: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree Nos. 15967 & 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>1. Expenses paid to relevant workers for education or training related to the business of enterprises in which they are engaged;2. Expenses paid to relevant workers pursuant to payment criteria stipulated by the regulations, etc. of enterprises in which they are engaged; and3. Expenses paid to relevant workers on condition that they return the amount paid to them, unless they work for the period exceeding the relevant period of education after completing such education or training, if such education or training period is six months or longer.

The term “allowances in the nature of compensation for actual expenses prescribed by Presidential Decree” in subparagraph 4 (h) of Article 12 of the Act means those falling under the following subparagraphs: <Amended by Presidential Decree No. 14682, Jun. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21148, Dec. 3, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Allowances paid to unpaid members of committees under Acts and subordinate statutes, or Municipal Ordinances (including members of the Academy of Sciences and the Academy of Arts);2. Food expenses received under the Seafarers Act;3. Amount of such level as to compensate actual expenses, such as pay for day duty, night watch, or business travel (including amounts not exceeding 200 thousand won per month from among the incurred expenses received by an employee pursuant to payment criteria stipulated by the regulations, etc. of relevant enterprises, in lieu of receiving reimbursement of the actual travel expenses incurred during a business trip within the city using his/her own car to perform his/her duties);4. Clothing, caps or shoes provided as uniforms to employees who shall wear uniforms under Acts and subordinate statutes, or Municipal Ordinances;5. through 7. Deleted; <by Presidential Decree No. 17032, Dec. 29, 2000>8. Work clothes or clothing worn only in the relevant place of work, which are received by employees who work in a hospital, laboratory, financial institution, factory or mine, or who engage in special jobs or services;9. Risk premiums paid to soldiers serving in such special fields as parachute jumping, underwater destruction, diving, high voltage, explosives handling, flight, service in the DMZ, service at the front line sentry post, service on warships or in landing tracked vehicles, police special tactical service allowances paid to police officers serving in special fields, and security service allowances paid to security service public officials;10. Embarkation allowance of 200 thousand won or less per month provided to seamen under the Seafarers Act, who are stipulated by Ordinance of the Ministry of Strategy and Finance (excluding persons to whom the provisions of Articles 16 and 17 apply), and the allowance for service on warships and flight allowance provided to police officials, and allowance for service on warships, flight allowance and fire fighting allowance provided to officials of fire departments;11. Allowances for entering a mining tunnel and for blasting, received by workers in a mine;12. Amount not exceeding 200 thousand won out of subsidies for research or research activity expenses provided to a person who falls under any of the following items:(a) Teaching staff of a school under the Early Childhood Education Act, the Elementary and Secondary Education Act, or the Higher Education Act or a school equivalent thereto (including an educational institution under a special Act);(b) A person directly engaging in, or providing direct support for research activities (limited to a person holding qualifications equivalent to that of teaching staff of universities and colleges) in a research institute governed by the Support of Specific Research Institutes Act, a government-funded research institute established pursuant to a special Act, or a local-government-funded research institute established pursuant to the Act on the Establishment and Operation of Local Government-Invested Research Institutes, and is specified by Ordinance of the Ministry of Strategy and Finance; and(c) A person who directly engages in researching activities in a research institute attached to a small or medium enterprise or a venture enterprise defined in Article 15 (1) 1 or 3 of the Enforcement Decree of the Technology Development Promotion Act;13. Deleted; <by Presidential Decree No. 17825, Dec. 30, 2002>14. Amount of 200 thousand won or less per month from among allowances for news gathering that are received in connection with news gathering activities by a reporter who engages in a press enterprise that runs a broadcasting company under the Broadcasting Act, a news agency under the News Agency Development Act, a newspaper under the Act on the Freedom of Newspapers, etc. and Guarantee of Their Functions (referring to ordinary daily newspapers, special daily newspapers and daily newspapers in foreign languages and internet newspapers, including periodicals under the Act on Promotion of Periodicals, Including Magazines, which are directly published by a company running the relevant newspaper), and who is engaged in the business of using broadcasting channels under the Broadcasting Act (including editorial writers and cartoonists who perform news gathering activities under full-time employment in the relevant press enterprise and in the business of using broadcasting channels under the Broadcasting Act). In such cases, if he/she receives allowance for news gathering along with his/her wages, the amount of money equivalent to 200 thousand won per month shall be deemed as allowance for news gathering;15. Allowances of 200 thousand won or less each month received by a worker working in an isolated area prescribed by Ordinance of the Ministry of Strategy and Finance; and16. Wages received by a worker in relation to natural disasters or other calamities.

(1) The term “international organizations prescribed by Presidential Decree” in subparagraph 4 (i) of Article 12 of the Act means the United Nations or its affiliated organs.(2) The term “pay received by persons prescribed by Presidential Decree” in subparagraph 4 (i) of Article 12 of the Act means pay received as a reward for his/her services by a person who is not Korean, from among those working for a foreign government or an international organization.

(1) Salaries received by military personnel and military service officials under subparagraph 4 (k) of Article 12 of the Act shall include prepaid salary: Provided, That if military personnel or a military service official stationed in a foreign country is deemed unfit for the performance of duties in the relevant foreign country on account of reasons such as reprimand, etc., and is called home, the prepaid salary corresponding to the remaining period shall not be included.(2) When military personnel or a military service official stationed in a foreign country has received his/her wages in advance, and where wages corresponding to the period after the period of performing duties are included therein, the provisions of paragraph (1) shall also be applicable to such cases.

(1) The term “wages prescribed by Presidential Decree” in subparagraph 4 (m) of Article 12 of the Act means the wages falling under the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>1. Amount of less than one million won per month (1.5 million won per month when receiving remuneration in exchange for labor on a pelagic fishery vessel, in a vessel serving overseas route or in an overseas construction work site, etc.) from among remuneration received by a person by providing labor abroad (including furnishing labor on a pelagic fishery vessel, in a vessel or aircraft serving overseas routes, or in an overseas construction work site, etc.) or in North Korea under the Inter-Korean Exchange and Cooperation Act (hereafter in this Article referred to as “overseas, etc.”); and2. Amount received in excess of that to be received if the relevant worker serves in Korea, from among allowances received for service overseas, etc. by public officials or the personnel supervised as to the performance of duty or other services by the chief of an embassy or consulate abroad under Article 24 of the Regulations on Services by Public Officials Abroad (including the employees of government-funded agencies established under the particular Acts, who are sent to work in an embassy or consulate abroad pursuant to Article 2 (2) of the Organization Regulations on the Ministry of Foreign Affairs and Trade and its Agencies).(2) Salaries under paragraph (1) shall include cases where the price for relevant labor is paid in Korea.(3) Salaries received by a person who provides labor in a pelagic fishery vessel or on a vessel or aircraft serving overseas routes, etc. under paragraph (1) 1, shall be limited to the salary received by the crew of a pelagic fishery vessel for engaging in pelagic fisheries, and to salaries received by the crew of a vessel or an aircraft serving overseas route, etc. for their labor provided during the service period over the said routes, etc. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(4) The scope of a pelagic fishery vessel under paragraph (1) 1 and of crew under paragraph (3) shall be governed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The term “workers prescribed by Presidential Decree” in subparagraph 4 (o) of Article 12 of the Act means persons who receive a regular monthly pay not exceeding one million won (including workers on a daily basis) and who fall under any of the following subparagraphs. In such cases, the regular monthly pay means the salary calculated by adding allowances for extended work, night work or holiday work under the Labor Standards Act, and salary calculated by deducting the production allowances received under the Seafarers Act (the payment on the ratio exceeding the regular monthly pay, in cases of the payment on a ratio basis), from the regular monthly pay under paragraph (4): <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18048, Jul. 10, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Persons providing labor in a factory or mine, who are prescribed by Ordinance of the Ministry of Strategy and Finance from among employees engaging in production or related areas as indicated in the Korea Standard Occupational Classification publicly notified by the Commissioner of the National Statistical Office;2. Persons providing labor under employment by a fishing business, and who are prescribed by Ordinance of the Ministry of Strategy and Finance; and3. Persons stipulated by Ordinance of the Ministry of Strategy and Finance from among drivers or employees in related fields, or those engaged in delivery or transport of baggage in accordance with the Korea Standard Occupational Classification published by the Commissioner of the National Statistical Office.(2) The term “wages received for such overtime work, night work or holiday work prescribed by Presidential Decree” in subparagraph 4 (o) of Article 12 of the Act means the amount of money falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14682, Jun. 30, 1995; Presidential Decree No. 18705, Feb. 19, 2005>1. Amount of not more than 2.4 million won per annum from among wages received in addition to ordinary wages due to overtime work, night work or holiday work under the Labor Standards Act (in cases of mine workers or daily employed workers, the total amount of the relevant wages); and2. Amount of not more than 2.4 million won per annum from among the allowances for production received by workers under paragraph (1) 2 pursuant to the Seafarers Act (pay based on a ratio exceeding regular monthly pay, in cases where pay is based on such ratio).(3) The scope of fisheries under paragraph (1) 2 shall be governed by the Korea Standard Industrial Classification publicly notified by the Commissioner of the National Statistical Office (hereinafter referred to as the “Korea Standard Industrial Classification”).(4) The term “regular monthly pay” in paragraph (1) means the total amount of salaries, pay, remuneration, wages, allowances and other similar grants (excluding the irregular pays, such as the bonus, etc. received in the relevant year, and the pay of such nature as compensation of actual expenses under Article 12), which are received by class of post each month. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>

The term “meals or meal expenses determined by Presidential Decree” in subparagraph 4 (p) of Article 12 of the Act means any of the following subparagraphs: <Amended by Presidential Decree No. 18173, Dec. 30, 2003>1. Meals and other food and drinks provided to workers by in-house meal services or similar means; and2. Meal costs of not more than 100 thousand won per month received by workers for whom meals and other food and drinks stipulated by subparagraph 1 are not provided.[This Article Newly Inserted by Presidential Decree No. 15138, Aug. 22, 1996]

(1) The term “other prizes and supplementary prizes prescribed by Presidential Decree” in subparagraph 5 (c) of Article 12 of the Act means prizes specified in any of the following subparagraphs: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21214, Dec. 31, 2008>1. Prize money and consolation prizes received by winners of the Academy of Sciences prizes under the National Academy of Sciences Act, or the Academy of Arts prizes under the National Academy of Arts of the Republic of Korea Act;2. Prize money and consolation prizes received by the winners of the Nobel Prize or of prizes from foreign governments, international agencies, international organizations, and other foreign organizations or funds;3. Prize money and consolation prizes received by the winners of the Korean Culture and Arts prizes under the Culture and Arts Foundation, and of various prizes granted by the Korean Culture and Arts Promotion Center from the Culture and Arts Promotion Fund under the same Act;4. Prize money and consolation prizes received by the winners of prizes awarded at the Korean Art Exhibitions;5. Prize money and consolation prizes received by the winners of athletic prizes under the National Sports Promotion Act;6. Prize money and extra prizes received by the winners of prizes awarded at a science exhibition held by the Ministry of Education, Science and Technology;7. Prize money and consolation prizes received by the winners of prizes awarded with an approval of the related central administrative agency by a corporation founded under special Acts;8. Prize money and consolation prizes received by persons selected as quality masters (including subgroups) under the Quality Control and Safety Management of Industrial Products Act;9. Amounts not exceeding 150 thousand won per person from among prize money received from an employer in connection with the relevant commendation or prize-winning in cases of employees who have received a commendation from the official ranking equal to or higher than a chief of the central administrative agency in view of their achievements in promoting government policies, such as at-work Saemaul campaign, the industrial accidents prevention campaign, etc., or of employees who have a won vocational technique competition in Korea or abroad approved by the chief of the relevant central administrative agency; and10. Prize money and consolation prizes granted by the State or local governments, other than those in subparagraphs 1 through 9.(2) The term “matters prescribed by Presidential Decree” in subparagraph 5 (d) of Article 12 of the Act means an excellent invention connected with the duties of employees pursuant to the Invention Promotion Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>

The term “income from any overseas navigation business of such vessels or aircraft prescribed by Presidential Decree” in Article 13 (1) 3 of the Act means income falling under any of the following subparagraphs:1. Income from regular business for the purposes of navigating overseas only; and2. Income from navigation overseas by vessels or aircraft owned by a business under time charter contract or regular lease contract of aircraft (excluding a bareboat charter or bareaircraft contract).

The term “daily employed workers” in Article 14 (3) 2 of the Act means any persons who receive remuneration for labor based upon the days or hours for which they provide labor, or where their pay is calculated based upon the outcome of labor in the days or hours for which they provide labor, and who are stipulated under the following subparagraphs:1. Persons engaged in construction work, excluding a person who falls under any of the following items:(a) Persons employed continuously for one year or more by the same employer; and(b) Persons employed by the same employer continuously in order to engage in the following jobs in general:(ⅰ) Directly instructing or supervising persons who prepare for work or engage in manual labor;(ⅱ) Technical work, clerical work, typing, cooking, guard, etc. required at a work site; and(ⅲ) Operating or maintaining construction machines;2. Persons engaged in loading and unloading (including stevedores), but excluding those who fall under any of the following items:(a) Persons not receiving remuneration for labor on days on which they provide labor, but regularly receive remuneration for labor; and(b) Persons employed by the same employer continuously in order to engage in the following jobs in general:(ⅰ) Directly instructing or supervising persons who prepare for works or engage in manual labor; and(ⅱ) Operating or maintaining major machines; and3. Persons engaged in jobs other than subparagraph 1 or 2, and who do not remain under continuous employment by the same employer for three months or more under employment contract.

The term "amount of other income prescribed by Presidential Decree, such as lottery prize money, etc.") in Article 14 (3) 7 of the Act means an amount of income falling under any of the following subparagraphs:1. Lottery prize money under Article 2 of the Lottery Tickets and Lottery Fund Act;2. A refund under Article 21 (1) 4 of the Act;3. Prize money or articles under Article 21 (1) 14 of the Act;4. A compensation for users of credit card, etc. under Article 32-4 (1) of the Value-Added Tax Act; and5. An amount of income recognized by the Commissioner of the National Tax Service as the income similar to that under subparagraphs 1 through 4.[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]

(1) Where bonds issued by the State are divided into principal and interest, the amount of discount bonds corresponding to the principal and interest shall be deemed to be the discounted value of bonds under Article 16 (1) 1 of the Act.(2) Where bonds falling under the following subparagraphs are issued in unity (referring to issuance by unifying the terms and conditions of issuance, such as coupon rate, maturity, etc. of bonds to be issued additionally for a given period) on the open market, the difference between the sale price and par value of the relevant bonds shall be deemed not to be included in the interest and amount of discount under Article 16 (1) 1 or 2 of the Act: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. State bonds;2. Industrial finance bonds under Article 25 of the Korea Development Bank Act;3. Deposit protection fund bonds and compensation fund bonds for deposit protection fund bonds under Articles 26-2 and 26-3 of the Depositor Protection Act; and4. Monetary stabilization bonds of the Bank of Korea under Article 69 of the Bank of Korea Act.(3) In cases of bonds issued by the State, the principal of which varies according to commodity prices, it shall be deemed that increase in the principal of such bonds does not include the interest and discount amount under Article 16 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>[This Article Wholly Amended by Presidential Decree No. 19327, Feb. 9, 2006]

(1) The term “collective investment organization prescribed by Presidential Decree” in Article 17 (1) 5 of the Act means any collective investment organization that meets all the requirements under the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. It shall be a collective investment organization under the Capital Market and Financial Investment Business Act (excluding special accounts of an insurance company under Article 251 of the same Act, but including indemnification of principal as trust of money; hereinafter referred to as a “collective investment organization”);2. Deleted; <by Presidential Decree No. 19890, Feb. 28, 2007>3. Accounts shall be settled and the profits shall be distributed at least once every year from the date of establishment of the relevant collective investment organization: Provided, That distribution of a profit falling under any of the following items may be reserved, and distribution may be reserved also in cases where a profit under the Capital Market and Financial Investment Business Act is less than 0 (limited to cases prescribed by the rules of collective investment under Article 9 (22) of the same Act);(a) A profit which is computed by the change of items constituting trade by an exchange trade collective investment organization under Article 234 of the Capital Market and Financial Investment Business Act; and(b) An appraised profit of collective investment assets appraised pursuant to Article 238 of the Capital Market and Financial Investment Business Act; and4. Entrustment shall be accepted in money and repaid in money (including what are accepted and repaid in assets other than money, and the relevant entrustment value and repaid value are all expressed in monetary amounts).(2) When applying paragraph (1), a trust established overseas shall be deemed a collective investment organization in accordance with paragraph (1), even in cases of failing to meet the requirements under each subparagraph of paragraph (1). <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>(3) In cases where a collective investment organization fails to fulfill the necessary conditions under the subparagraphs of paragraph (1), a tax shall be imposed according to the classification under the following subparagraphs: <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>1. A tax shall be imposed on a profit from an investment trust, an investment association, an anonymous investment association under Article 9 (18) of the Capital Market as it is deemed a profit from a trust other than a collective investment organization under Article 4 (2) of the Act; and2. A tax shall be imposed on a profit from an investment company, a limited liability investment company, a limited investment partnership, a private equity fund company (limited to cases not governed by the special provisions on taxation on companies in the same line of business under Article 100-15 of the Special Tax Treatment Control Act) as it is deemed a dividend under Article 17 (1) 1 of the Act.(4) Profits made or losses incurred by transactions or assessment of securities or derivatives on exchange (hereinafter referred to as “derivatives on exchange”) under the Capital Market and Financial Investment Business Act falling under any of the following subparagraphs, as securities acquired directly by a collective investment organization, shall not be included in profits from a collective investment organization under paragraph (1) (hereinafter “profits from a collective investment organization”): Provided, That this shall not apply to profits made or losses incurred by transactions of stocks or investment securities [as stocks or investment securities listed on the securities market (hereinafter referred to as the “securities market”) under Article 9 (13) of the Capital Market and Financial Investment Business Act, limited to cases where a non-resident or a foreign corporation possesses not less than 25/100 of the total number of stocks issued or the total amount of investment of a corporation which has issued such stocks or investment securities in the year to which the date of transfer belongs and in the period of the preceding five years] acquired by a non-resident or a foreign corporation through a private equity collective investment organization under Article 249 of the Capital Market and Financial Investment Business Act or a private equity fund company not governed by the special provisions on taxation on companies in the same line of business under Article 100-15 of the Special Tax Treatment Control Act: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Securities listed on the securities market (excluding those under the following items; hereafter in this paragraph the same shall apply):(a) Bonds, etc. under Article 46 (1) of the Act; and(b) Stocks or beneficiary certificates of a foreign collective investment organization established under the foreign Acts and subordinate statutes;2. Stocks or investment shares of a venture business under the Act on Special Measures for the Promotion of Venture Businesses;3. Deleted; and <by Presidential Decree No. 18705, Feb. 19, 2005>4. Derivatives on exchange intended for securities under subparagraph 1.(5) Securities acquired by a collective investment organization by investment in collective investment securities only under the Capital Market and Financial Investment Business Act shall be deemed “securities acquired directly by a collective investment organization” pursuant to paragraph (4). <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(6) Profits from a collective investment organization shall be the amount obtained by deducting various remunerations, fees, etc. under the Capital Market and Financial Investment Business Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>(7) Profits from a collective investment organization shall not include profits or dividends from trust of lump-sum payment for retirement under Article 2 (1) of the Addenda of the Guarantee of Workers’ Retirement Benefits Act (Act No. 7379). <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>(8) As a private equity collective investment organization under Article 9 (19) of the Capital Market and Financial Investment Business Act, a collective investment organization fulfilling all the necessary conditions under the following subparagraphs shall not be deemed a collective investment organization under paragraph (1), even if it fulfills all the necessary conditions under the subparagraphs of paragraph (1), and it shall be governed by Article 4 (2) of the Act: <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Where only one resident is the investor (including a nonresident and a foreign corporation having no place of business in Korea; hereafter the same shall apply in this Article) or where one resident and his/her relative under Article 20 of the Enforcement Decree of the Basic Act for National Taxes and other specially related persons (in cases of a nonresident or a foreign corporation, referring to a person in relations falling under any of the following items) are the investors:(a) A nonresident, and his/her spouse, linear blood relatives and siblings;(b) A party directly or indirectly owns not less than 50% of the shares with voting rights of the other party; and(c) Where a third party directly or indirectly owns not less than 50% of the shares with voting rights of the other party, the relationship between a party and the other party; and2. Where an investor makes a decision whether to operate properties.(9) With regard to the calculation of the indirect ownership ratio of the stocks under paragraph (8) 1 (b) and (c), the provisions of Article 2 (2) of the Enforcement Decree of the Act for the Coordination of International Tax Affairs shall apply mutatis mutandis. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>(10) The method, etc. of calculating the tax base of profits from a collective investment organization shall be as determined and announced by the Minister of Strategy and Finance. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>[This Article Wholly Amended by Presidential Decree No. 18173, Dec. 30, 2003]

The term “marginal profits of sales under repurchase condition of bonds or securities prescribed by Presidential Decree” in Article 16 (1) 9 of the Act means the marginal profits of the sale and purchase of bond or securities which are sold or purchased by financial institutions (referring to the financial institutions falling under any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy and the corporations falling under any subparagraph of Article 111 (2) of the Enforcement Decree of the Corporation Tax Act; hereinafter the same shall apply) under a condition of resale or repurchase thereof, by applying an interest rate agreed in advance according to the repurchase period. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>

(1) The term “marginal profits of any insurance in the nature of savings prescribed by Presidential Decree” in Article 16 (1) 10 of the Act means the amount arrived by deducting a paid-in insurance premium or paid-in deduction (hereafter in this Article referred to as “insurance premium”) from the insurance money and the deducted money to be received at maturity under an insurance contract, or from the refunded money (hereafter in this Article referred to as “insurance money”) to be received as the relevant insurance contract is cancelled early, and such insurance money corresponds to the following subparagraphs: <Amended by Presidential Decree No. 14999, May 13, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005>1. Period from the day of the first insurance premium payment under an insurance contract to the date of maturity or early cancellation shall be less than 10 years (including cases where receiving a partial payment of insurance premium paid before elapsing 10 years from the first payment date during the verified period, while the period from the first payment date to the date of maturity or early cancellation is over 10 years); and2. Insurance money shall not be that paid due to the death, disease, injury and other bodily harm of the insured, or due to the loss or destruction of, or damage to his/her assets.(2) The term “insurance contracts” in paragraph (1) means any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16762, Mar. 28, 2000; Presidential Decree No. 17032, Dec. 29, 2000: Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006>1. Life insurance contracts (excluding insurance contract under Article 16 (2) of the Guarantee of Workers’ Retirement Benefits Act and retirement insurance contract under Article 2 (1) of Addenda of the same Act) or accident insurance contracts under the Insurance Business Act;2. Life mutual-aid contracts or accident mutual-aid contracts administered pursuant to relevant Acts by an institution falling under any of the following items:(a) The National Agricultural Cooperatives Federation and cooperatives under the Agricultural Cooperatives Act;(b) The National Federation of Fisheries Cooperatives and cooperatives under the Fisheries Cooperatives Act;(c) Deleted; <by Presidential Decree No. 16664, Dec. 31, 1999>(d) The National Credit Unions Federation of Korea under the Credit Unions Act; and(e) The Community Credit Cooperatives Federation under the Community Credit Cooperatives Act; and3. Postal insurance contracts under the Postal Savings and Insurance Act.(3) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(4) In calculating an insurance premium under paragraph (1), dividends and other money similar thereto (hereafter in this paragraph, referred to as “dividends, etc.”) paid under an insurance contract during an insurance contract period shall be deducted from paid-up insurance premium. In cases of offsetting a insurance premium with dividends, etc., the insurance premium shall be deemed paid with dividends, etc. from an insurance contract.

(1) The term “at-work mutual-aid association prescribed by Presidential Decree” in Article 16 (1) 11 of the Act means a mutual-aid society or mutual-aid association (including similar organizations) established under Article 32 of the Civil Act and other Acts, which are organized for stable living, enhancement of welfare or mutual-aid for workers engaging in the same place of work or occupation. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “excess refund” in Article 16 (1) 11 of the Act means the amount calculated by deducting the amount of paid-in deduction (including retirement income under Article 42-2 (1) 3) from refund from an at-work mutual-aid association, which is paid pursuant to its rules to workers due to their retirement or withdrawal. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>

The profit of trust to which Article 4 (2) of the Act is applicable as specific money trust under subparagraph 1 of Article 103 of the Enforcement Decree of the Capital Market and Financial Investment Business Act shall be calculated by applying Article 23 (6) mutatis mutandis. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

Distributed amount of profits from securities or certificates falling under any of the following subparagraphs shall be included in dividend income under Article 17 (1) 7 of the Act: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Securities or certificates indicating a claim for payment of stock certificates or money (referring to money equivalent to the value of such stock certificates, securities or certificates) in connection with fluctuations in prices of specific stock certificates traded in the securities market or, as a market similar to this, in a foreign market or in numerical value of the price index of stocks; and2. Securities or certificates indicating a contractual right for making profits or evading losses according to predetermined methods in connection with fluctuations in an index falling under any of the following items other than securities or certificates under subparagraph 1 (excluding securities or certificates indicating a right which can bring about business trading stock certificates or giving and receiving money according to predetermined methods in connection with fluctuations in prices of specific stock certificates traded in the securities market or, as a market similar to this, in a foreign market according to declaration of intention of one party concerned or in numerical value of the price index of stocks):(a) Prices of securities under Article 4 of the Capital Market and Financial Investment Business Act, interest or numerical value of an index based on these;(b) Prices of things in the nature of securities traded in a foreign market, as a market similar to the securities market, currencies, agricultural products, stock farm products, marine products, forest products, mineral products, goods belonging to energy and goods manufactured or processed based on these goods as raw materials, other goods, as those similar to these goods, prescribed by Ordinance of the Ministry of Strategy and Finance, interest or numeral value of an index based on these or an index; and(c) An index of credit risk (referring to change in credit rating, bankruptcy or debt restructuring, etc. of the party concerned or the third party).[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

(1) In cases of deemed dividends under each subparagraph of Article 17 (2) of the Act, the value of property other than cash shall be based upon the amount calculated according to the following classifications: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>1. Amount under any of the following items, if acquired assets are stocks or contributed shares (hereafter in this Article, referred to as “stocks, etc.”):(a) Face value or amount invested, in cases of stocks, etc. under subparagraphs 2 and 5 of Article 17 (2) of the Act;(b) Face value or amount invested, in cases of stocks, etc. under subparagraphs 4 and 6 of Article 17 (2) of the Act (limited to cases where such stocks, etc. satisfy the requirements under Article 44 (1) 1 and 2 of the Corporation Tax Act and Article 46 (1) 1 and 2 of the same Act, respectively, and where their market price under subparagraph 2 is higher than face value or amount invested); and(c) Issue prices, in cases of stock dividends under Article 462-2 of the Commercial Act; and2. For all other cases, market value at the time of acquiring the property.(2) In cases of acquiring stocks, etc. under the proviso to Article 17 (2) 2 of the Act, the book value per new/old stock or per unit shall be as follows:Book value per stock or per unit of investment = Book value per old stock or per unit of investment / 1 + Alloted number of new stocks, etc. per old stock or per unit of investment(3) In the calculation of gross income from deemed dividends through capital reduction or stock retirement under Article 17 (2) 1 of the Act (including any decrease in investment or retirement of contribution quotas; hereafter in this paragraph, referred to as “stock retirement, etc.”), if there exists any portion not deemed as a fictitious dividend under the proviso to Article 17 (2) 2 of the Act among stocks acquired due to the capitalization of capital reserve funds within two years retrospectively counted from the day of such deemed dividends (excluding the stocks issued due to the capitalization of capital reserve fund pursuant to Article 459 (1) 1 of the Commercial Act; hereafter in this paragraph referred to as “short-term retired stocks”), it shall be deemed that short-term retired stocks have first been reduced or retired, and the acquisition value of such short-term retired stock shall be deemed to be non existent, notwithstanding the provisions of paragraph (2). In such cases, if part of stocks, etc. are transferred in the period from the acquisition of short-term retired stocks to the date of deemed dividends, short-term retired stocks, etc. and other stocks, etc. shall be calculated by deeming they are transferred in proportion to the number of each stock, etc., and the book value per stock or per unit of investment after the stock retirement has been made, shall be in accordance with the following formula: <Amended by Presidential Decree No. 18705, Feb. 19, 2005>Book value per stock or per unit of investment = Aggregate of acquisition value after stock retirement has been made / Total number of stocks after stock retirement has been made.(4) The term “marginal gain from the valuation of corporations undergoing merger or that from the valuation of dividing companies under the conditions prescribed by Presidential Decree” in Article 17 (2) 2 (a) of the Act, means the amount calculated under Article 12 (1) and (2) of the Enforcement Decree of the Corporation Tax Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(5) In applying the provisions of Article 17 (2) 2 (b) of the Act, in cases where a part of the revaluation reserve is transferred to the capital or the contribution amount, the amount corresponding to the revaluation spread of the land under Article 13 (1) 1 of the Assets Revaluation Act shall be calculated by the following formula: <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>Revaluation reserve transferred to the relevant capital or contribution × (revaluation spread under Article 13 (1) 1 of the Assets Revaluation Act ÷ assets revaluation spread).(6) The value of stocks without face value in cases under paragraph (1) 1 (a) and (b) shall be the amount computed by dividing the equity capital of the corporation issuing such stocks by the total number of its issued and outstanding shares on the date falling under subparagraphs 4 and 5 of Article 46. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>(7) In computing the amount disbursed for acquiring the relevant stocks under Article 17 (2) 1, 3, 4 and 6 of the Act, their face value shall be deemed the amount disbursed for acquiring such stocks, in cases where the stockholder falls under the category of minor stockholders under Article 20 (3) of the Act, and where the computing of the amount disbursed for such acquisition is unclear as the number of stockholders holding the relevant shares is too many or as the transactions of relevant stocks are too frequent: Provided, That this shall not apply where paragraph (3) is applicable and where the relevant stockholder establishes an amount other than the face value. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]

The term “cases prescribed by Presidential Decree” in Article 17 (2) 3 (c) of the Act means the reorganization of a law firm into a law firm (with limited liability) pursuant to the Attorney-at-Law Act and the reorganization of a corporate customs broker into a customs brokerage firm pursuant to the Licensed Customs Broker Act.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The term “juristic persons prescribed by Presidential Decree” in Article 17 (3) 4 of the Act means juristic persons falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Juristic persons to which the provisions of Article 51-2 of the Corporation Tax Act or Article 100-16 of the Special Tax Treatment Control Act are applied; and2. Juristic persons to which the provisions of Article 63-2, 121-2, 121-4, 121-8, or 121-9 of the Special Tax Treatment Control Act are applied.(2) The term “rate prescribed by Presidential Decree” in Article 17 (3) 4 of the Act means a rate falling under any of the following subparagraphs:1. In cases of a juristic person falling under paragraph (1) 1, 100/100; and2. In cases of a juristic person falling under paragraph (1) 2, a rate calculated by the following formula (in cases where a business year to which the provisions of paragraph (1) 2 are applied is only one business year, it shall be calculated on the basis of income in the relevant business year, and in cases where the relevant rate exceeds 100/100, it shall be 100/100): Aggregate of income subject to reduction or
exemption in two immediately preceding
business years
×
Rate of reduction or exemption
Aggregate of gross income in two immediately preceding business years
(3) When applying Article 17 (3) of the Act, an income from dividends received from a private equity fund company (limited to that not falling under paragraph (1) 1) under Article 9 (18) 7 of the Capital Market and Financial Investment Business Act shall be an amount computed pursuant to Article 23. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>[This Article Wholly Amended by Presidential Decree No. 16664, Dec. 31, 1999]

(1) Rights related to real state under Article 18 (1) 1 of the Act shall not include surface rights and servitude (including rights established underground or in the air).(2) Income from renting mining rights by the owner of mining rights, a person holding mining concession rights, or the subcontractor of mining (hereinafter referred to as a “mining right holder, etc.”) under Article 18 (1) 3 of the Act, shall be deemed as income of a mining right holder, etc. from renting a mine along with mining equipment; and fees which a mining right holder, etc. receives from a sub-contractor or share subcontractor by renting mining rights, mining concession rights, rights related to mining on conditions that a mining right holder, etc. provide the whole or part of capital expenditures or profitable expenditure, shall not be included.

The scope of business pursuant to each subparagraph of Article 19 of the Act except for those especially stipulated in this Decree shall be based on the Korea Standard Industrial Classification: Provided, That if Ordinance of the Ministry of Strategy and Finance prescribes otherwise, the same shall not be applicable. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

The term “crop cultivating business” in Article 19 (1) 1 of the Act means the crop cultivating business indicated in the Korean Standard Industrial Classification. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002>

In applying the provisions concerning business income pursuant to Article 19 of the Act, the following cases shall be deemed as manufacturing businesses pursuant to Article 19 (1) 4 of the Act: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. Deleted; and <by Presidential Decree No. 17825, Dec. 30, 2002>2. Where entrusting other manufacturers to do manufacturing, instead of direct manufacturing, and where the following requisites are satisfied:(a) A person shall plan products to manufacture (including devising or designing of products, and making samples) on his/her own;(b) A person manufactures products under his/her own name; and(c) A person accepts products, and directly sells them under his/her own responsibility.

(1) The term “such sales business of new construction housing prescribed by Presidential Decree” in Article 19 (1) 6 of the Act means business falling under any of the following subparagraphs:1. Constructing and selling housing; and2. Deleted. <by Presidential Decree No. 14860, Dec. 30, 1995>(2) In applying the provisions of paragraph (1), the relevant housing shall include land attached thereto, within the size of the larger of the following: <Amended by Presidential Decree No 19327, Feb. 9, 2006>1. The total area of a building (excluding area on the basement level, area for parking on the ground level, and area for common facilities for residents under subparagraph 3 of Article 2 of the Regulations on Standards, etc. of Housing Construction); or2. Land area calculated by multiplying five times the area on which the building is built (10 times in cases of land located outside of an urban district under Article 6 of the National Land Planning and Utilization Act).(3) Where there exist, together with the relevant building, buildings for other purposes, such as stores, etc. built in part of a house, or buildings for other purposes built on the same lot number (including other lot numbers in a complex with similar residential conditions) (hereafter in this paragraph, referred to as “buildings for other purposes”), buildings for other purposes and land attached thereto shall be excluded from the house under paragraph (1), and in cases falling under any of the following subparagraphs, the whole building shall be deemed as housing under paragraph (1). In such cases, the provisions of Article 154 (4) shall be applied mutatis mutandis to the calculation of area of land attached to a building:1. Where a house and building for other purposes are sold or purchased separately as each transaction unit, and where the area of the building for other purposes is not more than 10/100 of the area of the house; and2. Where a house and building for other purposes attached to the house are sold or purchased separately as each transaction unit, and where the area of the building for other purposes is smaller than the area of the house.(4) Where a house and building for other purposes under paragraph (1) are newly built and sold, they shall be entered separately on the book, and where there exist any common expenses necessary for them, such expenses shall be calculated in proportion under the conditions prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

Enterprise service businesses under Article 19 (1) 11 of the Act shall not include research and development business (excluding a business that provides research and development services under contract, etc. and receives the price therefor) on the Korea Standard Industrial Classification. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>

The term “real estate sale business prescribed by Presidential Decree” in Article 19 (1) 12 of the Act means building construction business (limited to selling buildings constructed on a person’s own account) and real estate supply business indicated in the Korea Standard Industrial Classification: Provided, That the business of selling new construction housing under Article 32 shall be excluded. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

Educational service business under Article 19 (1) 13 of the Act shall not include kindergartens under the Early Childhood Education Act, and schools determined by the Elementary and Secondary Education Act and the Higher Education Act and the similar institutions determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>

Health and social welfare business under Article 19 (1) 14 of the Act shall not include social welfare business under the Social Welfare Services Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>

(1) Service industries related to entertainment, culture and sports and other public, repair and personal service industries under Article 19 (1) 15 of the Act shall not include members’ organizations under the Korea Standard Industrial Classification: Provided, That in cases where such members’ organizations run specified business, it shall be classified according to the details of business. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(2) Earnest money for an exclusive contract received by an entertainer, professional athlete, etc. in connection with business activities shall be business income. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>

(1) The scope of earned income under Article 20 of the Act shall include income set forth in the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17115, Jan. 29, 2001; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Expenses paid in terms of confidential expenses (including expediency fund; hereinafter the same shall apply), social expenses and others under similar pretexts, which are pay indistinct as to whether they are used for business;2. Money for merit, bonus, money for celebrating a business opening, school expenses, scholarships (including school expenses and scholarships which an employee’s children at school received from an employer), and other similar salaries which are paid to an employee;3. Labor allowance, family allowance, war bonus, price allowance, cashier’s allowance, duty allowance, and other salaries similar thereto;4. Allowances for collecting money, returns for inviting purchase of insurance, for soliciting the purchase and sale of securities or for stimulating savings, and other payments of a similar nature which are received by office workers of the financial institutions such as an insurance company and an investment trading business operator or an investment intermediary business operator under the Capital Market and Financial Investment Business Act;5. Meal allowance, housing allowance, clothing allowance, and other salaries similar thereto;6. Benefits gained from housing provided by an employer: Provided, That such cases are excluded for an executive who is not a stockholder nor a contributor (including an officer who is a petty stockholder under Article 40 from among stockholders of a listed stock corporation), an employee who is not an executive (including an employee of a nonprofit corporation or private person) and a person who receives earned income from the State or a local government receives such housing provided by his/her employer prescribed by Ordinance of the Ministry of Strategy and Finance;7. Benefits which an employee gains by borrowing money necessary for purchasing or renting housing (including the land attached to the house) at low interest or without compensation;8. Technology allowance, health allowance, research allowance, and other wages of a similar nature;9. Overtime allowance, commuting allowance, perfect attendance allowance, special bonus, and other wages of a similar nature;10. Monthly or yearly wages paid in terms of travel expenses;11. Allowance for service in an isolated area, allowance for service abroad, and other wages of a similar nature;;12. Insurance premiums, trust installments or mutual aid installments (hereafter in this subparagraph, referred to as “insurance premiums, etc.”) imposed on an employer in connection with the insurance, trust or mutual aid whose contractor is an employee or whose beneficiary is an employee, his/her spouse, or any other family member: Provided, That insurance premiums, etc. specified in the following items shall be excluded:(a) Deleted; <by Presidential Decree No. 17032, Dec. 29, 2000>(b) An amount of not more than 700 thousand won per annum from among insurance premiums of insurance whose insurance money is to be paid upon an employee’s death, injury or disease, and whose insured and beneficiary are employees, and whose paid-in premiums are not refundable at its maturity (hereinafter referred to as “group genuine indemnity insurance”) and the insurance whose paid-in premiums are refundable within the limit not exceeding the paid-in premiums at its maturity (hereinafter referred to as “group refund-cum-guaranty insurance”);(c) Insurance premiums, etc. of the retirement insurance or of the retirement lump-sum trust under Article 2 of Addenda of the Guarantee of Workers’ Retirement Benefits Act, Act No. 7379, and the retirement insurance or retirement lump-sum trust of the corporation’s officers as determined by Ordinance of the Ministry of Strategy and Finance (hereafter in this Section, referred to as “retirement insurance or retirement lump-sum trust”);(d) Mutual aid installments paid to the Association of Mutual Aid for Retirement of Construction Workers by the owner of a mutual benefit contract business pursuant to the Act on the Employment Improvement, etc. of Construction Workers;(e) Insurance premiums of insurance the insured of which is an executive or employee, and whose grounds for payment are compensation for damages incurred by an act in the course of performing duties, except for those incurred intentionally (including gross negligence) by the executive or employee;(f) Deleted; <by Presidential Decree No. 21301, Feb. 4, 2009>13. Retirement allowance, retirement bonus and other similar wages which are paid upon retirement, but not belonging to retirement income;14. Vacation bonus and other similar wages;15. Refund money reverted to employees where retirement insurance, retirement lump-sum amount in trust, insurance or trust under Article 16 (2) of the Guarantee of Workers’ Retirement Benefits Act is terminated: Provided, That this shall not apply to cases where employees are paid retirement allowance by adjusting it in advance pursuant to Article 8 (2) of the Guarantee of Workers’ Retirement Benefits Act when they receive the relevant refund money;16. Refund of the group refund-cum-guaranty insurance to be reverted to employees before the maturity of contract period or at maturity;17. Profits gained by executives or employees of a corporation by exercising, while serving in the relevant corporation, etc., stock options granted from the relevant corporation or that having a special relation referred to in Article 87 of the Enforcement Decree of the Corporation Tax Act with the said corporation (hereafter in this subparagraph, referred to as the “relevant corporation, etc.”; referring to the difference between the market price at the time of exercising stock options and the actual purchase price, and stocks with preemptive rights to new stocks); and18. Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>(2) In applying the provisions of paragraph (1), where wages are paid in other than cash, the calculation of such amount of income shall be governed by each subparagraph of Article 51 (5). <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(3) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>

The term “employees organization satisfying the necessary conditions prescribed by Presidential Decree” in Article 20 (3) of the Act means an employee stock ownership association under the Framework Act on Worker’s Welfare (hereinafter referred to as the “employee stock ownership association”). <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>

(1) The term “amount determined by Presidential Decree” in Article 20 (3) of the Act means the smaller amount of either 1/100 of the total amount of issued securities or of the total investment amount (hereafter in this Article referred to as the “total amount of issued securities, etc.”) of the relevant corporation, or 300 million won (referring to the aggregate of face values): Provided, That in cases of a financial institution under the Banking Act, it shall refer to the amount corresponding to 1/100 of its total amount of issued stocks, etc. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18048, Jul. 10, 2003; Presidential Decree No. 18705, Feb. 19, 2005>(2) In cases where the total face value of securities owned by a person who was a petty stockholder under paragraph (1) becomes 300 million won or more due to the capital increase of a corporation, such person shall be deemed as a petty stockholder, notwithstanding the provisions of paragraph (1), during the period from the date of capital increase to the end of the year following that to which belongs the date of capital increase: Provided, That the same shall not be applicable in cases where the total face value of his/her securities becomes 1/100 or more of the total amount of issued stocks, etc. after the capital increase of the relevant corporation. <Amended by Presidential Decree No. 17825, Dec. 30, 2002>(3) The term “controlling stockholders of a corresponding corporation prescribed in Presidential Decree” in Article 20 (3) of the Act means such stockholders in cases where the total stocks owned by stockholders possessing 1/100 or more of the total amount of issued stocks of the corresponding corporation (excluding stockholders who are the State or local governments), and by stockholders in special relations with them under Article 98 (1), reaches to the largest amount from among shareholders of the relevant corporation. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002>(4) The term “stockholders in special relations prescribed by Presidential Decree” in Article 20 (3) of the Act means such stockholders who have special relations under Article 98 (1). <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

(1) The term “retirement insurance determined by Presidential Decree” in Article 20-3 (1) 3 of the Act means retirement insurance under Article 2 (1) of the Addenda of the Guarantee of Workers’ Retirement Benefits Act (Act No. 7379). <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>(2) Annuities under Article 20-3 (1) 4-2 of the Act shall include the amount received additionally according to the results of management of retirement annuity. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(3) Annuity income subject to income tax under Article 20-3 of the Act shall be the amount computed by a formula in any of the following subparagraphs: <Amended by Presidential Decree No 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007>1. Annuities falling under Article 20-3 (1) 1 of the Act:Taxable annuity income = Gross amount received × (Cumulative total of converted income during the installment payment period after January 1, 2002 ÷ Cumulative total of converted income during the entire installment payment period) × {1 [Cumulative total of pension insurance premium paid by the beneficiary in installments in excess of the portion for which income deduction is actually allowed (limited to the amount verified with the evidence submitted by the beneficiary) Cumulative total of pension insurance premiums paid in installments during the installment payment period after January 1, 2002]}2. Annuities falling under Article 20-3 (1) 2 of the Act: Provided, That annuities under subparagraph 3 shall be excluded:Annuity income subject to income tax = Gross amount received

×
Number of months in which contributions are made after January 1, 2002
Number of months in which contributions are made
3. Annuities in cases where retired public officials, soldiers, teachers and staff of private schools or staff of special post offices are employed and appointed as public officials, soldiers, teachers and staffs of private schools, or staffs of special post offices, after January 1, 2002 and return their retirement benefits and the term in office is aggregated under the provisions of Article 23 (2) of the Public Officials Pension Act, Article 16 (6) of the Veterans’ Pension Act, Article 32 (1) of the Pension for Private School Teachers and Staff Act, or Article 34 (2) of the Special Post Offices Act: andAnnuity income subject to income tax = Gross amount received

×
Number of months in which contributions are paid after the date of re-appointment
Number of months in which contributions are paid
4. Annuities falling under Article 20-3 (1) 4-2 of the Act:Annuity income subject to income tax = Gross amount received
×
(1-
Cumulative total of the amount the employee paid in excess of actually deducted amount of income
)
Total amount of principal and interest as of the date when annuity starts to be paid
(4) The term “converted income” in paragraph (3) 1 means the amount that standard monthly income per annum during a participation period under Article 47 (1) 2 of the National Pension Act is converted into the current value of the year preceding the commencement of annuity payments by applying a revaluation rate by year as publicly notified by the Minister for Health, Welfare and Family Affairs. <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21214, Dec. 31, 2008>[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The term “money and other valuables received by a person other than an author, stage performer, phonograph record maker or broadcasting business operator, in compensation for the transfer or use of copyrights or neighboring rights” in Article 21 (1) 5 of the Act, means the prices received by a person, to whom copyrights or neighboring rights under the Copyright Act has been inherited, donated or transferred, by transferring or lending such copyright or neighboring rights to another person. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “trademark rights” in Article 21 (1) 7 of the Act means rights to trademarks under the Trademark Act, service marks, collective marks, geographical indications, homonymous geographical indication, collective marks with geographical indication, registered trademarks, and business marks. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(3) Goodwill under Article 21 (1) 7 of the Act shall include economic interest acquired as a consequence of obtaining authorization, a permit, license, etc, from an administrative authority, but shall not include goodwill transferred along with fixed assets for business (referring to assets under Article 94 (1) 1 and 2 of the Act]. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(4) The term “rights to lease a store prescribed by Presidential Decree” in Article 21 (1) 7 of the Act means economic interest (including other goodwill transferred along with the right to lease the store) acquired by a resident as a consequence of transferring his/her status as a lessee of a store from which he/she has earned business income (excluding business income further specified by Ordinance of the Ministry of Strategy and Finance). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>(5) Rights incidental to permission for collecting earth, sand, and rocks under Article 21 (1) 7 of the Act shall include rights incidental to permission for collecting earth, sand, and rocks, which are transferred along with a parcel of land under Article 94 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(6) Rights to develop and use ground water under Article 21 (1) 7 of the Act shall include rights to develop and use ground water, which are transferred along with a parcel of land, etc. under Article 94 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(7) The term “overdue charges or indemnities” in Article 21 (1) 10 of the Act means indemnification received due to the breach or termination of a contract providing for property rights, and means money or the value of other goods to compensate damage exceeding actual damages payment which forms the terms of original contract, regardless of the title thereof. In such cases, if the value of money, etc. received due to the breach or termination of a contract does not exceed the gross amount paid initially under contract terms, it shall not be deemed as the value of money, etc. in excess of the actual payment. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(8) The term “specially related person prescribed by Presidential Decree” in Article 21 (1) 13 of the Act means a person who is in any of the following special relations: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. A person who is in special relations under Article 98 (1) with the pertinent resident;2. A person who is in special relations under Article 2 (1) of the Enforcement Decree of the Act for the Coordination of International Tax Affairs with the pertinent nonresident; and3. A person who is in special relations under Article 87 of the Enforcement Decree of the Corporation Tax Act with the pertinent corporation.(9) The term “economic gain” in Article 21 (1) 13 of the Act means gain which an individual person receives by using the property at low consideration or free of charge, which is a resource of generating income as it is provided as a corporation’s property or for private business (hereinafter referred to as a “property for business”), except for dividends and bonuses which are disposed of when a corporation makes a report on its income under the Corporation Tax Act or the superintendent of the competent tax office determines or rectifies the corporation’s income, and means the rental and other prices for such uses to be normally paid for the use of such property (where there any amount lower than the normally paid amount has been paid, the amount shall be one from which such difference is deducted). <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(10) The term "paintings and calligraphic works, curios prescribed by Presidential Decree" in Article 21 (1) 25 of the Act means those the value of transfer of which per piece, item or pair (referring to goods normally traded in pairs as those that two or more are used together) is 60 million won or higher as those falling under any of the following subparagraphs: Provided, That works of a domestic artist alive as of the date of transfer shall be excluded: <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>1. Things falling under any of the following items from among paintings and calligraphic works, and curios:(a) Pictures, drawings, pastels [limited to those drawn by hand, excluding drafts and processed goods decorated], collage and decorated board similar to this;(b) Original engravings, prints and lithographs; and(c) Curios (limited to those over 100 years after manufacturing); and2. Things prescribed by Ordinance of the Ministry of Strategy and Finance after the Minister of Strategy and Finance has consulted with the Minister of Culture, Sports and Tourism as paintings and calligraphic works, and curios which have historic and artistic value other than paintings and calligraphic works, and curios under subparagraph 1.

(1) The term “one time payment for termination of mutual-aid installment of the small businesses or small merchants and manufacturers prescribed by Presidential Decree” in Article 21 (1) 18 of the Act means miscellaneous income under Article 86-3 of the Special Tax Treatment Control Act.(2) The term “individual retirement accounts provided for by Presidential Decree” in Article 21 (1) 21 of the Act means annuity savings under Article 86-2 of the Special Tax Treatment Control Act.[This Article Wholly Amended by Presidential Decree No. 20618, Feb. 22, 2008]

(1) Retirement income provided for in Article 22 (1) of the Act shall include the amount of money under the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>1. and 2. Deleted; <by Presidential Decree No. 17032, Dec. 29, 2000>3. Amounts of money deemed as retirement allowance paid in advance under Article 17 of the Act on the Employment Improvement, etc. of Construction Workers;4. Retirement allowances, retirement consolation benefits and other payments of a similar nature paid pursuant to the regulation for payment of retirement allowances, the terms of employment or the agreement between labor and management which are applied to many unspecified persons;5. Amounts of money paid in compensation for losses incurred by changes in the retirement allowance payment system, while paying the adjusted retirement payment under Article 8 (2) of the Guarantee of Workers’ Retirement Benefits Act as the provisions on payment of retirement benefits or the terms of employment are amended; and6. A lump-sum amount paid under the Guarantee of Workers’ Retirement Benefits Act, which falls under any of the following items, and a lump-sum amount paid as the benefit of retirement annuity pursuant to Article 16 (1) 1 of the Korea Scientists and Engineers Mutual-Aid Association Act (hereinafter “lump-sum retirement annuity”):(a) Lump-sum amount paid from the retirement annuity scheme under the Guarantee of Workers’ Retirement Benefits Act;(b) Lump-sum amount paid from the individual retirement account under the Guarantee of Workers’ Retirement Benefits Act (hereinafter referred to as the “individual retirement account”);(c) Amounts of money withdrawn early from the defined contribution retirement annuity scheme (hereinafter referred to as “defined contribution retirement annuity”) and the individual retirement account under the Guarantee of Workers’ Retirement Benefits Act; and(d) Lump-sum amount paid to the person who was receiving pension benefits due to such reasons as early withdrawal from the pension contract.(2) The term “retirement insurance money prescribed by Presidential Decree” in Article 22 (1) 1 (c) of the Act means the amounts of money under the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000>1. Insurance money of an insurance whose payment of insurance money is subject to the retirement of an employee and its insured and beneficiary is the employee (hereinafter referred to as “group retirement insurance”); and2. Insurance money or refund money from retirement insurance or a retirement lump-sum trust.(3) Lump-sum payment subject to tax under Article 22 (2) of the Act shall be the amounts of money calculated by any of the following formulas: <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Lump-sum payments under Article 22 (1) 1 (d) of the Act:(a) Where it is a lump-sum refund received pursuant to Article 56 (2) of the National Pension Act, which exceeds the limit pursuant to Article 80 (2) of the same Act; andlump-sum payment subject to taxation = total received amount × (total number of months in which premiums have been paid after January 1, 2002 / total number of months in which premiums have been paid) cumulative amount of premiums paid in excess of the amount deducted from amount of income during the period of payment after January 1, 2002 (limited to the amount that can be confirmed by evidenciary documents submitted by the relevant beneficiary).(b) Other cases:Lump-sum payment subject to taxation = cumulative amount of pension insurance premiums paid after January 1, 2002, interest thereon and extra interest cumulative amount of pension premiums paid in excess of the amount deducted from amount of income during the period of payment after January 1, 2002 (limited to the amount that can be confirmed by evidenciary documents submitted by the relevant beneficiary).2. Lump-sum payments under Article 22 (1) 1 (e) of the Act: Provided, That lump-sum payments under the provisions of subparagraph 3 shall be excluded: andLump-sum payment subject to tax = Gross
amount received

×
Number of months in which contribution is paid since
January 1, 2002
Gross number of months in which contribution is paid
3. Lump-sum payments in cases where retired public officials, soldiers, teachers and staff of private schools or staff of special post offices are employed and appointed as public officials, soldiers, teachers and staff of private schools, or staff of special post offices, after January 1, 2002 and return their retirement benefits and the term in office is aggregated under the provisions of Article 23 (2) of the Public Officials Pension Act, Article 16 (6) of the Veterans’ Pension Act, Article 32 (1) of the Pension for Private School Teachers and Staff Act, or Article 34 (2) of the Special Post Offices Act:Lump-sum payment subject to income tax = Gross amount received

×
Number of months in which contributions are paid after the date of re-appointment
Number of months in which contributions are paid
(4) Lump-sum payment subject to income tax under paragraph (1) 6 shall be the amount calculated by the following formula: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>Lump-sum payment subject to income tax = Gross amount received
× (1-
Cumulative total of the amount the employee paid in excess of actually deducted amount of income

)

Total amount of principal and interest as of the date when annuity starts to be paid
(5) Where a resident transfers or pays an amount in excess of the amount equivalent to 80/100 of retirement benefits (including the honorary retirement allowances and the group retirement insurance money; hereinafter the same shall apply) received due to retirement to a defined contribution annuity or individual retirement account (hereinafter referred to as the “taxation deferred account”) within 60 days from the date of retirement, the relevant retirement benefits shall not be deemed as the retirement income before he/she actually receives such amount. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>[This Article Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997]

The date receipt of the total income from interest shall be any of the following dates: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. For interest and an amount of discount under the provisions of Article 16 (1) 13 of the Act, redemption date under the agreement: Provided,That when making a redemption before the deadline, such date of redemption;2. For interest and discount amount of the bearer public bonds, etc. under the provisions of Article 46 (1) of the Act, receipt date of such payments;3. For interest and discount amount of the non-bearer public bonds under the provisions of Article 46 (1) of the Act, payment date under the agreement;4. For interest on an ordinary deposit, a fixed deposit, and an installment savings or an installment:(a) The actual day of receipt of the interest payment;(b) As for interest under a special contract for transferring it to the principal, the day of transfer to the principal under such special contract: Provided, That as for the interest income of a private annuity savings subject to the levy of income tax under Article 86 (2) of the Special Tax Treatment Control Act, the termination day before its maturity or the day of receipt of payment in forms other than the annuity;(c) The termination day, in cases where the interest is paid due to the termination of the accounts;(d) The day of extension, in cases where the contract period is extended; and(e) The interest of a fixed deposit in cases of a fixed installment savings connected to fixed deposit: the day on which a fixed deposit or a fixed installment savings is terminated or a deposit period of a fixed installment savings matures;5. For interest on the deposit at notice, the day of withdrawal;6. Deleted; <by Presidential Decree No. 19890, Feb. 28, 2007>7. For marginal profits on the sale and purchase of bonds or securities under the condition of redemption, the day of redemptive purchase or sale of the relevant bonds or securities pursuant to the agreement: Provided, That in cases where they are redeemably purchased or sold before their due date, the day of such redemptive purchase or sale shall be applied;8. For marginal insurance profits of the savings insurance, the paymentday of the insurance money or the refund money: Provided, That in cases where the insurance is terminated before its maturity, its termination date shall be applied;9. For refund of the excess amount by an at-work mutual-aid association, the payment day of the refund money of the mutual-aid association pursuant to the agreement;9-2. For profits of non-business loans, the payment day of the interest pursuant to the agreement: Provided, That in cases where there is no agreement as to the interest payment date, or where the interest is paid before the payment day pursuant to the agreement, or the interest excluded from the calculation of total amount of income pursuant to Article 51 (7) is received, such interest payment days shall apply;10. For the amount equivalent to interest, etc. during the possession period of bonds, etc., under Article 102, the selling day of the relevant bonds, etc. or the payment day of the interest, etc.; and11. In cases where the inherited property generating the interest under subparagraphs 1 through 10 is inherited or donated, the commencement date of such inheritance or the date of donation.

The date of receipt of the total dividend income shall be any of the following dates: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Profits or the dividends of the bearer securities: The date of receipt of the said payment;2. Dividends derived from the disposal of surplus funds: The resolution date for the disposal of surplus funds at the relevant corporation;3. Dividends on accrued interest during construction pursuant to Article 463 of the Commercial Act: The resolution day of the dividend on the accrued interest during establishment of the relevant corporation;3-2. Dividends distributed to joint investment businessmen under Article 17 (1) 6-3 of the Act: The last day of the taxable period;3-3. Dividend or dividend of gains under the provisions of Article 17 (1) 7 of the Act: The date of receipt of the said payment;4. Deemed dividends under Article 17 (2) 1, 2, and 5 of the Act: The day on which the retirement of securities, the decrease of capital, or the capitalization is decided (referring to the date determined under Article 461 (3) of the Commercial Act, if it depends on a resolution of the board of directors), or the day on which one leaves or secedes from the corporation;5. Deemed dividends under Article 17 (2) 3, 4, and 6 of the Act:(a) The day on which the value of remaining property is assessed, in cases where a corporation extinguishes due to a dissolution;(b) The day on which the merger registration is made, in cases where a corporation extinguishes due to a merger; and(c) The day on which the registration for division or for divided merger is made, in cases where a corporation extinguishes or survives as a result of the division or the divided merger;6. Dividends distributed under the Corporation Tax Act: The day on which the accounts are settled for the relevant business year of the relevant corporation; and7. Gains from a collective investment organization: The date on which the earnings of the investment trust are distributed: Provided, That it shall be the date on which the distributed amount is transferred to the principal according to a special agreement in cases where there is a special agreement to transfer it to the principal, while it shall be the date on which the term of the trust contract is extended in cases where the term is extended.

The receipt date of the gross real estate rental income shall be as follows:1. In cases where the payment date is fixed by contract or custom: Such fixed day;2. In cases where the payment date is not fixed by contract or custom:The paid day; and3. The amount equivalent to the rental fee for already elapsed period (including the interest on delay and other compensation for losses) which the owner is to receive due to a decision or reconciliation on the dispute concerning the lease contract (excluding the dispute concerning a claim for unpaid rental fees):The date of such decision or reconciliation: Provided, That as for the deposit money for the reimbursement of such rentals in cases of a dispute concerning the rental fee, it shall be the day as stipulated in subparagraph 1.

The receipt date of the total amount of business income shall be dates prescribed by the following subparagraphs: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Sale of commodities (excluding housing, in cases of a business of selling newly constructed housing; and real estate, in cases of a business trading real estate), products or other manufactured goods (hereinafter referred to as “commodities, etc.”):The day on which commodities, etc. are delivered;2. Approval sales of commodities, etc.:The day on which the other party expresses his/her intention to purchase: Provided, That in cases where such sale is settled by special contract or custom, unless he/she returns the goods or expresses his/her intent of rejection within the specified period, it shall be the expiration date of such period;3. Consignment sale of commodities, etc.:The day on which the consignee sells the consigned goods;4. Sale of commodities, etc. under a long-term installment plan prescribed by Ordinance of the Ministry of Strategy and Finance:The date of delivery of the commodities, etc.: Provided, That during the taxable period whereto belongs the date of receipt or of agreeing to receive under such long-term installment plan, and where the amount of such receipt and the necessary costs corresponding thereto are appropriated, the date of receipt or agreed date of receipt under a long-term installment plan. In such cases, the amount received or receivable before the date of delivery shall be deemed to be received on the date of delivery, and in cases where the business has been closed down during a long-term installment period, the amount not included in the gross income amount as such date of business closure and the corresponding cost shall be included in the amount of gross income and necessary costs during the taxable period whereto belongs the date of business closure;5. Provision of construction, manufacturing and other services (including contracted construction and reservation sale; hereafter in this subparagraph, referred to as “construction, etc.”):The date of completion of service (in cases of the delivery of an object, the date of such delivery): Provided, That if the contract period is one year or more, and it is determined by Ordinance of the Ministry of Strategy and Finance, the work progress rate as determined by the same Ordinance (hereinafter referred to as “work progress rate”) shall be the standard, whereas if a contract period is less than one year, and it is determined by the same Ordinance, the work progress rate may serve as a standard;6. Deleted; <by Presidential Decree No. 15969, Dec. 31, 1998>7. Sale by vending machines:The time when the relevant business withdraws cash from the relevant vending machines;8. Supply of human services:The day set to receive remuneration for services or the day on which the supply of services has been completed, whichever comes first: Provided, That an entertainer, professional athlete, etc. receive a lump-sum of remuneration for exclusive contract covering more than a one-year period, the amount obtained by dividing the remuneration concerned proportionally among the period of contract shall be the amount received at the end of each period of contract, and the number of months shall be counted according to the calendar, however, in cases where a month to which the date of commencement of the term of the relevant contract belongs is less than one month, it shall be counted as one month, and in cases where a month to which the expiration date of the term of the relevant contract belongs is less than one month, it shall not be included;9. Deleted; <by Presidential Decree No. 15969, Dec. 31, 1998>10. Discount of bill:The expiration date of such bill: Provided, That when such bill is transferred before its expiry, the date of such transfer shall be applied;10-2. For the credit accruing from the transfer or sale of a property under a long-term installment plan pursuant to subparagraph 4, if appropriating the marginal gain on current value discount after evaluating in the current value according to business accounting standards, such marginal gain on current value discount shall not be counted in the amount of gross income of the appropriated taxable period, and the amount returned or to be returned according to business accounting standards during the recovery period of relevant credit shall be counted in the amount of gross income of each taxable period;10-3. Amount of interest and discount accruing from the finance and insurance business on the Korea Standard Industrial Classification:The date of actual receipt;10-4. Income accruing from the lease of assets:The date determined by applying mutatis mutandis the provisions of Article 47. In such cases, the term “real estate” in Article 47 shall be deemed as the “asset”; and11. Sale and purchase of the asset which does not fall under subparagraphs 1 through 10-4 (including housing, in cases of a business selling newly constructed housing; and real estate, in cases of a business trading real estate):The date on which the purchase price is fully paid: Provided, That in cases of making the registration or enrollment for a transfer of ownership, etc. or of using and taking profits from the relevant property before the full payment of price, the day of such registering or enrolling, or the day of using and taking profit, shall apply.

(1) The receipt date of the gross earned income shall be as follows: <Amended by Presidential Decree No. 14860, Dec. 30, 1995>1. Salary:The day on which one’s labor is provided;2. Bonuses derived from the disposal of surplus funds:The day on which the disposal of surplus funds is decided;3. Bonuses for the officers or stockholders, employees and other investors of the relevant corporation, which has accrued when the amount of income in the relevant business year is reported by a corporation, or is determined or rectified by the superintendent of the competent tax office:The day on which one’s labor is provided during the relevant business year; and4. Retirement allowance or retirement bonus, etc. under Article 38 (1) 13 of the Decree:The date on which they are paid or payable.(2) In cases where the salary is paid under a contract for work and other similar contracts, and where the relevant salary is not fixed before the commencement date of the final return period of tax base in the relevant taxable period, it shall be deemed received on the day of fixing notwithstanding the provisions of paragraph (1) 1: Provided, That in cases of the actual receipt amount paid before such day of fixing, the day of such reception shall be applied.

(1) The date of receipt of the gross amount of miscellaneous income shall be any of the following dates: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Miscellaneous income under Article 21 (1) 7 of the Act (excluding miscellaneous income from leasing an asset or rights):The day on which payment is settled, the day on which the asset is delivered, the day on which the asset is utilized, or the day on which the asset makes a profit, whichever occurs first: Provided, That the amount is not determined though the asset has been delivered, has been utilized or has made profit before the payment is settled, it shall be the day of payment;2. Miscellaneous income under Article 21 (1) 20 of the Act:The date of the final settlement of accounts for the relevant business year of the corporation; and3. Miscellaneous income other than those specified in subparagraphs 1 and 2 above:The date on which the payment is received.(2) The receipt date of the gross amount of retirement income shall be the retirement date: Provided, That it shall be the date of receipt of income in cases falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19327, Feb. 9, 2006>1. Where receiving early withdrawn money under Article 42-2 (1) 6 (c);2. Where receiving lump-sum payment under Article 42-2 (1) 6 (d); and3. Where receiving again the retirement benefits transferred or paid in to a taxation-deferred account under Article 42-2 (5).(3) and (4) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>(8) The receipt date of the gross amount of the annuity income shall be the date on which the annuity is paid or payable. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2006>

(1) The date of receipt of an income distributed pursuant to Article 100-18 (1) of the Special Tax Treatment Control Act shall be the expiration date of the taxation year of the relevant enterprise in the same line of business.(2) The date of receipt of an income exceeding the value of stakes as of the date of distribution from among the market prices of assets distributed pursuant to Article 100-22 (1) of the Special Tax Treatment Control Act shall be the date of distribution.[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]

(1) As to prepaid rentals in calculating the amount of gross income of real estate rental income, the aggregate in each year of the amount obtained by dividing such prepaid rentals by the number of months in the contract period shall be the amount of gross income.(2) In applying the provisions of paragraph (1), the calculation of the number of months shall be governed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(3) The calculation of gross business income shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>1. The value of the returned goods and the discount on sales shall not be included in the calculation of the amount of gross income earned during the relevant year: Provided, That a bounty granted to the other party based on the trading quantity and trading amount, and other amount and uncollectable accounts similar thereto, shall not be deducted in the calculation of the amount of gross income;1-2. The discount amount of sales in cases of settling the credit sales shall be subtracted from the calculation of the amount of gross income in a taxable period whereto belongs the payment term under an agreement with the other party of transaction (the payment date in cases where no payment term is stipulated therein);2. The bounty and other amounts similar thereto which are granted by the other party of a transaction shall be included in the gross amount of income;3. Where the amount of tax paid as necessary expenses, such as the money of refunded customs duties, has been returned or is to be returned, such amount shall be included in the gross amount of income;4. The value of an asset received without compensation in connection with the business, and the deducted amount of liabilities accruing from the exemption or extinguishment of obligations shall be included in the gross amount of income: Provided, That this shall not apply to cases of Article 26 (2) of the Act;4-2. The profits, dividends of gains or insurance marginal profits falling under any of the following items shall be counted in the gross amount of income:(a) The profits or dividend of gains from the lump-sum retirement trust under Article 23 (7);(b) The marginal profits from a group retirement insurance contract or the retirement insurance contract under Article 2 (1) of the Addenda of the Guarantee of Workers’ Retirement Benefits Act; and(c) The marginal profits from an insurance contract, or the profits or dividend of gains from a trust contract under Article 16 (2) of the Guarantee of Workers’ Retirement Benefits Act; and5. The amount of income related to businesses other than those under subparagraphs 1 trough 4-2, which has been reverted or is to be reverted to the relevant business operator, shall be counted in the gross amount of income.(4) The marginal profit accruing from insurance, which is received due to loss in the relevant business property in connection with business by a resident with real estate rental income or business income, shall be included in the gross amount of income. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(5) In applying Article 24 (2) of the Act, the calculation of amounts of income other than money shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where the commodities manufactured, produced or sold are transferred from the manufacturer, producer or sale business operator, the sale price of such manufacturer, producer or sale business operator;2. Market price when the goods are transferred from those other than their manufacturer, producer, or sale business operator;3. Face value of stocks received as dividends from the corporation;4. In cases where preemptive rights are received from the corporation issuing new shares (excluding cases where a stockholder receives them), the amount calculated by deducting the issue-price of relevant new stocks from the value of new stocks as of the payment date pursuant to such preemptive rights; and5. In cases other than subparagraphs 1 through 4, the market value as determined by Ordinance of the Ministry of Strategy and Finance.(6) When the value of new stocks under paragraph (5) 4 is quoted low within one month from the day following the relevant payment date, such lowest value shall be the value of new stocks.(7) In calculating the gross income from the profits accruing from a non-business loan under Article 16 (1) 12 of the Act, if the whole or part of the principal and interest are irrecoverable from the debtor or a third party because the relevant non-business loan falls under bonds stipulated in Article 55 (2) 1 or 2 before the final return on tax base under Article 70 of the Act or the determination or rectification of tax base and amount of tax under Article 80 of the Act, the calculation shall be made by preferentially subtracting the principal from the amount recovered. In such cases, if such amount recovered is short of the principal, the amount of gross income shall be deemed as nonexistent. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>(8) In calculating the amount of revenue from a business for cutting down or transferring forestry trees on a parcel of forest land, the income accrued from the transfer of the forest land, when the trees are transferred along with the parcel of forest land, shall not by included in the calculation of gross amount of revenue. In such cases, the price for acquisition or transfer shall be calculated in accordance with the following guidelines if it is impossible to separate the price for acquisition or transfer of the parcel of forest land from that for the trees thereof: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. As to the parcel of forest land: The standard market price under Article 99 of the Act; and2. As to the trees thereon: The balance after deducting the price for acquisition or transfer of forest land calculated in accordance with subparagraph 1 from the total price for the acquisition or transfer. In such cases, it shall be deemed that there is no price for acquisition or transfer of the trees if there is no balance remains.(9) The revenue amount acquired from transferring a right under a forestation contract for profit sharing or the revenue amount that a party to a forestation contract for profit sharing has earned from cutting down trees or transferring the forest, which is the subject matter of such contract, in accordance with the sharing ratio under the contract shall be included in the gross revenue amount of the business for cutting down or transferring trees in forest land. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>

(1) For the purposes of Article 25 (1) of the Act, the term “residence and land appurtenant thereto, which are prescribed by Presidential Decree” means buildings (hereafter in this Article referred to as “residence”) to be used for regular residence (excluding cases of residential use for business) and the land appurtenant thereto, a potion whose area does not exceed the larger of the following subparagraphs: <Amended by Presidential Decree No. 19327, Feb. 9, 2006>1. The total area of the building (excluding the area in the basement level, area used for parking purposes on the ground level, and area for the common facilities for residents under subparagraph 3 of Article 2 of the Regulations on Standards, etc. of Housing Construction); and2. Land area multiplied by five times of the area on which the building is attached (10 times in cases of land located outside of an urban district under Article 6 of the National Land Planning and Utilization Act).(2) In applying the provisions of paragraph (1), the scope of residences and the land appurtenant thereto in cases where the residence and a building for business subject to a levy of value-added tax (hereafter in this Article referred to as “building for business”) are concurrently installed shall be governed by the classification falling under each of the following subparagraphs. In such cases, if the residences and the land appurtenant thereto are leased to not less than two lessees, it shall be respectively applicable by calculating the area of residence portion of each lessee (excluding that for residing for the business) and the area of the portion of a building for business: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002>1. Where the area of residential portion is larger than that of the portion of a building for business, the whole of these shall be deemed the residence. In such cases, the scope of land appurtenant to the relevant residence shall be the same as paragraph (1); and2. Where the area of residential portion is equal to or smaller than that of the portion of a building for business, other portions of building for business than the residential portion shall not be deemed the residence. In such cases, the area of land appurtenant to the relevant residence shall be calculated by multiplying the gross land area by the ratio occupied by the area of residential portion in the gross building area, and such scope shall be the same as paragraph (1).(3) The amount to be included in the amount of gross income under Article 25 (1) of the Act shall be the amount calculated by the following formula. In such cases, when the amount to be included in the amount of gross income is less than zero, it shall be deemed as zero, and the drop number may be calculated by multiplying the remainder of rental deposit as of the end of every month by the number of days elapsed: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>Amount to be included in the amount of gross income = {Drop number of the deposits, etc. in the relevant taxable period － Drop number of the amount corresponding to the construction costs for real estate for lease} × 1/365 (366 in cases of a leap year) × Interest rate as determined by Ordinance of the Ministry of Strategy and Finance in view of the interest rate of fixed deposit of the financial institutions (hereafter in this Article, referred to as the “fixed deposit interest rate”) － Total of interest earned, discount fee and dividend accrued from the rental business part in the relevant taxable period.(4) In cases where the amount of income is reported in estimation under Article 45 (3) of the Act or is estimated, investigated and determined under the proviso to Article 80 (3) of the Act, the amount calculated by the following formula shall be included in the gross amount of income, notwithstanding the provisions of paragraph (3): <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>Amount to be included in the amount of gross income = Drop number of deposits etc. of the relevant taxable period × 1/365 (366 in cases of a leap year) × Interest rate of fixed deposit.(5) The term “amount corresponding to the construction costs of real estate for lease” in paragraph (3) means the amount falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where constructing an underpass and making an adoption of donation to the State or a local government under the State Properties Act and other Acts and subordinate statutes, and where leasing it after obtaining a permit for the underpass occupation (limited to the first occupation permit without compensation), the amount corresponding to the construction costs for underpass as determined by Ordinance of the Ministry of Strategy and Finance; and2. In cases of the real estate for lease other than under subparagraph 1, the amount corresponding to the costs for constructing the relevant real estate for lease as determined by Ordinance of the Ministry of Strategy and Finance (excluding the land value).(6) The interest earned, discount fee and dividend accrued from the rental business part under paragraph (3) shall be limited to those accrued from the financial property which is confirmed to have been acquired as the relevant deposits for lease, etc. by reference to books kept and entered or the evidentiary documents. <Amended by Presidential Decree No. 17456, Dec. 31, 2001>(7) In applying Article 25 (1) of the Act, the amount of gross income from rentals of real estate, when making a sublease on deposit or the sublease, shall be as follows: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17456, Dec. 31, 2001>1. The amount calculated by deducting, from the amount of gross income paid by the former lessee, the aggregate of the deposit or key money paid to lease or rent the subject matters, and of the amount computed under paragraphs (1) through (6) with respect to the expenses for reforming the facilities of relevant real estate before making a sub-lease on deposit or the sublease as well as the rental fees; and2. In cases where only a part of the relevant real estate has been leased to the sublessee, the amount calculated by deducting, from the gross amount of income, the amount computed by multiplying the aggregate under subparagraph 1, respectively, by the occupying ratio of the subleased portion of the relevant real estate.(8) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>(9) The provisions of Article 51 (5) shall apply mutatis mutandis to the calculation of the value at the time of consumption or payment under Article 25 (2) of the Act.

(1) The term “deficit carried forward prescribed by Presidential Decree” in Article 26 (2) of the Act means the deficit carried forward under Article 45 (2) of the Act.(2) The term “income amount carried forward from the preceding year” in Article 26 (3) of the Act means income of each year which has already been taxed is again included in the income of the corresponding year.

(1) The necessary expenses corresponding to the gross amount of real estate rental income and business income in each year shall be as follows: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Purchase price (excluding a reduction of purchase or a purchase discount) of the raw materials for commodities or products sold and the expenses incidental thereto. In such cases, the original purchase price and expenses incidental thereto shall be applicable, if the relevant business has consumed such for business use, as have been purchased for other purposes;1-2. Incidental expenses in connection with sale, such as storage, packing charges, carriage, sales bounty, sales benefit, etc. of goods and products sold (in case of sales bounty and sales benefit, including cases where they are paid without a prior agreement);2. Book value of real estate at the time of its transfer (limited to the cases of a sale business of new construction houses and real estate trading business). In such cases, the acquisition value calculated by applying Article 89 mutatis mutandis at the time of original acquisition by the relevant business operator, shall be the book value, if he/she uses such real estate as has been purchased for other purposes for his/her business use;3. Expenses for a forestry business:(a) Purchase expenses for seeds, seedlings and fertilizers;(b) Expenses for afforestation;(c) Management expenses;(d) Expenses for deforestation;(e) Equipment expenses;(f) Improvement expenses; and(g) Expenses for selling forest trees;4. Expenses for the sericultural industry:(a) Purchase expenses;(b) Raising expenses;(c) Management expenses;(d) Equipment expenses;(e) Improvement expenses; and(f) Sale expenses;5. Expenses for livestock and poultry:(a) Expenses for hatchery eggs;(b) Delivery expenses;(c) Breeding expenses;(d) Equipment expenses;(e) Improvement expenses; and(f) Sale expenses;6. Employees’salaries;7. Expenses for business property:(a) Repair expenses for maintaining current status of business property (including a part of idle facilities attached to the relevant business);(b) Expenses for management and maintenance; and(c) Rent for a business property;8. Taxes and public charges related to business: Provided, That those not included among necessary expenses under the Act and this Decree shall be excluded;9. Non-life insurance premium for the business property;10. Insurance premiums, trust installments, or mutual aid installments, shares in expenditure under Article 38 (1) 12 (c), (d) or (f);10-2. Charges which an employer defrays under the Guarantee of Workers’ Retirement Benefits Act;11. Insurance premiums or charges which an employer defrays under the National Health Insurance Act, the Employment Insurance Act and the Long-Term Care Insurance for the Aged Act;11-2. Insurance premiums of an employer himself, which are defrayed as an employment-provided policyholder under the National Health Insurance Act and the Long-Term Care Insurance for the Aged Act;11-3. Insurance premiums borne as a regional insured under the National Health Insurance Act and the Long-Term Care Insurance for the Aged Act;12. Insurance premiums for a group genuine guaranty insurance and group refund-cum-guaranty insurance;13. Interest paid on the debt incurred directly for gaining the gross amount of income;14. Depreciation costs of fixed property for business;15. Appraisal losses on property;16. Bad debt (including those which have not been subjected to a deduction of bad debt amount of tax under Article 17-2 of the Value-Added Tax Act from among the accrued receivables of the output tax of the value-added tax which are irrecoverble);17. Bounties and other amounts similar thereto paid to any other party according to trade quantity or transaction amount;18. In cases where the purchasing costs of those items destroyed by disaster, from among purchased commodities, products, real estate and forest, are included among necessary expenses in the calculation of income during the year in which the relevant disaster occurs, the relevant costs;19. Amounts paid to employees to cover expenses for at-work sports or entertainment, or support for family planning;20. Value for free medical treatment paid by free treatment tickets as determined by the Minister for Health, Welfare and Family Affairs;21. Expenses for inspection and training overseas which are related to business duties;22. Operating expenses for special classes or middle or high schools attached to the industrial enterprises for working teenagers established under the Elementary and Secondary Education Act;23. Operating expenses for daycare facilities at work established under the Infant Care Act;24. Expenses paid for a geological survey, drilling or digging galleries for prospecting minerals, and expenses for the relevant development;24-2. Deleted; <by Presidential Decree No. 20618, Feb. 22, 2008>25. Expenses [in case of goods (excluding goods under five thousand won per piece) donated to a specific person, limited to an amount not exceeding 30 thousand won a year] paid for samples, calendars, diaries, cups, fans and other similar articles to be donated to many unspecified persons for purposes of advertisement and publicity;26. Membership fees paid to organizations constituted by business operators, which are juristic persons, or the cooperatives or associations registered with the competent authorities; and27. Expenses corresponding to the relevant gross amount of income, which are of such nature as are similar to the expenses under subparagraphs 1 through 26.(2) Bad debts under paragraph (1) 16 must fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>1. Claims which are irrecoverable due to the debtor’s bankruptcy, compulsory execution, execution of punishment, or discontinuance of a business;2. Claims which are irrecoverable due to the debtor’s death, disappearance or be missing, etc.; and3. Other claims which are deemed irrecoverable under conditions determined by Ordinance of the Ministry of Strategy and Finance.(3) The charges which an employer has paid in the defined contribution type retirement annuities and the individual retirement account under Article 26 of the Guarantee of Workers’ Retirement Benefits Act (hereinafter referred to as “defined contribution retirement annuities, etc.”) of the insurance premiums, trust installments, or charges to be included among necessary expenses under paragraph (1) 10 and 10-2 (hereafter in this Article referred to as “insurance premiums, etc.”) shall be included among necessary expenses, and insurance premiums, etc. excluding the charges paid in the form of defined contribution annuities, etc. shall be limited to the amounts obtained by deducting insurance premiums, etc. paid until the end of the immediately preceding year, from insurance premiums, etc. for insurance money or trust money (hereafter in this Article referred to as “insurance money, etc.”) equivalent to an amount obtained by deducting the reserves for retirement allowance as of the end of the relevant year, from the estimated amount payable as retirement allowances if all employees (excluding those subscribed to the defined contribution annuities, etc.) working as of the end of the relevant year retire, and where exist two or more insurance premiums, etc. exist, the insurance premiums, etc. of insurance or trust contracts which are concluded earlier shall be included among necessary expenses. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 19327, Feb. 9, 2006>(4) A business that has included insurance premiums, etc. among necessary expenses under paragraph (1) 10 and 10-2, shall submit a written report on the fixed tax base along with a detailed payment statement of retirement insurance premiums, etc. determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office of the place of tax payment. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(5) Where a business that has included insurance premiums, etc. among necessary expenses under paragraph (3) falls under any of the following subparagraphs, the amount as stipulated in a respective subparagraph shall be included in the gross amount of income, in calculating the amount of income during the taxable period wherein such causes have occurred: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 19327, Feb. 9, 2006>1. Where a business furnishes a claim for insurance money, etc. as security for liabilities: An amount equivalent to the insurance premiums, etc. for the insurance money, etc. which have been furnished as security;2. Where an insurance contract or trust contract is terminated: Insurance money, etc. to be reverted to a business operator;3. Where a business receives dividends from an institution handling insurance or trust: Relevant dividends; and4. Where the benefits or reserves revert to an employer under each subparagraph of Article 15 of the Enforcement Decree of the Guarantee of Workers’ Retirement Benefits Act: Relevant benefits or reserves.(6) Where a resident, who runs a manufacturing, wholesale or retail business of food and beverage items under the Korea Standard Industry Classification, donates without compensation the surplus food generated in the relevant business to a person who has registered with the State or local governments as an operator of surplus food utilization business (hereafter in this paragraph, referred to as an “operator of surplus food utilization business”) or to the person designated by such operator of surplus food utilization business, the book value of relevant donated surplus food shall be included among necessary expenses. In such cases, such amount shall not be included as a donation under Article 79 (1) 1. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

(1) The allowances for bad debts to be included among necessary expenses under Article 28 (1) of the Act shall be the larger amount of the amount equivalent to 1/100 of the aggregate of credit account receivable, accounts due, and other claims related to the business (hereafter referred to as “credit balance” in this Article) as of the end of the relevant year, and the amount obtained by multiplying the credit balance by the actual ratio of bad debts. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(2) The credit balance under paragraph (1) shall be that falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>1. Uncollected balance of the sale price of commodities and products, and uncollected balance of processing fees and service charges; and2. Uncollected balance of the claims accruing from normal business trades, and of the output tax of value-added tax, and those determined by Ordinance of the Ministry of Strategy and Finance.(3) The actual ratio of bad debts under paragraph (1) shall be the ratio calculated as follows: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>Actual ratio of bad debt = Bad debts in the relevant taxable period / Credit balance as of the closing date of immediately preceding taxable period.(4) The balance of the allowance for bad debts to be included in the amount of gross income in calculating the amount of income in the following year under Article 28 (2) of the Act, shall be the amount remaining after off-setting the bad debts incurred in each year.(5) The recovered amount from among the bad debts included among necessary expenses under Article 55 (1)16 or the bad debts which have offset the allowance for bad debts, shall be included in the amount of gross income of the year to which such recovery date belongs.(6) A business that wishes Article 28 of the Act to apply to it shall submit a final return on tax base, along with a detailed statement of the allowance for bad debts prescribed by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office of tax payment place. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(7) Matters necessary for the calculation of the allowance for bad debts other than under paragraphs (1) through (6) shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The reserve for retirement benefits to be included among necessary expenses under Article 29 of the Act, shall be limited to the maximum amount equivalent to 5/100 of the gross wages paid in the relevant year to the employees who are eligible to receive retirement benefits (excluding those who have subscribed to the defined contribution annuities, etc.; hereafter the same shall apply in this Article). <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19327, Feb. 9, 2006>(2) The accumulated amount of reserves for retirement benefits to be included among necessary expenses under paragraph (1) shall be limited to the maximum of 30/100 of the estimated amount to be paid as retirement benefits where the incumbent employees as of the end of the relevant year retire in whole. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19327, Feb. 9, 2006>(3) The amount appropriated by a businessman for conversion money into retirement allowance under the National Pension Act, shall be added to the ceiling of the accumulated amount of the reserves or retirement benefits under the provisions of paragraph (2). <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>(4) When a business that appropriates the reserve for retirement benefits to necessary expenses pays the retirement benefits to an employee, it shall first offset it by the reserves for retirement benefits.(5) A business that wishes Article 29 of the Act to apply to it shall submit a final return on tax base, along with a detailed statement on the reserve for retirement benefits determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The gains from insurance claim to be included among necessary expenses under Article 31 (1) of the Act shall be appropriated for the temporary depreciation reserve.(2) The term “same kinds of fixed assets” in Article 31 (1) of the Act means those the same as the fixed assets whose usage or purpose is extinguished.(3) The depreciation cost of fixed assets acquired by gains from insurance claim shall be offset for the temporary depreciation reserve within the limit of the temporary depreciation reserve under paragraph (1).(4) A business that wishes Article 31 (2) of the Act to apply to it shall submit a final return on tax base along with plans for the use of the insurance money determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The amount to be included among necessary expenses under Article 32 (1) of the Act shall be the expenses spent to acquire or improve the fixed assets for business from among paid national subsidies, and such amount shall be appropriated for the temporary depreciation reserves or the advanced depreciation reserves according to the following classifications:1. Property to be depreciated: Temporary depreciation reserves; and2. Other property: Advanced depreciation reserve.(2) The depreciation cost of fixed business property acquired with national subsidies shall be offset for the temporary depreciation reserves within the limit of the temporary depreciation reserve under paragraph (1).(3) A business that wishes Article 32 (2) of the Act to apply to it shall submit a final return on tax base, along with plans for the use of national subsidies determined by Ordinance of the Ministry of Strategy and Finance, to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(4) The term “unavoidable causes prescribed by Presidential Decree” in the latter part of Article 32 (2) of the Act means cases falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>1. Where the permission, authorization, etc. of construction are delayed;2. Where the period of construction is extended because the place in which construction shall be executed is not determined, etc.;3. Where litigation on compensation, etc. for a site is under way; or4. Where a cause corresponding to the provisions of subparagraphs 1 through 3 has occurred.

(1) The term “expenses for such domestic affairs prescribed by Presidential Decree, and those related thereto” in Article 33 (1) 5 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008>1. Expenses confirmed as used by the business in connection with domestic affairs. In such cases, the expenses related to the houses corresponding to Article 98 (2) 2 (proviso) shall be deemed to be expenses incurred in connection with the domestic affairs; and2. In cases where the total amount of business property falls short of the total amount of liabilities, the amount calculated as interest paid on the debt equivalent to such amount of short-fall under conditions prescribed by Ordinance of the Ministry of Strategy and Finance.(2) The term “assets prescribed by Presidential Decree, such as inventory assets” in the main body of Article 33 (1) 7 of the Act means property subject to the application of Article 91 or 97; and the term “such fixed assets prescribed by Presidential Decree” in the proviso to the same subparagraph means the fixed property damaged or destroyed by natural disaster, calamities or other causes determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In cases where the depreciation costs of fixed business property (excluding invested properties) are appropriated to necessary expenses, the depreciation cost under Article 33 (1) 6 of the Act (hereinafter referred to as a “depreciation amount”) shall be appropriated as necessary expenses in calculating the income amounts within the limit of the amount calculated by such means as returned in each taxable period by fixed asset to the superintendent of the competent tax office (hereinafter referred to as the “scope of depreciation”). In such cases, if the business is opened or closed down in the relevant taxable period, or if the assets subject to depreciation are acquired or transferred in the relevant taxable period, the scope of depreciation shall be computed by dividing such amount by 12 as is obtained by multiplying the scope of depreciation by the number of months spent for business in the relevant taxable period; and the number of months shall be computed according to the calendar, treating the number of days not exceeding a month as one month. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(2) The term “fixed business assets” in paragraph (1) means assets used directly for the said business, and which fall under one the following subparagraphs (excluding assets the value of which does not decreased over time; hereinafter referred to as “depreciable assets”): <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18903, Jun. 30, 2005>1. Tangible fixed assets falling under any of the following items:(a) Buildings (including appurtenant facilities) and structures (hereinafter referred to as “structures”);(b) Vehicles and transportation equipment, tools, instruments and furnishings;(c) Ships and aircraft;(d) Machines and apparatuses;(e) Animals and plants; and(f) Tangible fixed assets similar to items (a) through (e); and2. Intangible fixed assets falling under any of the following items:(a) Goodwill, design right, utility model right, trademark right;(b) Patent right, fishing rights, gathering rights under the Submarine Mineral Resources Development Act, toll road management rights, water utilization rights, rights to utilize electricity and gas supply facilities, rights to use water supply facilities for industry, rights to utilize tap water facilities, rights to use heat supply facilities;(c) Mining rights, rights to use exclusive telecommunications and telephone facilities, rights to utilize exclusive sidetracks, rights to manage sewage terminal treatment plants, rights to manage tap water facilities;(d) Rights to use dam;(e) Deleted; <by Presidential Decree No. 17825, Dec. 30, 2002>(f) Development expenses: Expenses incurred in applying the outcome of research or related knowledge for planning or designing in order to create or remarkably improve material, apparatus, products, process, system or service before commercial production or uses, which have been appropriated for development expenses by the relevant businessman (including the amount paid by the member of the Industrial Technology Research Cooperatives under the Act on the Support of the Industrial Technology Research Cooperatives for the research and development and the acquisition of research facilities, etc. to the relevant Cooperatives);(g) Value of donated property for beneficial use: Book value of relevant property in cases where any use is made of the relevant property or any profits accrue therefrom after the properties other than money are donated; and(h) Rights to utilize frequencies and rights to manage airport facilities: Rights to utilize frequency under Article 14 of the Radio Waves Act, and rights to manage the airport facilities under Article 105-2 of the Aviation Act.(3) In applying the provisions of paragraph (1), the fixed assets acquired under conditions of long-term installment, etc. shall be included among the depreciable assets, irrespective of whether the payment is settled or the ownership is transferred; and the assets corresponding to the financial lease under Article 24 (5) of the Enforcement Decree of the Corporation Tax Act shall also be included among the depreciable assets of the businessman who is the user of such lease. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) A business may appropriate in each year the book value of relevant depreciable fixed property, without reducing it, to the accumulated depreciation amounts, and include such depreciation costs among necessary expenses. In such cases, the accumulated depreciation amounts shall be appropriated by each individual asset, and if the specification on the adjustment of depreciation cost under Article 73-2 is made and preserved, the total depreciation costs may be appropriated to the accumulated depreciation amounts.(5) The amount in excess of the scope of depreciation from among the depreciation costs appropriated to necessary expenses during each taxable period of a businessman (hereafter in this Article, referred to as the “amount of disapproved depreciation”) shall, in cases where the depreciation costs appropriated to necessary expenses during the taxable periods thereafter fall short of the scope of depreciation , be appropriated to necessary expenses within the limit of such short-fall amount (hereafter in this Article, referred to as the “approved short-fall amount”) which is calculated by the businessman in the subsequent taxable year. In such cases, when the business fails to appropriate any depreciation costs to necessary expenses, the amount of disapproved depreciation shall be ratified as expenses within the limit of scope of depreciation scope.(6) The approved short-fall amount cannot be appropriated to the disapproved amount of depreciation during the taxable period thereafter.(7) In applying the provisions of the latter part of paragraph (1), if a part of depreciable assets is transferred, the accumulated amount of depreciation, the disapproved depreciation amount, or the approved short-fall amount for the relevant transferred asset shall be such amount as computed by multiplying the accumulated amount of depreciation, the disapproved amount of depreciation, or the approved short-fall amount for the entire relevant depreciable assets by the ratio which the value of transferred parts occupies out of the entire values of relevant depreciable assets. In such cases, the relevant value shall be the book value at the time of acquisition. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(8) In case where a businessman makes concurrently the depreciation and the evaluation increase on the depreciable assets, the scope of depreciation shall be calculated by considering that the depreciation has been conducted first, and the evaluation increase is made thereafter.[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]

(1) Useful Life of a depreciable asset, and the depreciation rate according to the relevant useful life shall be as any of the following subparagraphs: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008>1. Assets for laboratory tests as determined by Ordinance of the Ministry of Strategy and Finance and intangible fixed assets under Article 62 (2) 2 (a) through (d): Useful life as determined by Ordinance of the Ministry of Strategy and Finance, and the consequential depreciation rate by depreciation method as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “depreciation rate”); and2. Depreciable assets (excluding intangible fixed assets under Article 62 (2) 2 (f) through (h)) other than assets subject to subparagraph 1: Useful life as reported by a business to the superintendent of the competent tax office of the place of tax payment (hereinafter referred to as “reported useful life”) by selecting and applying within the scope of useful life as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as “scope of useful life”), with the increase or decrease of 25/100 of the relevant standard useful life from the standard useful life as determined by Ordinance of the Ministry of Strategy and Finance by structure, asset or business type (hereinafter referred to as “standard useful life”), and the corresponding depreciation rate (the standard useful life and the corresponding deprecation rate, if it is failed to make a report within the reporting term under any of the subparagraphs of paragraph (2)).(2) A report (including a report by means of the national tax information and communications networks) on the useful life under paragraph (1) shall be made on the form of report on useful life as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office by not later than the term of final return on tax base of the gross income tax in the taxable period to which the day under any of the following subparagraphs belongs: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases of a businessman who commences a new business; the commencement date of such business; and2. In cases where a businessman other than subparagraph 1 newly acquires a depreciable asset whose the standard useful life by classification of asset or business type are different, or commences a business of a new type: the date of such acquisition or the commencement date of the said business.(3) The useful life reported or the standard useful life which are applied by a businessman according to the classification of assets or business type under paragraph (1) shall be continually applicable to the subsequent business years.(4) The report on useful life under paragraphs (1) and (2) shall be filed in a unit of years.[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]

(1) When any of the following is applicable, a businessman may apply useful life different from the scope of useful life, or change useful life applied thus far, by obtaining by place of business approval from the commissioner of the competent regional tax office of the place of tax payment, increasing or decreasing within the scope of 50/100 of the standard useful life from the standard useful life, notwithstanding the provisions of Article 63 (1) 2 and paragraph (3) of the same Article: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where the assets are remarkably corroded, abraded or damaged owing to the geographical and environmental peculiarities of the location of business place;2. In cases of a businessman for whom three years have elapsed from the commencement of his/her business, the operating rate as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “operating rate”) of the production facilities in the relevant business year (excluding structures, hereinafter referred to as “production facilities”) has been remarkably increased more than the average operating rate during the immediately preceding three years;3. In case where the existing production facilities are in need of accelerated depreciation due to the development and diffusion of new production technology and new products; and4. In case where the manufacturing is suspended or the operating rate of production facilities is decreased due to the fluctuation in the economic conditions.(2) Within three months after the opening date of business when a businessman desires to obtain approval for useful life under paragraph (1), and within three months before the expiration of first taxable period whereto useful life to be changed is to be applied when he/she wishes to obtain an approval for the changes, he/she shall submit a written application as determined by Ordinance of the Ministry of Strategy and Finance to the commissioner of the competent regional tax office. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) The application for approval of useful life under paragraph (1) or for the change thereof, shall be filed by a unit of year. In such cases, the provisions of Article 65 (3) shall apply mutatis mutandis to the approval, etc. of useful life.(4) In cases where approval for useful life or for the changes thereto is obtained after the expiration of taxable period whereto the acceptance date of a written application under paragraph (2) belongs, useful life newly approved or approved with changes shall be applied from the taxable period to which the date of such approval or modified approval belongs.(5) If the businessman who has changed (including a re-change) useful life of depreciable assets under paragraph (1) intends to further change useful life of the relevant assets, he/she shall do so only after three years have elapsed from the expiration of taxable period whereto the previouslychanged useful life have been applied for the first time.[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) In case where a businessman acquires such an asset as determined by Ordinance of the Ministry of Strategy and Finance whose standard useful life have partially or fully elapsed (hereafter in this Article, referred as “used assets”), a businessman may have such useful life as selected and reported by himself within the scope between the years corresponding to 50/100 of the standard useful life (in cases of the asset by business kind, referring to such standard useful life as applied to the acquisitor’s business kind) and the relevant standard useful life, as the useful life of the relevant used assets, notwithstanding Article 63 (1) 2. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) In case where intending to file a report on the useful life under paragraph (1), a report on the useful life under Article 63 (2) shall be submitted to the superintendent of the competent tax office not later than the term for the final return on the tax base of gross income tax during the taxable period whereto the acquisition date of used assets belongs.[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The depreciation amount for an individual depreciable asset shall be computed by such depreciation methods reported by a business to the superintendent of the competent tax office from among the depreciation methods under the classifications indicated in the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>1. Structures and intangible fixed assets (excluding properties under subparagraphs 3 and 6 through 8): Straight line method;2. Tangible fixed assets other than structures (excluding properties under subparagraph 4): Declining balance method or straight line method;3. Mining right (including gathering rights under the Submarine Mineral Resources Development Act): Output method or straight line method;4. Tangible fixed assets for mining industry: Output method, declining balance method or straight line method;5. Deleted; <by Presidential Decree No. 17825, Dec. 30, 2002>6. Development expenses: Method to depreciate in proportion to the number of elapsed months by each business year pursuant to useful life reported in a unit of year, within the period of 20 years from the point of time when the sale or use of related products is possible;7. Value of donated property for use benefits: Method to write off the proportionally distributed amount (where the relevant donated property is destroyed or a contract is terminated, the relevant remaining value) according to the use benefit period of relevant properties (where there is no special agreement on the relevant period, reported useful life); and8. Right to utilize frequency and right to manage airport facilities: Method to write off equal amount according to the period of use within the period which has been publicly announced by the competent administrative office or whose registration has been made in the said office.(2) Any businessman shall, when he/she intends to report on the depreciation method under paragraph (1), submit a written report on depreciation methods determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications network) to the superintendent of the competent tax office, by selecting one method by property under classification listed in each subparagraph of the said paragraph, by not later than the final tax base return deadline for the taxable period to which the date listed in each of the following subparagraphs belongs: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>1. A businessman who commences a new business, the date of commencement of the relevant business; and2. Where businessmen other than those in subparagraph 1 newly acquires fixed assets with classification different from each subparagraph of paragraph (1), the date of such acquisition.(3) The depreciation method which has been reported by a businessman under paragraph (1) (in case where failed to file a report on the depreciation methods, referring to the depreciation methods under paragraph (4) 1 through 5) shall be applied continuously throughout subsequent taxable periods. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001>(4) In cases where a businessman has failed to make a report under paragraph (1), the scope of depreciation for the relevant depreciable assets shall be computed under the depreciation methods falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002>1. Strait line method, in cases of assets falling under paragraph (1) 1;2. Declining balance method, in cases of assets falling under paragraph (1) 2;3. Output method, in cases of assets falling under paragraph (1) 3 and 4;4. With respect to property under paragraph (1) 6, the method to calculate depreciation an equal amount each year for a period of five years from the point of time when the related products is available for sale or use;5. With respect to property under paragraph (1) 7 and 8, the method under the said subparagraph; and6. Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>(5) In case where a businessman has changed the relevant method of depreciation without obtaining a modified approval under Article 65 (1), the scope of depreciation shall be calculated by the depreciation method applicable prior to such modification. <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002>

(1) In cases where a businessman falls under any of the following subparagraphs, he/she may change the relevant depreciation methods by obtaining approval from the superintendent of the competent tax office, notwithstanding the provisions of Article 64 (3): <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>1. When he/she operates a business jointly with another businessman with a different depreciation method;2. When he/she takes over or succeeds to the business of another businessman with a different depreciation method;3. When a foreign investor takes over or possess 20/100 or more of the total shares under the Foreign Investment Promotion Act; and4. When he/she intends to change the depreciation methods due to the business fluctuations in overseas markets or due to the changes in economic conditions.(2) A business that intends to obtain approval under paragraph (1) shall submit a written application for change of the depreciation method determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications network) to the superintendent of the competent tax office by not later than three months before the end of the first business year whereto it intends to apply the depreciation methods to be changed. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(3) The superintendent of the competent tax office, in receipt of a written application under paragraph (2) shall determine as to whether an approval is to be granted and notify the applicant thereof by not later than the expiry of the taxable period whereto the acceptance date of application belongs. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>(4) When the superintendent of the competent tax office intends to grant approval for the change of depreciation method due to the causes under paragraph (1) 4, he/she shall comply with the standards determined by the Commissioner of the National Tax Service.(5) When a businessman changes the depreciation method under paragraph (1), the provisions of Article 27 (6) of the Enforcement Decree of the Corporation Tax Act shall apply mutatis mutandis to the calculation of the scope of depreciation . <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>

The definitions of the terms used in Article 64 shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>1. The term “declining balance method” means the depreciation method where the scope of depreciation in each business year is calculated by multiplying the balance obtained by deducting the amount already appropriated to necessary expenses as depreciation costs from the acquisition value of relevant depreciable assets, by the depreciation rate according to the useful life of relevant assets, diminish successively each year;2. The term “straight line method” means a depreciation method where the scope of depreciation in each taxable period is computed by applying the depreciation rate according to useful life of the relevant assets to the acquisition value of relevant depreciable assets (referring to the acquisition value computed by applying mutatis mutandis Article 72 of the Enforcement Decree of the Corporation Tax Act; hereafter in this Article, the same shall apply), becomes equal each year; and3. The term “output method” means the depreciation method where the scope of depreciation amount as is computed by multiplying the amount obtained by dividing the acquisition value of relevant depreciable assets by the total expected amount to be mined from a mining area to which such asset belongs, by the amount mined from such mining area during the relevant taxation period.

(1) When a businessman appropriates to necessary expenses such amount as has been disbursed for the acquisition of depreciable assets and that as corresponding to the capital expenditure on the depreciable assets, the scope of depreciation shall be calculated by deeming it has already been depreciated. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(2) The term “capital expenditure” in paragraph (1) means the repair cost disbursed to extend the useful life of the depreciable asset owned by a businessman or to increase the actual value of the relevant asset, and it shall be deemed that any disbursement for any of the followings is also included: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>1. Remodeling to change the original use thereof;2. Installment of elevators or apparatuses for heating and cooling;3. Installment of emergency exits in the buildings, etc.;4. Restoration of those which have lost the usefulness of original purposes of the relevant assets because the buildings, machines and facilities, etc. have been damaged or lost due to disasters, etc.; and5. Others similar to subparagraphs 1 through 4, such as improvement, expansion, enlargement, etc.(3) When the repair costs disbursed by a businessman during each taxable period falls under any of the following subparagraphs, and the relevant repair cost have been appropriated to necessary expenses, it shall not be deemed to be included in the capital expenditure under paragraph (2): <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>1. Where the amount disbursed as repair cost by individual asset is less than three million won;2. Where the amount disbursed as repair cost by individual asset is short by 5/100 of the asset value on the balance sheet as of the expiration of immediately preceding taxable period (referring to the amount obtained by subtracting the accumulated depreciation costs from the acquisition value); and3. Where the disbursement is made for the periodic repair of less than three years.(4) The depreciable assets whose acquisition value is one million won or less by transaction unit shall be appropriated to the necessary expenses for the business year to which the date of providing such assets for business belongs, notwithstanding the provisions of Article 62 (1): Provided, That this shall not apply to cases falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. Assets possessed in large quantities due to the nature of relevant original business; and2. Assets acquired for the commencement or expansion of the relevant business.(5) The term “transaction unit” in paragraph (4) means that its acquiror may use it independently and directly for the relevant business. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(6) In cases where a part of production facilities is scrapped due to the renewal of facilities or outdatedness of technology, the difference between the book value and the disposition value of the relevant asset may be included among necessary expenses in the relevant business year.(7) Notwithstanding the provisions of paragraph (4), with respect to theproperties falling under any of the following subparagraphs, only those which have been appropriated to necessary expenses in the taxable period to which the date of using them for such business belongs, shall be included among necessary expenses: <Amended by Presidential Decree No. 4860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999>1. Fishing gear used for fisheries (including implements for fishing boats);2. Motion picture films, tools (including metal molds), furniture, electric appliances, gas apparatus, home appliances and furnishings, clock, experiment apparatus, measurements, and billboards; and3. Acquisition price of individual property is less than 300 thousand won, such as video tapes for a lending business and the compact discs for music.

(1) In case where any businessman, who operates a business for which income tax is exempted or reduced on the income in the relevant business year, has been granted an exemption or reduction of income tax, he/she shall calculate the depreciation costs of the depreciable assets under Articles 62 through 67, and 70 through 73, and then appropriate them to necessary expenses. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999>(2) A businessman, who has failed to appropriate the depreciation costs of depreciable assets to necessary expenses under paragraph (1), shall calculate the scope of depreciation by adopting, as the basic value, the remaining balance which deducts the amount corresponding to the depreciation costs from the value of assets which are to form the basis for the calculation of the scope of depreciation during the succeeding business years: Provided, That if revaluation pursuant to the Assets Revaluation Act is made, the scope of depreciation shall be calculated on the basis of the reappraised value. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>

The value of assets which form the basis for the calculation of cope of depreciation shall include the value of idle facilities for business, but it shall not include the value of the assets under construction. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>

The residual value of depreciable assets in the calculation of the scope of depreciation under Article 62 (1) shall be zero: Provided, That in cases of calculating the scope of depreciation by the fixed percentage of declining balance method, the amount equivalent to 5/100 of the acquisition value shall be its residual value; but, such amount shall be added to the scope of depreciation in the business year wherein the non-depreciated balance of the relevant depreciable asset first becomes 5/100 or less of the acquisition value. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001>

(1) In case where a businessman makes an evaluation increase of depreciable assets, the disapproved amount of depreciation shall be ratified as necessary expenses, while deemed that up to the ceiling of evaluation increase has been included in the total revenue amounts; and those which exceed the ceiling of evaluation increase shall be calculated as the disapproved amount of depreciation to be carried forward to the subsequent business years. In such cases, the approved short-fall amount shall be deemed zero. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(2) through (4) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>

(1) In case where a businessman has appropriated the depreciation costs to necessary expenses in each taxable period, he/she shall prepare and preserve specification on the adjustment of depreciation costs as determined by Ordinance of the Ministry of Strategy and Finance by classifying them by individual asset, and submit the written report under Article 70 of the Act to the superintendent of the competent tax office along with an aggregate table of specifications of adjustment of depreciation costs, specification of approved or denied depreciation costs, and specification of adjustment of depreciation costs of the acquired or transferred assets, as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) Matters necessary for the calculation of depreciation cost of depreciable assets shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

The term “amount of tax of cases prescribed by Presidential Decree” in Article 33 (1) 9 of the Act means those as indicated in the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. Purchase amount of tax for the maintenance of a small passenger vehicle for non-business purposes under Article 17 (2) 3 of the Value-Added Tax Act (excluding those falling under capital expenditure); and2. Other purchase amounts of tax determined by Ordinance of the Ministry of Strategy and Finance proved as payable by the relevant businessman.

(1) The term “interest of the amount of a loan, appropriated for such construction funds as prescribed by Presidential Decree” in Article 33 (1) 10 of the Act means interest paid on the loan (excluding loans obscure as to whether used for the construction of fixed assets) used for the purchase, manufacturing or construction (hereafter in this Article, referred to as “construction”) of fixed assets for the relevant business regardless of the pretexts, or means expenditures similar to such payments.(2) Interest or expenditure under paragraph (1) shall be added to the relevant principal as capital expenditure until the completion date of construction as determined by Ordinance of the Ministry of Strategy and Finance (in case where a land is purchased, until the day when such land price is paid in full; and in cases where such land is provided for the business before the land price is paid in full, until the day of such provision of land): Provided, That the interest earned from the temporary deposit of the loan under paragraph (1) shall be subtracted from the capital expenditure to be added to the principal. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998 ; Presidential Decree No. 20720, Feb. 29, 2008>(3) In cases where a part of borrowed construction funds are diverted into the operative fund, the interest paid corresponding thereto shall be deemed necessary expenses.(4) In cases where the interest incurred by the overdue borrowed construction fund is added to the principal, such added amount shall be deemed capital expenditure in the relevant business year; and the interest paid on the amount added to the principal shall be deemed necessary expenses.(5) The interest on the loan which has remained, out of the loan under the pretext of construction fund, after the completion of such construction, shall be deemed necessary expenses in each year.(6) In the calculation of the capital expenditure or necessary expenses under paragraphs (1) through (5), the interest under Article 33 (1) 11 of the Act shall not be counted as the capital expenditure or the necessary expenses.

The term “interest on any loan the creditor of which is obscure” in Article 33 (1) 11 of the Act means interest on loans falling under any of the following subparagraphs (including money or goods provided after loaning regardless of pretexts, such as brokerage charges, honorarium, etc.): Provided, That in cases where the creditor, whose residence has been confirmed as of the payment date by photocopy of resident registration card, becomes missing after receiving a reimbursement of the loan, this shall not be applicable: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. Loan with its creditor’s name and whereabouts unknown;2. Loan whose creditor cannot be recognized to have lent such loan, determined based on his/her financial ability and property status; and3. Loan for which the details of financial transactions with the creditor and its contents are obscure.

The term “expenses deemed not to be directly related to business” in Article 33 (1) 13 of the Act shall be any of the followings: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Acquisition expenses, maintenance expenses, repairing expenses, and necessary expenses related thereto which are generated by a businessman by an acquisition or management of asset not connected to his/her business;2. Maintenance expenses, repaired expenses, rental fees, and expenditures related thereto for land and buildings which are not used by a businessman directly for his/her business, and mainly used by other persons (excluding his/her employees);3. The interest paid on the amount borrowed by a businessman for acquiring assets not connected to his/her proper business;4. Entertainment expenses paid by a businessman without any connection to his/her proper business;4-2. The aggregate of money, assets other than money, and economic interest that constitute a bribe under the Criminal Act or the Act on Combating Bribery of Foreign Public Officials in International Commercial Transactions, provided by a businessman; and5. Expenditure corresponding to subparagraphs 1 through 4-2, and which are determined by Ordinance of the Ministry of Strategy and Finance.

(1) In applying Article 33 (2) of the Act, if Articles 61, 75, 76 and 78 are concurrently applicable with respect to the non-inclusion of paid interest from necessary expenses, orders under the following subparagraphs shall be observed:1. Interest on loans whose creditor is unknown, under Article 76;2. Interest on the amount of a loan, appropriated for construction funds under Article 75 (1);3. Paid interest computed under Article 61 (1) 2; and4. Paid interest computed under subparagraph 3 of Article 78.(2) In applying each subparagraph of paragraph (1), if there concurrently exist such interest as subject to mutually different interest rates, those subject to an application of higher interest rate shall be first excluded from appropriation to necessary expenses.[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) Donations under Article 34 of the Act shall include the amount falling under any of the following subparagraphs:1. The value of donated property which a businessman has given free to a person who is not in special relations under Article 98 (1), with no direct connection to his/her business; and2. The amount deemed to have been substantially donated out of such differences as are caused by either transferring the property at a price lower than normal price to a person who is not in special relations under Article 98 (1), or purchasing it at a price higher than normal from him, without justifiable grounds. In such cases, the normal price shall be the value within the scope of 30/100 above or below of the market price.(2) The value of money and goods donated free to the State or local government under Article 34 (2) 1 of the Act shall include such value of money and goods donated again to the State or local government by the recipient without delay after an individual has donated the property to a corporation or another individual.(3) The national defense donation under Article 34 (2) 2 of the Act shall include the donations given directly to the homeland reserve forces established under the Establishment of Homeland Reserve Forces Act, or given through the agencies or organizations approved by the Minister of National Defense. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) In applying Article 34 (3) of the Act, the amount of designated donation under paragraph (1) of the same Article (hereinafter referred to as “designated donation”) which exceeds the ceiling of appropriation to necessary expenses, shall be appropriated to necessary expenses within the scope of the short-fall only when the designated donation falls short of the ceiling of appropriation to necessary expenses under paragraph (1) of the same Article in each taxable period carried over. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001>(5) When a businessman gives a donation designated under Article 34 (1) of the Act and donations under paragraph (2) of the same Article of the Act, he/she shall submit a final return on tax base along with a detailed statement of donations as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The term “welfare facilities prescribed by Presidential Decree” in Article 34 (2) 4 of the Act means facilities falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20323, Oct. 15, 2007>1. Child welfare facilities under Article 16 (1) of the Child Welfare Act;2. Welfare facilities for senior citizens under Article 31 of the Welfare of the Aged Act: Provided, That facilities falling under any of the following items shall be excluded:(a) Paid welfare facilities and paid welfare housing for senior citizens from among residential welfare facilities for senior citizens under Article 32 (1) of the Welfare of the Aged Act;(b) Paid medical-treatment facilities for senior citizens, paid specialized medical-treatment facilities and hospitals specializing in diseases of senior citizens from among medical and welfare facilities under Article 34 (1) of the Welfare of the Aged Act; and(c) Centers, classes and recreation facilities for senior citizens from among leisure and welfare facilities for senior citizens under Article 36 (1) of the Welfare of the Aged Act;3. Facilities falling under any of the following items as welfare facilities for disabled persons under Article 58 of the Welfare of Disabled Persons Act:(a) Living facilities for disabled persons;(b) Community rehabilitation facilities for disabled persons (communalliving homes for disabled persons shall be limited to those run by a nonprofit corporation or social welfare corporations established under Article 16 (1) of the Social Welfare Services Act); and(c) Occupational rehabilitation facilities for disabled persons (excluding facilities to sell goods produced by disabled persons);4. Welfare facilities for single-parent families under Article 19 (1) of the Single-parent Family Welfare Act;5. Facilities for the rehabilitation of mental patients and mental-care facilities from among mental facilities and health facilities under subparagraph 2 of Article 3 of the Mental Health Act;6. General support facilities, support facilities for juveniles, support facilities for foreign women and rehabilitation centers under Article 5 (1) of the Act on the Prevention of Sexual Traffic and Protection, etc. of Victims Thereof, and counseling centers for the victims of prostitution under Article 10 of the same Act;7. Domestic-violence counseling centers under Article 5 of the Act on the Prevention of Domestic Violence and Protection, etc. of Victims, and facilities to protect victims of domestic violence under Article 7 of the same Act;8. Counseling centers for victims of sexual violence under Article 23 of the Act on the Punishment of Sexual Crimes and Protection of Victims Thereof, and facilities to protect victims of sexual violence under Article 25 (1) of the same Act; and9. Social-welfare centers and facilities to protect vagabonds from among social-welfare facilities under Article 34 of the Social Welfare Services Act.(2) The term “institutions forming relationship to help needy neighbors prescribed by Presidential Decree” in Article 34 (2) 5 of the Act, means juristic persons falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008;Presidential Decree No. 21301, Feb. 4, 2009>1. The Child Fund, a social welfare corporation, established pursuant to Article 16 of the Social Welfare Services Act;2. The Korea Association of Senior Citizen Welfare Institutions established as an aggregate corporation under Article 32 of the Civil Act;3. The Korea Association of the Welfare Institute for the Disabled as an aggregate corporation under Article 32 of the Civil Act; and4. Any corporation that is similar to corporations under subparagraphs 1 through 3, and as prescribed by Ordinance of the Ministry of Strategy and Finance.(3) In applying paragraph (1) 2, where a founder of a paid welfare facility for senior citizens under paragraph (1) 2 (a) bears the expenses for its installation and operation, with respect to the amount within the scope of losses due to the operation of relevant facilities (referring to the deficit for the current year under corporate accounting standards) from among such expenses borne, it shall be deemed as expenses that have been paid for welfare facilities for senior citizens other than paid welfare facility for senior citizens, notwithstanding the provisions of Article 79 (1) 1. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>[This Article Newly Inserted by Presidential Decree No. 16988, Oct. 23, 2000]

(1) The term “donation prescribed by Presidential Decree” in the part other than the subparagraphs of Article 34 (1) of the Act means a donation falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Donations falling under each subparagraph of Article 36 (1) of the Enforcement Decree of the Corporation Tax Act;2. Union dues paid by workers to the labor unions established by the Trade Union and Labor Relations Adjustment Act or the Act on the Establishment and Operation of Teachers’Unions;3. Membership dues paid by persons who have joined a teachers organization under Article 15 of the Framework Act on Education;4. Membership dues paid by persons who have joined the public officials’ council under the Act on the Establishment and Operation of Public Officials’ Councils;5. Donations for nonprofit organizations registered under the Assistance for Nonprofit Non-Governmental Organizations Act satisfying all the following requirements and designated by the Minister of Strategy and Finance with the recommendation of the Minister of Public Administration and Security (hereafter referred to as “private organizations for donations” in this Article): Provided, That the donations granted to private organizations for donations shall be donations granted for five years from January 1 of the taxable period to which the designation date belongs:(a) In cases of dissolution, remaining property shall revert to the State, a local government or an organization having similar purposes;(b) Membership fees and donations from individuals out of the total income shall exceed the ratio determined by Ordinance of the Ministry of Strategy and Finance;(c) That the income shall be used for the public interest, not for the interest of the members such as mutual friendship, and the direct beneficiaries of project shall be many and unspecified;(d) That income, such as membership fees, donations, etc. has been managed in a bankbook in the name of the nonprofit organization for one year or more retrospectively from the last day of taxable period which is immediately prior to the taxable period intended for designation; and(e) That it shall agree to opening statements of accounts by taxable period; or6. Membership fees paid by persons who have participated in the labor union established pursuant to the Act on the Establishment and Operation of Public Officials’ Unions.(2) The Minister of Strategy and Finance may, if a private organization eligible for donations under paragraph (1) 5 falls under any of the following subparagraphs, revoke the designation thereof. In such cases, he/she shall give an opportunity to the relevant organization to submit an opinion in advance: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21214, Dec. 31, 2008>1. If the Commissioner of the National Tax Service requests to revoke the designation of a private organization eligible for donations because the inheritance tax or gift tax is additionally imposed on the organization pursuant to Article 48 (2) and (3) of the Inheritance Tax and Gift Tax Act;2. If the head of the competent administrative authority (including the Minister of Public Administration and Security) notifies the Minister of Strategy and Finance of an act committed by a private organization eligible for donations in violation of public purposes, such as engaging in any business in deviation from its business purposes or violating the terms and conditions of the permission for its establishment;3. Where it has come to fall under the donation receiving organizations in good faith pursuant to Article 85-5 of the Basic Act for National Taxes and the list is revealed;4. Where membership fees and donations of individuals constitute 50/100 or less of the income;5. Where it has been confirmed that the membership fees and donations have been managed in a bankbook in a name other than that of the nonprofit organization;6. Where it has been confirmed that the income has been used for the interest of members, such as mutual friendship, etc.; or7. Where the Minister of Public Administration and Security has requested the revocation of designation as it has failed to submit the statement of accounts by taxable period.(3) Private organizations eligible for donations shall submit the statement of accounts of the relevant taxable period to the Minister of Public Administration and Security within three months from the end of the relevant taxable period. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008>(4) When the Minster of Public Administration and Security has received the statement of accounts pursuant to paragraph (3), he/she may reveal the matters in the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008>1. Ratio of membership fees and donations of individuals to total income; and2. Total amount and number of cases of donations and the detailed statement of use thereof.(5) Private organizations eligible for donations shall submit a statement of income prescribed by Ordinance of the Ministry of Strategy and Finance to the Minister of Strategy and Finance within three months from the end of the relevant taxable period. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>(6) The organization whose designation has been revoked pursuant to paragraph (2) may be re-designated after a lapse of five years from the date of revocation. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>(7) Necessary matters, such as the procedures for designating private organizations eligible for donations, methods of verifying the requirements pursuant to the items of paragraph (1) 5, documents to submit, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Wholly Amended by Presidential Decree No. 16664, Dec. 31, 1999]

(1) When a businessman makes deferred appropriation of donations under Article 34 of the Act as an advance, it shall be deemed a donation for the year wherein it has been given.(2) When a businessman has appropriated a donation under Article 34 of the Act as an unpaid amount, such donation shall not be included among necessary expenses until it is actually paid.(3) When a businessman offers property other than money as a donation or entertainment expenses under Articles 34 and 35 of the Act, the value of relevant property shall be determined by the market price (or the book value if the market price is lower than the book value) at the time when it is offered: Provided, That with respect to donations under subparagraphs of Article 34 (2) of the Act and subparagraphs of Article 73 (1) of the Special Tax Treatment Control Act, such value shall be determined by its book value. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(4) A businessman shall, where he/she has paid a donation under Article 34 of the Act and a donation under Articles 73, 76 and 88-4 (13) of the Special Tax Treatment Control Act, include the relevant donations among necessary expenses within the limit of the amount by classifications under the following subparagraphs: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. In cases of donations under Article 76 of the Special Tax Treatment Control Act (hereafter in this paragraph, referred to as “political funds donation”) or donations under each subparagraph of Article 34 (2) of the Act (hereafter in this paragraph, referred to as “legal donation”), the amount calculated by the following formula:Amount of income in the relevant year － Carryover deficits;2. In cases of donations under Article 73 of the Special Tax Treatment Control Act, the amount calculated using the following formula:(Amount of income in the relevant year － Carryover deficits － Political funds donation － Legal donation) × 50/100;2-2. In cases of donations under Article 88-4 (13) of the Special Tax Treatment Control Act (hereafter in this paragraph, referred to as the “donations of the employee stock ownership association”), the amount calculated by the following formula:(Income amount in the relevant year － Carryover deficits － Political funds donation － Legal donation －Donations under Article 73 of the Special Tax Treatment Control Act) × 30/100; or3. In case of designated donations, an amount calculated with a formula under item (a) or (b). In such cases, in case of deducting the total amount of donations, etc. from an amount of income of the relevant year, a deficit carried forward, donations for political funds, legal donations, donations under Article 73 of the Special Tax Treatment Control Act and donations to an employee stock ownership association shall be deducted in order as stated above:(a) In cases where there is an amount donated to religious organizations:{An amount of income of the relevant year [the total amount of a deficit carried over, donations for political funds, legal donations, donations under Article 73 of the Special Tax Treatment Control Act and donations to an employee stock ownership association (hereafter in this subparagraph referred to as the "total amount of donations, etc.")]} x 10/100 + [(an amount of income of the relevant year the total amount of donations, etc.) x 10/100 (5/100 shall be applied to donations paid no later than December 31, 2009) and less amount of the amount paid to others than religious organizations]; and(b) Cases other than item (a):(An amount of income of the relevant year the total amount of donations, etc.) x 20/100 (15/100 shall be applied to donations paid not later than December 31, 2009).(5) The value of voluntary services under Article 34 (2) 3-2 of the Act (hereinafter referred to as “voluntary services”) shall be the total sum of the amounts calculated pursuant to the provisions of each of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003>1. The amount obtained by multiplying 50 thousand won to the number of service days calculated by the following formula (the portion below the decimal point shall be calculated by regarding it as one day). In such cases, in cases of private business operator, it shall be limited to the portion of his/her own services):Number of service days = Total service hours ÷ 8 hours; or2. Direct expenses such as oil expenses and material expenses, etc. incurred incidental to the relevant voluntary services:Market values or book value at the time of providing them.(6) In applying the provisions of Article 34 (2) 3-2 of the Act, the verification of relevant voluntary services shall be made by the head of local government of a special disaster area or a special calamity area or the head of voluntary service center established in the relevant local government, but the said verification shall be based upon the written verification of donated fund prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>(7) The term “other reasons prescribed by Presidential Decree” in Article 34 (2) 3 of the Act means the disaster which is the reason for the declaration of special disaster areas under Article 60 of the Frame-work Act on the Management of Disasters and Safety. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>

(1) The term “small or medium enterprises determined by Presidential Decree” in Article 35 (1) 1 of the Act means the enterprises as stipulated in Article 2 of the Enforcement Decree of the Special Tax Treatment Control Act. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “cases prescribed by Presidential Decree” in Article 35 (4) of the Act means that paid to the relevant corporation, where the relevant association or organization is a juristic person; and where the relevant association or organization is not a juristic person, it shall be deemed as the expenditure incurred on the assets owned by the relevant businessman. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998>(3) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>(4) Deleted. <by Presidential Decree No. 14860, Dec. 30, 1995>(5) The number of months in Article 35 (1) 1 of the Act shall be computed according to the calendar, but the number of days less than one month shall be deemed as one month. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996>(6) The term “amount prescribed by Presidential Decree” in the main sentence of the part other than the subparagraphs of Article 35 (2) of the Act means amounts by classification under the following subparagraphs: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Expenses for congratulations or condolence: 200 thousand won; and2. Expenses other than those under subparagraph 1 above: The amount according to the categories of following items:(a) Until December 31, 2007: 50 thousand won;(b) From January 1, 2008 to December 31, 2008: 30 thousand won; and(c) On or after January 1, 2009: 10 thousand won.(7) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>

(1) The term “revenue amount as determined by Presidential Decree” in Article 35 (1) 3 of the Act means the turnover computed according to corporate accounting standards. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 16664, Dec. 31, 1999>(2) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>(3) The term “person in special relations determined by Presidential Decree” in the proviso to Article 35 (1) 3 of the Act means those in special relations under Article 98 (1). <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(4) The term “overseas areas prescribed by Presidential Decree” in the proviso to the main body of Article 35 (2) of the Act means overseas areas where evidence under any subparagraph of Article 35 (2) of the Act is difficult to obtain since methods of payment other than cash are not accepted in the place where entertainment expenses are paid (including similar places within an area where the relevant place is located). <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>(5) The term “matters determined by Presidential Decree” in Article 35 (2) 1 (a) of the Act means any of the following: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Debit cards under the Specialized Credit Financial Business Act;2. Credit cards issued in a foreign country;3. Prepaid cards under Article 126-2 (1) 1 of the Special Tax Treatment Control Act; or4. Electronic debit payment instrument, inscribed electronic prepaid payment instrument and inscribed electronic money under Article 1262 (1) 1-2 of the Special Tax Treatment Control Act(6) The term "withholding receipt prescribed by Presidential Decree" in Article 35 (2) 2 of the Act means a withholding receipt issued pursuant to Articles 144 and 145 of the Act after having received services from any person who has not made registration of entrepreneur pursuant to Article 168 of the Act. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(7) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>(8) Deleted. <by Presidential Decree No. 17456, Dec. 31, 2001>

(1) Where two or more places of business exist, the entertainment expenses paid by each place of business during the relevant taxable period, which are eligible for inclusion among necessary expenses when the amount of revenue by each place of business is calculated, shall be limited to the aggregate of amounts calculated under each of the following subparagraphs (hereafter in this Article referred to as the “maximum limit of entertainment expenses”):1. Amount calculated by the following formula: and Amount under Article 35 (1) 1 of the Act



×
Amount of revenue of each place of business for relevant taxable period
Aggregate amount of revenue of each business place for relevant taxable period
2. Amount of revenue of each place of business for relevant taxable period × Applicable rate under Article 35 (1) 3 of the Act (hereafter in this Article, referred to as the “applicable rate”).(2) In applying paragraph (1) 1, where any place of business exists wherein a business is newly commenced or is discontinued in the middle of the relevant taxable period, from among two or more places of business, the amount under Article 35 (1) 1 of the Act shall be calculated on the basis of the number of months of the place of business, whose number of business months for relevant taxable period is greatest, but whether or not falling under small or medium enterprises shall be determined by its principal business type (referring to the business type having the largest amount of revenue).(3) In applying paragraph (1) 2, the applicable rate shall be decided by the aggregate of amount of revenue of each place of business for relevant taxable period, and where the aggregate of amount of revenue of each place of business is in excess of 10 billion won, the priority order of the applicable rate may be selected at will by each place of business.(4) When such cases take place respectively, as cases where entertainment expenses paid by each place of business in two or more places of business have failed to meet a maximum amount of entertainment expenses, or as cases where the said entertainment expenses exceed such limit, such short-fall amount and excessive amount shall not be aggregated.(5) In cases where a decision on estimation investigation or a revision has been made on the amount of revenue of a part of two or more places of business, the place of business subject to the decision on estimation investigation or the revision shall be deemed to have no revenue amount in applying the provisions of paragraph (1).(6) In cases where any amount of revenue exists accrued from a transaction with a person in special relations under Article 98 (1) (hereafter referred to as the “revenue amount related to special relations” in this paragraph), the amount under paragraph (1) 2 shall be calculated by the following formula: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>{(Gross revenue amount × Applicable rate) － (Revenue amount related to special relations) × Applicable rate} ＋ {(Revenue amount related to special relations × Applicable rate) × 20/100}.[This Article Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002]

(1) With respect to other income falling under any of the following subparagraphs, an amount equivalent to 80/100 of an amount received by a resident shall be deemed necessary expenses: Provided, That if necessary expenses actually involved exceed an amount equivalent to 80/100, the exceeding amount shall be also included in the necessary expenses:1. Awards or supplementary awards won by a public-service corporation governed by the Act on the Establishment and Operation of Public-Service Corporations with approval of the competent administrative office, and prizes and supplementary prizes won by prize winners in a contest in which numbers of people contend for precedence from among other income under Article 21 (1) 1 of the Act;2. Other income under Article 21 (1) 7, 9, 15 and 19 of the Act; and3. Delay penalty in moving into a house from among penalties and damages under Article 21 (1) 10 of the Act.(2) With respect to other income under Article 21 (1) 25 of the Act, an amount equivalent to 80/100 (90/100 in cases where the period of possession of paintings and calligraphic works, and curios is not less than ten years) of an amount received by a resident shall be deemed necessary expenses: Provided, That if necessary expenses actually involved exceed an amount equivalent to 80/100 (90/100 in cases where the period of possession of paintings and calligraphic works, and curios is not less than ten years), the exceeding amount shall be also included in the necessary expenses.[This Article Wholly Amended by Presidential Decree No. 21301, Feb. 4, 2009]

(1) The acquisition value of the assets under Article 39 (2) of the Act shall be governed by an amount falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases of assets purchased from another, such amount obtained by adding the acquisition tax, registration tax and other incidental expenses to the acquisition value;2. In cases of assets acquired by one’s own manufacturing, production or construction, etc., the aggregate of the cost of raw materials, labor expenses, freight, stevedoring expenses, insurance premium, commission, public charges (including acquisition tax and registration tax), installation expenses and other incidental expenses; and3. In cases of assets falling under subparagraphs 1 and 2 whose acquisition price is obscure, and the assets other than those of subparagraphs 1 and 2, such amount obtained by adding the acquisition tax, registration tax and other incidental expenses to the market price at the time of acquisition prescribed by Ordinance of the Ministry of Strategy and Finance.(2) The acquisition value under paragraph (1) shall not include an amount falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where a businessman has evaluated, according to the corporate accounting standards, the debt brought about by a purchase of asset on a long-term installation basis, and appropriated it as the discounted debt estimated by the present value, the relevant discounted debt estimated based on its present value;2. In cases of the yearly paid income determined by Ordinance of the Ministry of Strategy and Finance, the amount appropriated as the paid interest, by separating it from the acquisition value under paragraph (1); and3. The amount in excess of the market value under Article 98 (2) 1.(3) In applying the provisions of paragraph (1), the acquisition value shall be either the revaluation value when a revaluation has been made under the Assets Revaluation Act, or when there is an amount equivalent to the capital expenditure, the amount to be obtained by adding such amount. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) The amount of deemed input tax deducted under Article 17 of the Value-Added Tax Act, and the amount of input tax deducted under Article 108 (1) of the Special Tax Treatment Control Act, shall be deducted from the purchase price of the relevant raw materials. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>(5) The provisions of Articles 127, 156 and 164 of the Act shall not apply to the amount of depreciation the discounted debt estimated by present value under paragraph (2) 1, and the paid interest under subparagraph 2 of the same paragraph. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>

(1) In applying Article 39 of the Act, the methods of inventory (excluding for securities) valuation shall be any of the following subparagraphs:1. Cost method; and2. Lower of cost or market method.(2) In valuation by cost method under paragraph (1) 1, it shall be governed by a valuation method falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. Specific identification method;2. First-In, First-Out (FIFO) method;3. Last-In, First-Out (LIFO) method;4. Weighted average method;5. Moving average method; and6. Gross profit method.(3) In case where making inventory valuation under paragraphs (1) and (2), the relevant asset may be respectively valuated by kind and place of business under different methods according to the classification falling under any of the following subparagraphs:1. Manufactured goods and merchandise (including real estate possessed by sales businessman of newly constructed housing or the businessman trading real estate for the purpose of sale);2. Half-finished goods and work in progress;3. Raw materials; and4. Stored goods.(4) The inventory assets under paragraph (3), which are not salable at normal price or usable due to the damage, spoiling or other causes, may be valuated separately from other inventory at the salable price.

(1) The definitions of the terms used in Article 91 (1) shall be as follows: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>1. The term “cost method” means the method of using the acquisition value of inventory assets as the assessed amount of such asset under the method falling under each subparagraph of Article 91 (2); and2. The term “lower of cost or market method” means the method of using the lower estimated value between the assessed value by cost method or that by the market price method determined by Ordinance of the Ministry of Strategy and Finance as the assessment value of the inventory assets as of the end of relevant business year.(2) The definitions of the terms used in Article 91 (2) shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. The term “specific identification method” means the method of using the amount computed respectively according to an acquisition value of each inventory asset as the assessment value of the relevant asset;2. The term “First-In, First-Out (FIFO) method” means the method of valuation of inventory assets as of the end of relevant business year, deeming that the first asset purchased has been successively taken out of inventory;3. The term “Last-In, First-Out (LIFO) method” means the method of valuation of inventory assets as of the end of relevant business year, deeming that the last asset purchased has been successively taken out of inventory;4. The term “weighted average method” means the method of valuation of inventory assets as of the end of the relevant business year according to the average unit price, which is obtained by dividing the aggregate of acquisition value of inventory assets as of the commencement date of the relevant business year, and of the aggregate of acquisition value of assets acquired in the relevant business year, by the total quantity of relevant assets by kind and item of the stored assets;5. The term “moving average method” means the method of valuation of inventory assets as of the end of the relevant business year according to the average unit price computed in the end, after computing the average unit price by the method of dividing the book amount on hand by the book quantity on hand upon each acquisition of assets; and6. The term “gross profit method” means the method of valuation of inventory assets as of the end of the relevant business year according to the amount computed by deducting the estimated margin at the expiry of taxable period of relevant business year from the estimated sale prices of each kind of inventory asset as of the end of the relevant business year.

When applying Article 39 of the Act, the method of valuation of securities purchased for the trade or short-term investment (including the securities deposited by an investment trading business operator or an investment intermediary business operator under the Capital Market and Financial Investment Business Act with the Korea Exchange) shall be in accordance with a method reported by a business operator from among methods under the following subparagraphs: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Specific identification method (limited to bonds);2. Weighted average method; and3. Moving average method.[This Article Wholly Amended by Presidential Decree No. 15191, Dec. 31, 1996]

(1) The businessman shall report (including report by means of the national tax information and communications network) the valuation method of inventory assets and securities under Articles 91 and 93 (hereinafter referred to as the “valuation method of inventory assets, etc.”) within the term of final return on tax base for the year whereto the date of commencing the relevant business belongs by a report form on the valuation method of inventory assets, etc. as determined by Ordinance of the Ministry of Strategy and Finance, to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where a person who has reported the valuation method of inventory assets, etc. intends to alter such method, he/she shall make report on it by not later than three months before the expiry of the first year, whereto applied the valuation method to be altered, by a report form on the change of valuation method of inventory assets, etc. as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The superintendent of the competent tax office shall, where falling under any of the following subparagraphs, valuate inventory assets and securities purchased for the trade or short-term investment by the First-In, FirstOut (FIFO) method under Article 91 (2) 2 (the gross average method in cases of securities; the valuation by specific identification method in cases of the real estate owned for trade): Provided, That in cases where the valuation is made by a method other than the reported valuation method or it falls under subparagraph 2, if the value by the reported valuation method is larger than the value by the First-In, First-Out (FIFO) method, it shall be governed by the reported valuation method:1. When the valuation method of inventory assets, etc. has not been reported within the term under Article 94 (1), or when it has not been governed by the reported valuation method; and2. When the valuation method has been altered without reporting the change in valuation method of inventory assets, etc. within the term under Article 94 (2).(2) In cases where the valuation method of inventory assets, etc. is reported after the term under Article 94 (1) and (2) has been passed, the provisions of paragraph (1) shall apply mutatis mutandis to the portion of year to which such date of return belongs, and the reported valuation method shall be applied to the portion of succeeding business years.

(1) The profit or loss from the difference between the amount booked in won currency of the monetary assets or liabilities in foreign currency (hereafter in this Article “monetary assets and liabilities in foreign currency”) prescribed by Ordinance of the Ministry of Strategy and Finance, which a business is repaid or repays, and the won currency that he/she is repaid or repays shall be included among necessary expenses or total amount of income of the relevant year. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where the monetary asset or liability in foreign currency has been valuated pursuant to paragraph (1), the detailed statement shall be attached to the final return on tax base.[This Article Wholly Amended by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The term “person in special relations” under Articles 41 and 101 of the Act means any of the following persons: <Amended by Presidential Decree No. 17825, Dec. 30, 2002>1. Relatives of the relevant resident;2. Employees of the relevant resident, or relatives who live with such employees;3. Other persons than the employees of the relevant resident who make their living by means of money or other assets of the relevant resident, and the relatives who make their living with such employee;4. The corporation in which the relevant resident and persons under subparagraphs 1 through 3 possess 30/100 or more of the total stocks or investments, or whose president is the relevant resident;5. The non-profit corporation in which the relevant resident and persons under subparagraphs 1 through 3 occupy a majority of directors, or 50/100 or more of the contribution (limited to the contribution for its establishment) are made by them and any of them serves as its founder; and6. The corporation in which such corporation as falling under subparagraph 4 or 5 makes an investment of 50/100 or more of the total stocks or investment shares.(2) The term “if deemed unreasonably reducing tax” in Article 41 of the Act means an occasion falling under any of the following subparagraphs: Provided, That subparagraphs 1 through 3 and 5 (limited to the acts similar to those under subparagraphs 1 through 3) shall apply only to cases where the difference between market price and actual selling price is 300 million won or more or equivalent to or more than five percent of the market price: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 19890, Feb. 28, 2007>1. Where one purchases the asset from the person in a special relation at a price above its market price, or when one transfers the asset to the person in a special relation at a price below its market price;2. Where one lends or provides money, other assets or services free of charge or at a lower interest rate, etc. to the person in a special relation: Provided, That such case is excluded as where a house is provided for gratuitous use by the lineal ascendant and descendant, and they actually live in the relevant house;3. Where one borrows or receives the money or other assets or services at a higher interest rate, etc. from a person in special relations;4. Where one purchases a non-profit asset from the person in a special relation, and bears the expenses for such asset; and5. Where one is deemed to reduce tax liability unreasonably in calculation of his/her total income or necessary expenses for the current year on account of a transaction with other person in a special relation.(3) The provisions of Article 89 (1) and (2) of the Enforcement Decree of the Corporation Tax Act shall apply mutatis mutandis to a calculation of the market price under paragraph (2) 1. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>(4) The provisions of Article 89 (3) through (5) of the Enforcement Decree of the Corporation Tax Act shall apply mutatis mutandis to a calculation of the amount of income under paragraph (2) 2 through 5. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>

The provisions of Article 17 of the Enforcement Decree of the Act for the Coordination of International Tax Affairs shall apply mutatis mutandis to the application procedure for the adjustment of amount of income under Article 42 of the Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>[This Article Wholly Amended by Presidential Decree No. 14860, Dec. 30, 1995]

(1) The term “joint investment businessmen prescribed by Presidential Decree” in Article 43 (1) of the Act means a person who does not fall under any of the following subparagraphs and who does not participate in the management of the joint business, but merely makes an investment therein: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. A person who allows the joint business to use his/her name or trade name; and2. A person who agrees to assume unlimited liability for the obligations incurred in the joint business.(2) The term “person in special relations prescribed by Presidential Decree” in Article 43 (3) of the Act means persons who is in relations under subparagraphs 1 through 8 of Article 20 of the Enforcement Decree of the Basic Act for National Taxes and make their living with one resident. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(3) The conditions as of the end of the relevant taxable period shall govern whether one corresponds to a person in special relations under paragraph (2). <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(4) The term “reasons prescribed by Presidential Decree” in Article 43 (3) of the Act means cases falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>1. Where the written report and the attached documents submitted by a joint businessman under Articles 43 (2) of the Act (hereinafter referred to as a “joint businessman”) in accordance with Article 70 (4) of the Act, stating the type of business, details of revenue amount, equity ratio, agreed allocation ratio of profit and loss and relations among joint businessmen, etc., are remarkably different from the facts; and2. Where it is verified that joint businessmen operate the business for avoiding taxes, in light of the management participation, business relations, ratio of profit and loss and the financial status, etc., such as properties and debts, etc.(5) The term “person prescribed by Presidential Decree” in Article 43 (3) of the Act means any of the persons in the order named in the following subparagraphs: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. A person whose gross income, except income from joint business is greater;2. A person whose gross income during the immediately previous year is greater in cases where the amounts of gross income except the income from the joint business are the same; and3. A person who has filed a tax return on the tax base of gross income from the relevant business in cases where the amounts of gross income during the immediately preceding year are the same: Provided, That the superintendent of the competent tax office shall designate a person in cases where all joint businessmen filed or did not file a tax return on the tax base of gross income from the relevant business.

(1) In cases where the amount of income by category of the relevant businessman is computed, if necessary expenses which belong or comes to belong to the current year exceed the amount of gross income which belongs or comes to belong to the current year, the deficit under Article 45 (1) and (2) of the Act means such amount in excess.(2) The deduction of deficit carried over under Article 45 (2) of the Act (excluding the deficit carried over which has been appropriated as donated income of assets o income from waiver of liabilities under Article 26 (2) of the Act) shall be made by any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19890, Feb. 28, 2007>1. The deficit carried over which has been incurred in a person’s business income shall be successively deducted from the amount of business income, that of real estate rental income, that of earned income, that of annuity income, that of miscellaneous income, that of interest income, and that of dividend income; and2. The deficit carried over which has been incurred in real estate rental income shall be deducted from real estate rental income.(3) Deleted. <by presidential Decree No. 17825, Dec. 30, 2002>

(1) The term “securities prescribed by Presidential Decree” in Article 46 (1) of the Act means securities which accrue interest, discounted amount or profits from a collective investment organization (including the securities falling under any of the following subparagraphs, but excluding bonds, etc. exempted from income tax by the law): <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Certificates of deposit issued by financial institutions or similar certificates: Provided, That those determined by Ordinance of the Ministry of Strategy and Finance shall be excluded;2. Securities, as collective investment securities and profit-making securities (excluding stocks or investment stakes under Article 94 (1) 3 of the Act) issued pursuant to Articles 9 (21) and 110 of the Capital Market and Financial Investment Business Act, not traded by methods of establishment and repurchase but traded by methods of transfer between accounts, transfer of the title of an account, actual transfer of collective investment securities and profit-making securities: Provided, That trade in the securities market shall be excluded; and3. Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>4. Bills (including bills issued, sold, or mediated by financial institutions, and excluding commercial bills).(2) Even if securities under paragraph (1) are incorporated into the trust estate, etc., Article 46 (1) through (3) and (5) of the Act shall be applied. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(3) The term “juristic persons prescribed by Presidential Decree” in Article 46 (2) of the Act means juristic persons under Article 2 of the Corporation Tax Act (including the State, local government, and domestic places of business of a foreign juristic person). <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>(4) The term “period calculation method stipulated by Presidential Decree” in Article 46 (2) of the Act means a method of calculating the retention period by the number of days, from the next date of an issuance date of relevant bonds, etc. or immediately preceding withholding date (hereafter referred to as “purchase date” in this Article) to the sale date (in cases of entrusting, relaying or intermediating the sale to a corporation, the actual selling date shall be deemed as the selling date) or to the paying date of interest, etc. (hereafter referred to as the “sale date” in this Article). <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(5) An amount equivalent to interest, etc. (hereafter in this Article and Article 207-3 referred to as the “amount equivalent to the interest accruing for the period of possession”) under Article 46 (2) of the Act refers to the amount computed by applying a rate falling under any of the following subparagraphs according to the method of calculating interest, etc. as agreed in the calculation period of interest, etc. for the period of possession from the purchase date to the sale date of the relevant bonds, etc.: Provided, That where there exists separately a maturity-guaranty profit-making rate in applying the interest rate for the convertible bonds, exchange bonds or debenture cum preemptive rights on new stocks, the interest rate shall be the said maturity-guaranty profit-making rate; but where a conditional interest rate exists, the interest rate shall be the said conditional interest rate from the date of fulfillment of the said condition; where conversion into or exchange with the stocks is made after a dishonor has occurred in the corporation issuing the converted or exchanged bonds, and if the market value of stocks is lower than the converted or exchanged values on the date of requesting such conversion or exchange, the amount equivalent to the interest, etc. accruing for the period of possession of the person making such conversion or exchange shall be deemed non-existent; and where there exists any stipulation that interest shall be paid after an application for the conversion or exchange of bonds into stocks, the relevant interest rate agreed shall be applied from the date of applying for the conversion or exchange of bonds as prescribed by Ordinance of the Ministry of Strategy and Finance: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16809, May 16, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Where the bonds falling under each subparagraph of Article 22-2 (1) and (2) are issued on the open market, the nominal interest rate; and2. In cases of other bonds, etc., a rate calculated by adding the discount rate at the time of issuing such bonds, etc. to their nominal interest rate, and by deducting the premium rate therefrom.(6) When applying paragraph (5), in cases where collective investment securities are sold in the middle of the period for computation of profits from the collective investment securities, notwithstanding paragraph (5), an amount equivalent to interest, etc. accruing for the period of possession of the collective investment securities shall be an amount computed pursuant to Article 23. <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 20009>(7) The term “day prescribed by Presidential Decree, such as the term day of interest, etc. or the selling day of bonds, etc.” in Article 46 (2) of the Act means the selling day of the relevant bonds, etc. or the term day of an amount equivalent to interest, etc., and in cases where the relevant bonds, etc, are inherited or donated, it means the beginning day of inheritance and the donation day. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>(8) The holding period stipulated by Article 46 (3) of the Act shall be proven by a method falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where the bonds, etc. are traded through an account opened in a financial institution: the method of verifying it by the electronic data processing system of such financial institution or by the ledger of passbook; and2. In other cases than those under subparagraph 1: If the bonds, etc. are purchased from the corporation, it shall be proven by the sale verification of bonds, etc. as determined by Ordinance of the Ministry of Strategy and Finance and is issued by such juristic person; and if the bonds, etc. are purchased from an individual, it shall be proven by notarial deed prepared by a notary public under the Notary Public Act (limited to such deeds which include the name, address and resident registration number of the parties to the transaction, the date of trade, and the kind, issue number and face value of the bonds).(9) Deleted. <by Presidential Decree No. 18705, Feb. 19, 2005>(10) In applying Article 46 of the Act, if the bonds, etc. are sold with approval from a financial institution, it shall be deemed that the relevant financial institution has mediated such sale. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996>(11) and (12) Deleted. <by Presidential Decree No. 18705, Feb. 19, 2005>[This Article Wholly Amended by Presidential Decree No. 14860, Dec. 30, 1995]

(1) The term “cases prescribed by Presidential Decree, such as trade, etc. of repurchase agreement in Article 46 (2) of the Act” means trade falling under any of the following subparagrphs and where it is verified through the deposit account books of repurchase bonds of the Korea Securities Depository established under Article 294 of the Capital Market and Financial Investment Business Act or where it is verified as provided for by Ordinance of the Ministry of Strategy and Finance: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Transactions of bonds trade cum repurchase conditions, selling bonds, etc. on condition that the residents make the repurchase at a specific price after a specific period; and2. That provided for by Ordinance of the Ministry of Strategy and Finance, which is a trade similar to subparagraph 1.(2) Where a person who has purchased bonds, etc. through trade as provided for in paragraph (1) (hereafter in this Article, referring to as a “purchaser”) sells the relevant bonds, etc. to the third person prior to the repurchase date, the taxes on the amount equal to the interest for the retention period from the next date to the date on which the purchaser has purchased the relevant bonds, etc. or to the date immediately preceding withholding date, or to the date of sale to the third person (the actual selling date in cases of entrusting, relaying, intermediating) shall be withheld on the purchaser, and a purchaser intending to obtain a refund of relevant amount of tax shall submit a written application for refund to the superintendent of the competent tax office not later than the tenth of the next month to the month in which the payment date of withheld amount of tax belongs.(3) Where a purchaser has submitted a written application for refund under paragraph (2), the document provided by Ordinance of the Ministry of Strategy and Finance capable of proving that it is the trade as provided for in each subparagraph of paragraph (1) shall be attached, and the superintendent of competent tax office in receipt of the application for refund shall promptly refund after verifying the fact of trade and the details of refund application. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005]

(1) Where earned income earners other than daily employed workers receive wages from two or more employers, the tax withholding agent of the principal place of work shall make earned income deduction under Article 47 (5) of the Act, within the limit of earned income paid by him.(2) Where earned income from the principal place of work of the wage earner under paragraph (1) is short of the earned income deduction amount, the tax withholding agent of the principal place of work shall make earned income deduction at the year-end adjustment under Article 137 of the Act by aggregating the earned income from the secondary workplace.(3) The amount of earned income deduction for the daily employed worker under Article 47 (2) of the Act, shall be deducted from the amount of daily wages of the day on which such worker provides his/her labor. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>

(1) The provisions of Article 104 (1) and (2) shall apply mutatis mutandis to retirement income deduction for persons who receive a retirement allowances from the principal place of work or the secondary place of work under Article 48 (5) of the Act.(2) For the purpose of Article 48 (1) 2 of the Act, the term “number of years calculated by the method prescribed by Presidential Decree” means the number of years calculated under the classifications listed in each of the following subparagraphs. In such cases, if the number of years of deposit or the service period falls short of one year, it shall be deemed to be one year: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006>1. In cases of lump-sum money to be paid under the National Pension Act, the number of deposit years calculated by dividing the gross number of deposit months of annuity premiums by 12;2. In cases of a lump-sum money to be paid under the Public Officials Pension Act, the Veterans’ Pension Act, the Pension for Private School Teachers and Staff Act or the Special Post Offices Act, the incumbent service period to be applied in computing the retirement benefits by the respective relevant Act;3. Where the honorary retirement allowances under Article 22 (1) 1 (b) of the Act and lump-sum money under the Public Officials Pension Act, the Veterans’ Pension Act, the Pension for Private School Teachers and Staff Act or the Special Post Offices Act are paid all at once, the longer period between the service period to be applied in computation of the retirement benefits under each relevant Act and the actual service period; and4. In cases of lump-sum money subject to Article 42-2 (3) 3, the service period after the date of re-appointment, notwithstanding the provisions of subparagraphs 2 and 3.(3) In calculating the length of service under Article 48 (1) of the Act, where the retirement benefit amount transferred to the taxation deferred account under Article 42-2 (5) is paid, the service period prior to the transfer of the retirement benefit amount to the taxation deferred account shall be added to the length of service under Article 48 (1) of the Act. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>

(1) Where a person entitled to a personal deduction of a resident (hereinafter referred to as a “family member entitled to deduction”) concurrently falls under a family member entitled to a deduction of another resident, the family member shall be deemed to be a family member entitled to a deduction of such person, based on the matters indicated either on the final return on the tax base for the current year, the report on the income deduction of wage earner determined by Ordinance of the Ministry of Strategy and Finance under Article 198 (hereinafter referred to as “report on the income deductions of a wage earner”), the report on income reductions under Article 201-4 (1), or the report on income deductions of annuity income earner under Article 201-7 (1): Provided, That where a person primarily entitled to personal deduction of a resident falls under the person entitled to an additional personal deduction of another resident under Article 51 (1) 4 of the Act, he/she may be deemed to be a person entitled to such additional deduction of another resident. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>(2) Where two or more residents mutually indicate the family member entitled to a deduction under paragraph (1) on his/her written return as his/her own family member entitled to deduction, or where it is unknown whose family member entitled to reduction he/she shall be, the decision thereon shall be governed by the following subparagraphs:1. Where the spouse entitled to deduction of a resident comes to fall under another resident’s dependent entitled to deduction, the former status shall prevail;2. Where a resident’s dependent entitled to deduction comes to fall under another resident’s dependent entitled to deduction, such dependent shall be deemed to be a dependent entitled to deduction of the resident who has been entitled to personal deduction as a dependent in the immediately preceding year: Provided, That in cases where no personal deduction as a dependent in the immediately preceding year has been made, he/she shall be deemed to be a dependent of the resident who has the largest gross income in the current year; and3. Where a person entitled to an additional deduction of a resident comes to fall under a person entitled to an additional deduction of another resident, he/she shall be deemed to be a person entitled to an additional deduction of the resident who makes a basic deduction under subparagraphs 1 and 2.(3) Where a family member entitled to deduction of a resident who has either died in the middle of the current year or left Korea to permanently reside in a foreign country, and who comes to fall under a family member entitled to deduction of another resident such as a successor, etc., he/she shall be deemed to be a family member entitled to deduction of the decedent or the resident who left Korea.(4) If the personal deduction for the decedent or the resident who left Korea exceeds the amount of income in cases of paragraph (3), the amount in excess may be deducted from the amount of income of the heir or other resident in the relevant year.(5) The term “person prescribed by Presidential Decree” in Article 50 (1) 3 (a) of the Act means a person who is verified that he/she is married (excluding the de facto marriage) with the lineal ascendent of the relevant resident. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003>(6) The term “person prescribed by Presidential Decree” in Article 50 (1) 3 (b) of the Act means the person falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003>1. A lineal descendent of the resident; and2. In case where the spouse of a resident has remarried, any person who has been delivered of during the marriage (excluding the de facto marriage) of the relevant spouse with the previous spouse.(7) The term “adopted person living together, as determined by Presidential Decree” in Article 50 (1) 3 (b) of the Act means the child adopted under the Civil Act or the Act on Special Cases concerning the Promotion and Procedure of Adoption, and the person who is actually in the adopted status and makes his/her living with the resident. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 18705, Feb. 19, 2005>(8) The term “persons prescribed by Presidential Decree” in Article 50 (1) 3 (d) of the Act means recipients under subparagraph 2 of Article 2 of the National Basic Living Security Act. <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(9) The term "persons prescribed by Presidential Decree" in Article 50 (1) 3 (e) means entrusted children whom a resident has brought up in person not less than six months in the relevant taxation period: Provided, That in cases where he/she has not received income deduction in the preceding taxation period, income deduction shall be computed including an entrusted period for the relevant entrusted children of the preceding taxation period. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(10) In cases where a resident intends to receive the composite income deduction for persons under paragraphs (5) through (8), he/she shall present documents prescribed by Ordinance of the Ministry of Strategy and Finance as prescribed by the subparagraphs of Article 107 (2). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>

(1) Disabled persons under Article 51 (1) 2 of the Act shall be the persons indicated in any of the following subparagraphs: <Amended by Presidential Decree No. 15486, Sep. 30, 1997; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>1. Disabled persons under the Welfare of Disabled Persons Act;2. Injured persons under the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State, and persons similar thereto without any ability to work;3. Deleted; and <by Presidential Decree No. 17456, Dec. 31, 2001>4. Persons with serious illnesses in need of constant medical treatment, other than those of subparagraphs 1 through 3.(2) In case where persons who fall under any of subparagraphs of paragraph (1) intend to receive the deduction for disabled persons, they shall submit the certificate of disability determined by Ordinance of the Ministry of Strategy and Finance pursuant to the following subparagraphs. In such cases, those who have received a certificate of injured person under the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State, or those who have received a registration certificate of disability under the Welfare of Disabled Persons Act may substitute the certificate of disability by a copy of the relevant certificate or the registration certificate of the disability or by other documents verifying the fact of disability: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15486, Sep. 30, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. When filing the final return on tax base, he/she shall submit it along with such return to the superintendent of the competent tax office;2. Those who have earned income belonging to Class A shall submit it, along with a report on earned income deduction for the earned income earner, to the withholding agent who makes the year-end adjustment; and3. Those who have the business income to be adjusted at the year-end pursuant to Article 144-2 of the Act shall submit it, along with the report on the income deduction, to the withholding agent who makes the year-end adjusting.(3) Where the disabled person, whose condition of the relevant disability is expected to last for one year or longer, submits under paragraph (2) a certificate of disability stating the period of disability, he/she need not re-submit the certificate during the period of such disability: Provided, That when the competent tax office or the employer has been altered during the period of relevant disability, the certificate of disabled person shall be submitted pursuant to paragraph (2). <Amended by Presidential Decree No. 17456, Dec. 31, 2001>(4) In cases of the proviso to paragraph (3), he/she may have such certificate of disability, as has already been submitted, returned from the superintendent of the competent tax office of the former place of tax payment or the former withholding agent, and submit it. <Amended by Presidential Decree No. 17456, Dec. 31, 2001>

In applying Article 51 (1) of the Act, the fact as to whether a person has a spouse, or is a householder with dependents, shall be governed by a certified transcript of resident registration card or a certificate of a register of family relationship as of the expiration of the relevant taxable period. In such cases, the superintendent of the competent tax office shall confirm a certified transcript of resident registration card by mutual use of the administrative information provided for in the provisions of Article 21 (1) of the Electronic Government Act, and where the resident refuses to agree to his/her confirmation or it cannot be judged by his/her certified transcript of resident registration card whether he/she has a spouse or he/she is a householder or any earned income earner files a return of the income deduction pursuant to the provisions of Article 140 of the Act, the superintendent of the competent tax office shall get each of them to submit a certified transcript of resident registration card or a certificate of a register of family relationship. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008>

(1) A person who desires to be eligible for the application of Article 513 (1) 3 of the Act shall submit a certificate of the payment of retirement pension prescribed by Ordinance of the Ministry of Strategy and Finance with the superintendent of the competent tax office of the area where the person liable for withholding taxes, the tax association or the place of tax payment is located by no later than the day set forth in one of subparagraphs of Article 113 (1). <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where paragraph (1) is applicable, when the evidenciary documents for income deduction are submitted to the Commissioner of the National Tax Service in accordance with Article 216-3, the documents specified by Ordinance of the Ministry of Strategy and Finance may be submitted by the day set forth in one of subparagraphs of Article 113 (1). <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) The term ”mortgage-backed retirement pension that meets requirements prescribed by Presidential Decree” in Article 51-4 (1) of the Act means a pension that meets all the following requirements:1. It shall be a mortgage-backed retirement pension in which the annuity has been paid under the guarantee for the mortgage-backed retirement pension under subparagraph 8-2 of Article 2 of the Korea Housing Finance Corporation Act;2. The annuity shall be paid to a resident whose gross income during the year immediately before being admitted to the mortgage-backed retirement pension does not exceed 12 million won; and3. The standard market value of the residential house under Article 99 (1) of the Act (including a residential house registered in the name of the spouse of the resident who has the annuity income), which is the subject matter of institution of the mortgage at the time of being admitted to the mortgage-backed retirement pension, shall not exceed 300 million won.(2) In cases where an annuity under the mortgage-backed retirement pension system was paid, the amount equivalent to the interest accrued from the annuity shall be the amount stated in the certificate of interest expenses for the mortgage-backed retirement pension issued by the financial institution that paid the annuity or the Korea Housing Finance Corporation under the Korea Housing Finance Corporation Act, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) A person, who wishes to be eligible for the deduction of interest expenses for the mortgage-backed retirement pension under Article 51-4 of the Act, shall submit a final return on tax base along with the certificate of interest expenses for the mortgage-backed retirement pension pursuant to the provisions of paragraph (2) to the superintendent of the competent tax office.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

The term “insurance contract prescribed by Presidential Decree” in Article 52 (1) 2 of the Act means those as determined by Ordinance of the Ministry of Strategy and Finance from among those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Life insurance;2. Accident insurance;3. Non-life insurance insuring the household against fire, theft and accident or disasters;4. Mutual aid pursuant to the Agricultural Cooperatives Act, the Fisheries Cooperatives Act, the Credit Unions Act, or the Community Credit Cooperatives Act; and5. Mutual aid pursuant to the Military Personnel Mutual Aid Association Act, the Korea Teachers’ Credit Union Act, the Korea Local Administration Mutual Aid Association Act, the Police Mutual Aid Association Act, and the Korea Fire-Fighting Mutual Aid Association Act.

The term “insurances prescribed by Presidential Decree” in Article 52 (1) 2-2 of the Act means those indicated as disabled only guaranty insurance on the insurance policy or an insurance premium receipt, from among the insurances falling under each subparagraph of Article 109 (including the mutual aid programs).[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The term “medical expenses prescribed by Presidential Decree” in Article 52 (1) 3 of the Act means the expenses falling under any of the following subparagraphs, which are directly borne by the relevant laborer: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18401, May 25, 2004; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>1. Expenses paid to medical institutions under Article 3 of the Medical Service Act for diagnosis, medical examination or the prevention of diseases;2. Expenses paid for the purchase of medical products under Article 2 of the Pharmaceutical Affairs Act (including the herbal remedies; hereinafter the same shall apply) for the treatment and recuperation;3. Expenses paid to directly purchase or hire the supplementary aid devices (referring to supplementary aid devices under Article 105 of the Enforcement Decree of the Special Tax Treatment Control Act) and medical instruments prescribed by a doctor, dentist, herbal doctor, etc. (referring to medical instruments under Article 2 (1) of the Medical Appliances Act);4. Expenses paid for a purchase of eyeglasses for vision correction or contact lenses, the prices of which are within 500 thousand won per annum per head of the persons subject to basic deduction under Article 50 (1) of the Act (not subject to any restrictions on age or income level);5. Expenses paid for purchase of hearing aids; or6. Partial share in expenditure actually paid by the principal pursuant to Article 40 (1) of the Long-Term Care Insurance for the Aged Act.(2) Expenses paid on or before December 31, 2009 for plastic surgery and expenses for purchasing medical supplies for promotion of health shall be included in the expenses falling under each subparagraph of paragraph (1). <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(3) With regard to worker whose medical expenses to be deducted from his/her amount of gross amount at the time of a year-end settlement of earned income tax under the provisions of Article 137 or 138 of the Act are not less than two million won per year, the withholding agent shall submit the tapes or diskettes on which the payment specifications of relevant worker’s medical expenses are electronically processed to the superintendent of the competent tax office when the detailed statement of payment of earned income is submitted. <Amended by Presidential Decree No 18173, Dec. 30, 2003; Presidential Decree No 20618, Feb. 22, 2008>

(1) The term “lecture fee for after-school course prescribed by Presidential Decree” in the latter part of the main body of Article 52 (1) 4 of the Act means lecture fees (excluding expenses for procuring materials for schoolwork) for after-school courses provided at schools pursuant to the Elementary and Secondary Education Act.(2) The term “school expenses prescribed by Presidential Decree” in the proviso to the main body of Article 52 (1) 4 of the Act means scholarship or education fund (hereafter in this paragraph “scholarship, etc.”) received during the relevant year, which falls under any of the following subparagraphs:1. Scholarship, etc. received from an intra-company labor welfare fund under the Intra-company Labor Welfare Fund Act;2. Scholarship, etc. received from the schools that they attend;3. Scholarship, etc. received by a student, who is an employee, from his/her job;4. Scholarship, etc. for children, etc., paid to the public officials working abroad; or5. Other scholarship, etc. received from various organizations.(3) The term “educational course prescribed by Presidential Decree” in Article 52 (1) 4 (a) (ii) of the Act means the educational course evaluated and approved by the Minister of Education, Science and Technology as an accredited study course under Article 3 (1) of the Act on Recognition of Credits, etc. and the educational course under Article 9 (1) 4 of the Enforcement Decree of the Act on the Acquisition of Academic Degrees through Self-Education. <Amended by Presidential Decree No. 21214, Dec. 31, 2008>(4) The term “overseas educational institution prescribed by Presidential Decree” in 52 (1) 4 (a) (iii) of the Act means an educational institution located abroad equivalent to a kindergarten under the Early Childhood Education Act, a school under the Elementary and Secondary Education Act or a school under the Higher Education Act, and the term “student prescribed by Presidential Decree” means those falling under any of the following subparagraphs:1. Person qualified to study abroad at his/her own expense under Article 5 of the Regulations on Studying Abroad; or2. Person studying abroad under Article 15 of the Regulations on Studying Abroad, who has stayed abroad for one year or more together with the person who is responsible for supporting him.(5) The term “sports facilities prescribed by Presidential Decree” in Article 52 (1) 4 (a) (iv) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Sports facilities operated by a sports facility operator under the Installation and Utilization of Sports Facilities Act (including sports facility operator prescribed by Ordinance of the Ministry of Strategy and Finance); or2. Sports facilities operated (including entrusted operation) by the State, local government, or a person who operates facilities permitted or registered as the facilities for training juveniles pursuant to the Juvenile Activity Promotion Act.(6) The term “amount prescribed by Presidential Decree” in Article 52 (1) 4 (a) (iv) of the Act means the lecture fees paid by preschool children after taking lessons of the training course (limited to the courses conducted at least once a week) conducted on a monthly basis at private teaching institutes under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons or at sports facilities under paragraph (3).(7) The term “subsidy prescribed by Presidential Decree” in the proviso to Article 52 (1) 4 (b) (iii) of the Act means a subsidy for workers taking lectures under Article 43 of the Enforcement Decree of the Employment Insurance Act.(8) The term “special education expenses prescribed by Presidential Decree” in the main body of Article 52 (1) 4 (c) of the Act means the expenses paid for rehabilitative education of disabled persons, and the term “social welfare facilities and nonprofit corporations prescribed by Presidential Decree” in Article 52 (1) 4 (c) (i) of the Act means the facilities and corporations falling under the following subparagraphs: <Amended by Presidential Decree No. 21214, Dec. 31, 2008>1. Social welfare facility under the Social Welfare Services Act; and2. Nonprofit corporations established under the Civil Act, which the Minister for Health, Welfare and Family Affairs has recognized as the corporations that perform rehabilitative education to disabled persons.[This Article Wholly Amended by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The term "household prescribed by Presidential Decree" in Article 52 (2) of the Act means a household all inclusive of a resident and his/her spouse, lineal ascendants and descendants (including their spouses), brothers and sisters of the resident and his/her spouse living together at the same address or domicile as that of the resident. In such cases, even if the resident and his/her spouse do not make a living together, they are deemed the same household. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(2) The term “house-purchasing savings prescribed by Presidential Decree” in Article 52 (2) of the Act means savings falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Subscription savings under the Housing Act (limited to the saving whose monthly subscription is not more than 100 thousand won);2. Workers house-purchasing savings under the former Act on the Assistance to Residential Stability and Lump Sum-raising Savings of Workers repealed in accordance with Article 2 of the Addenda of the Korea Housing Finance Corporation Act of Act No. 7030; or3. Long-term house-purchasing savings under the Special Tax Treatment Control Act.(3) The term “house smaller than the certain scale set forth in Presidential Decree” in Article 52 (2) of the Act means the house of the national housing scale under the Housing Act. In such cases, if the relevant house is a multi-family house, the exclusive area for each family shall be the standard therefor. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(4) The term “multiplying factor prescribed by Presidential Decree” in Article 52 (2) of the Act means the multiplying factor in the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Land located within urban areas under Article 6 of the National Land Planning and Utilization Act (hereinafter “urban area”): Five times; and2. Other land: Ten times.(5) The term “financial institution prescribed by Presidential Decree” in Article 52 (2) of the Act means the credit institutions pursuant to Table 1-2. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(6) The term “fund to lease a house prescribed by Presidential Decree” in Article 52 (2) of the Act means the loan that meets all of the requirements under the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. That the funds have been borrowed within three months before or after the date of moving in under a lease contract or the date of moving in on the certified copy of resident registration, whichever occurs first; and2. That the borrowed funds shall be deposited in the account of lessee directly from the account of financial institution, etc. under paragraph (4).(7) The term “long-term housing mortgage loan prescribed by Presidential Decree” in the main sentence of Article 52 (3) of the Act means a loan satisfying all the requirements under the following subparagraphs: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 21301, Feb. 4, 2009>1. The term of redemption of a loan shall be not less than 15 years. In such cases, if a transferee of the relevant house takes over, together with the acquisition of the house, the liability for long-term housing mortgage loan that the former owner of the relevant house has borrowed after creating a mortgage on the relevant house, the redemption period shall be calculated based on the date on which the former owner of relevant house has first borrowed the relevant loan;2. The long-term housing mortgage loan is required to be borrowed within 3 months from the date on which the registration for passage of title for house or the preservation registration has been made; and3. The obligor of long-term housing mortgage loan is required to be the owner of the house over which the relevant mortgage has been created.(8) The term "requirements prescribed by Presidential Decree" in the main sentence of Article 52 (5) of the Act means cases where the term of redemption of a loan under paragraph (7) 1 is not less than 30 years. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(9) In cases where a loan falls under any of the following subparagraphs, the relevant loan shall be deemed to be the “long-term housing mortgage loan prescribed by Presidential Decree” under Article 52 (3) of the Act, notwithstanding paragraph (7): Provided, That in cases falling under subparagraph 2 or 4, the remaining amount of existing loan shall be its upper limit: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Where such fact of borrowing is verified that a person, who first acquires a newly-built house subject to deduction of or exemption from the transfer income tax under Article 99 of the Special Tax Treatment Control Act, has borrowed the loan from a financial institution or the National Housing Fund under the Housing Act for a purchase of relevant house;2. Where a borrower of a long-term housing mortgage loan under paragraph (7) transfers the long-term housing mortgage loan within the relevant financial institution or to another financial institution (limited to cases where the relevant financial institution or another financial institution directly redeems the remaining amount of the existing long-term housing mortgage loan, and transfers the long-term housing mortgage loan in the form of mortgage settlement on the relevant residence). In such cases, the relevant loan shall satisfy the requirements under paragraph (7) 1, and when calculating the term of redemption, it shall be on the basis of the date of first borrowing of the long-term housing mortgage loan;3. Where the ownership is transferred to the residence transferee immediately after the said transferee has borrowed the loan, which satisfies the requirement under paragraph (7) 1, from a financial institution or the National Housing Fund under the Housing Act, by providing the residence transferor’s residence as a security; and4. Where a borrower of the loan the term of redemption of which is less than 15 years which falls under the requirements of paragraph (7) 2 and 3 pursuant to Article 52 (3) of the Act established a mortgage on the relevant house during the repayment period of existing loan, and has repaid the existing loan with a new loan borrowed with the term of redemption of not less than 15 years or the term of redemption for the existing loan has been extended to 15 years or longer. In such cases, when applying paragraph (7) 2, the new loan shall be based upon the first borrowing date of the existing loan.(10) When applying paragraph (7), if a transferee of the relevant house assumes the liability for long-term housing mortgage loan in connection with the house acquisition, the requirement under subparagraph 2 of the same paragraph shall not be applicable. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>(11) When applying paragraph (7), if such requirements are not met, Article 52 (3) of the Act shall not be applicable beginning from the date on which the relevant causes have occurred. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>(12) With respect to persons who are entitled to tax deduction for the interest on borrowings of housing fund under Article 92-4 of the Regulation of Tax Reduction and Exemption Act prior to amendment by Act No. 5584, the amended Act of the Regulation of Tax Reduction and Exemption Act, a loan related to the acquisition of the relevant house during the relevant taxable period shall not be deemed to be a “long-term housing mortgage loan prescribed by Presidential Decree” under Article 52 (3) of the Act, notwithstanding paragraph (7). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(13) When applying paragraph (9) 4, where the standard market price of a house under Article 99 (1) of the Act or the price of parcelling-out right of a house under paragraph (15) exceeds 300 million won respectively at the time of converting to long-term housing mortgage loan exceeding 15 years or extending the repayment period, it shall not be deemed to be a “long-term housing mortgage loan prescribed by Presidential Decree” under Article 52 (3) of the Act. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>(14) When applying paragraph (10), where the standard market price of a house under Article 99 (1) of the Act exceeds 300 million won at the time when a transferee acquires the relevant house, it shall not be deemed to be a “long-term housing mortgage loan prescribed by Presidential Decree” under Article 52 (3) of the Act. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>(15) The term “prices prescribed by Presidential Decree” in Article 52 (4) 3 of the Act means a price falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>1. Parcelling-out right of a house under Article 52 (4) of the Act excluding association member’s residing rights under subparagraph 2: Parcelling-out price; and2. Association member’s residing rights under the main body of Article 89 (2) of the Act:(a) Where settlement balance is paid:Assess value of the existing building and the land appurtenant thereto + Settlement balance paid; and(b) Where settlement balance is received:Assess value of the existing building and the land appurtenant thereto Settlement balance received.[This Article Wholly Amended by Presidential Decree No. 16988, Oct. 23, 2000]

(1) The provisions of Article 81 (4) through (6) shall apply mutatis mutandis to cases where the donations paid by the resident under Articles 52 (6) and (10) and 54-2 of the Act are deducted from the amount of gross income. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(2) With regard to the resident whose donations to be deducted from his/her amount of gross income at the time of year-end settlement of earned income amount of tax under the provisions of Article 137 or 138 of the Act, or of a year-end settlement of business income amount of tax under the provisions of Article 144-2 of the Act are an amount pursuant to the classifications of the following subparagraphs, the withholding agent shall submit the tapes or diskettes on which the lists of relevant resident’s donations are electronically processed to the superintendent of the competent tax office when the detailed statement of payment is submitted: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Until December 31, 2008: one million won;2. Until December 31, 2009: 500 thousand won; and3. From January 1, 2010 on: amount, irrespective of size, which has been deducted.[This Article Wholly Amended by Presidential Decree No. 18173, Dec. 30, 2003]

(1) Persons who intend to be governed by Article 52 of the Act shall submit the documents prescribed by Ordinance of the Ministry of Strategy and Finance, by not later than the date stipulated in the following subparagraphs, to the tax withholding agent, the tax payment association, or the superintendent of the competent tax office: Provided, That the same shall not apply to cases of insurance premiums under Article 52 (1) 1 of the Act, and of the donation which the tax withholding agent deducts a lump-sum from the wage amount: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. In case of workers who have joined the tax payment association from among the wage earners belonging to Class A and Class B, the date on which they receive the pay for February of the year following the relevant year (in cases of retirement, the date on which they receive the pay for the month whereto belongs the retirement date); and2. In case of workers who have failed to join a tax payment association from among the wage earners belonging to Class B, the term of final return on tax base on the gross income.(2) Where documentary evidence for income deduction is submitted to the Commissioner of the National Tax Service pursuant to the provisions of Article 216-3, a person who intends to have Article 52 of the Act applied to him, notwithstanding the main body of paragraph (1), may submit documents determined by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(3) The provisions of Article 104 (1) and (2) shall apply mutatis mutandis to the special deduction: Provided, That the withholding agent who pays the wages which form the basis for the calculation of relevant insurance premiums shall deduct the insurance premiums under Article 52 (1) 1 of the Act.

(1) The term “business operator who meets the requirements prescribed by Presidential Decree” in Article 52 (11) of the Act means a business operator who meets all the following requirements: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. He/She shall be a business operator who falls under any of the following items:(a) A business operator who does not fall under any of the following, as a business operator who holds both membership of a credit card member store and a cash receipt member store pursuant to Articles 162-2 and 162-3 of the Act:(ⅰ) A business operator who has refused settlement with a credit card (hereinafter referred to as a "credit card") under Article 35 (2) 1 (a) of the Act in the relevant taxation period (limited to cases where he/she has been notified of the relevant fact by the head of the competent tax office pursuant to the latter part of Article 162-1 (4) of the Act);(ⅱ) A business operator who has ever issued a credit card sales check under Article 160-2 (2) 3 of the Act (including documentary evidences in cases where transactions are made by making use of debit cards and prepaid cards; hereinafter referred to as a “credit card sales check”) different from the fact in the relevant taxation period(limited to cases where he/she has been notified of the relevant fact by the head of the competent tax office pursuant to the latter part of Article 162-2 (4) of the Act);(ⅲ) A business operator who has refused to issue a cash receipt under Article 126-3 (3) of the Special Tax Treatment Control Act (hereinafter referred to as a “cash receipt”) in the relevant taxation period (limited to cases where he/she has been notified of the relevant fact by the head of the competent tax office pursuant to the latter part of Article 162-3 (5) of the Act); and(ⅳ) A business operator who has issued a cash receipt different from the fact in the relevant taxation period (limited to cases where he/she has been notified of the relevant fact by the head of the competent tax office pursuant to the latter part of Article 162-3 (5) of the Act)]; and(b) A business operator prescribed by Ordinance of the Ministry of Strategy and Finance, including a businessman who has installed facilities for the enterprise resource planning system under Article 4 (1) 2 of the Special Tax Treatment Control Act or those for the point-of-sale information management system under the Distribution Industry Development Act;2. He/She shall keep and maintain account books in accordance with Article 160 (1) or (2) of the Act, and shall submit a return with the amount of income calculated in accordance with the account books (excluding the pertinent taxable period, if there is a decision to make an investigation into the estimation pursuant to the proviso to Article 80 (3) of the Act); and3. He/She shall open and report a banking account for business in accordance with Article 160-5 (3) of the Act, and shall use at least two-thirds of the amount that shall be transacted through the business account in accordance with paragraph (1) of the said Article during the pertinent taxable period.(2) Necessary matters concerning the determination on whether each item of paragraph (1) 1 is met, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) The term “such causes as prescribed by Presidential Decree” in Article 53 (2) of the Act means cases in which a resident or a family member living together (excluding a spouse and a lineal descendant) leaves temporarily his/her original domicile or temporary domicile to enter school, receive medical treatment for a diseases, or under any circumstances of service or business.(2) Persons who intend to receive gross income deduction for those who have left temporarily under Article 53 (2) of the Act, shall submit a list of family members living together with a person who has left temporarily (hereinafter referred to as the “list of family members living together with a person who has left temporarily”) prescribed by Ordinance of the Ministry of Strategy and Finance along with the documents falling under any of the following subparagraphs (including submitting them by means of the national tax information and communications networks), to a withholding agent or to the superintendent of the competent tax office: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Where a person has left temporarily to enter school, the certificate of enrollment issued by the head of the relevant school (including a teaching institute, etc.);2. Where a person has left temporarily for medical treatment and rehabilitation from a disease, the certificate of medical treatment issued by the head of the relevant medical institution;3. Where a person has left temporarily for his/her work, the certificate of employment issued by the head of the relevant place of business; and4. Deleted. <by Presidential Decree No. 19507, Jun. 12, 2006>(3) Upon receiving an application filed pursuant to the provisions of paragraph (2), the superintendent of the competent tax office shall confirm the documents of the following subparagraphs by mutual use of the administrative information provided for in the provisions of Article 21 (1) of the Electronic Government Act, and where the resident refuses to agree to his/her confirmation or any income earner files a return of the income deduction pursuant to the provisions of Article 140 of the Act, the superintendent of the competent tax office shall request them to attach such documents: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 231, 2008>1. A certified copy of resident registration card of his/her original address and temporary address; and2. A copy of his/her business registration certificate (limited to cases where he/she has left temporarily for business).(4) The provisions of Article 113 (1) shall apply mutatis mutandis to the submission of the list of family members living together with a person who has left temporarily under paragraphs (2) and (3). <Amended by Presidential Decree No. 19507, Jun. 12, 2006>

(1) In applying Article 55 (2) of the Act, if one retires from his/her job twice or more in the relevant year, and the income tax on his/her retirement benefits is calculated by adding up the retirement benefits received from two or more places of work, his/her length of service shall be calculated by the number of months obtained by deducting the number of months in overlapping period from the number of months summing up his/her length of service at the place of work where he has retired.(2) In applying Article 55 (2) of the Act, in cases falling under any of the following subparagraphs, the calculated retirement income amount of tax shall be the calculated retirement income amount of tax to be imposed on the amount of retirement benefit receivable at retirement (including the amount paid in division or the pension amount payable converted to a lump-sum amount; hereafter in this paragraph, referred to as the “retirement benefit amount receivable”) multiplied by the ratio of actually received retirement benefit amount in the retirement benefit amount receivable at retirement: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>1. Where the amount under Article 42-2 (1) 6 (a) through (c) is separated into a lump-sum amount and pension, and paid;2. Where a lump-sum amount is paid under Article 42-2 (1) 6 (d); or3. Where it is not transferred to the taxation deferred account under Article 42-2 (5), but is received in a lump-sum.

In applying Article 62 of the Act, the amount of dividend income exceeding the standard amount for aggregate taxation on interest income, etc. under Article 56 (4) of the Act, shall be governed by the amount obtained by successively aggregating the amount of interest income, etc. in the order of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005>1. Where there concurrently exist the interest income and the dividend income, the interest income shall be added first; and2. In applying subparagraph 1, if there concurrently exist the dividend income subject to the proviso to Article 17 (3) of the Act and other dividend income, the other dividend income shall be added first.[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]

(1) The tax credit for bookkeeping under Article 56-2 (1) of the Act shall be calculated by any of the following formulas: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. In cases where account books are entered by double-entry system, and an amount of income is calculated in accordance with the account books:Amount of tax deduction from amount of tax in entry = [(total amount of income amount of income deduction) × basic tax rate × (total amount of income entered ÷ total amount of income)] × (20/100); and2. In any case other than those under subparagraph 1:Tax credit for bookkeeping = [(gross income income deduction) × basic tax rate × (gross income entered / gross income)] × (10/100).(2) The term “inevitable cause as determined by Presidential Decree” in the proviso to Article 56-2 (2) 2 of the Act means cases falling under any of the following subparagraphs:1. Force majeure;2. Meeting such disaster as fire or war, or faced with theft; and3. Other cases wherein such causes have occurred as equivalent to subparagraphs 1 and 2.(3) Persons who intend to receive the deduction of amount of tax entered in the book under Article 56-2 of the Act shall apply to the superintendent of the competent tax office by submitting the final return on tax base along with an application for the deduction of amount of tax entered in the book as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The term “amount of foreign income tax prescribed by Presidential Decree” in the part other than the subparagraphs of Article 57 (1) and in the former part of Article 129 (4) of the Act means the amount of tax under the following subparagraphs (excluding additional taxes and additional charges) assessed by a foreign government: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 21301, Feb. 4, 2009>1. Amount of tax assessed by making the individual amount of income as the tax base, and additional amount of tax thereto; and2. Amount of tax assessed by making revenue other than income, and others equivalent thereto, as the tax base, which fall under the tax item similar to subparagraph 1.(2) The term “ratio determined by Presidential Decree” in Article 57 (1) 1 of the Act means the following ratio: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008>(Overseas source income amount determined by Ordinance of the Ministry of Strategy and Finance from among the overseas source income) / amount of gross income in the current taxable period.(3) An amount of tax paid in a foreign country under Article 57 (1) of the Act shall be deducted from an amount of tax computed in the taxation period when the relevant overseas withholding income is included in the tax base or shall be included in the necessary expenses. In such cases, a person who wants an amount of tax paid in a foreign country to be deducted or be included in necessary expenses shall file an application for foreign-paid tax credit (inclusion in necessary expenses) prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the competent tax office or a person responsible for withholding in the place of tax payment when he/she makes the final report on tax base of the year in which an overseas withholding income is included or the year-end settlement. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>(4) In cases where an application under paragraph (3) cannot be submitted along with the final return on tax base due to such causes as a delay of notification of decision on income tax on the overseas source income by the foreign government, or as the difference in the taxable periods, it may be submitted within 45 days from the date of receiving such notification of decision. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(5) The provisions of paragraph (4) shall apply mutatis mutandis to the cases wherein any changes have occurred in the paid amount of foreign tax as the foreign government rectified its decision on the income tax for the overseas source income. In such cases, in cases where an amount of tax to be refunded occurs, it may be appropriated or refunded pursuant to Article 51 of the Basic Act for National Taxes. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 21301, Feb. 4, 2009>(6) The paid foreign amount of tax on gross income other than real estate rental income under Article 18 of the Act and the business income under Article 19 of the Act, shall be credited according to the method under Article 57 (1) 1 of the Act.(7) In calculating the limit of deduction under Article 57 (1) 1 of the Act, if the overseas places of business are located in two or more foreign countries, the businessman may apply it by selecting either method of separate calculation for each country, or a method of collective calculation without such separation.

(1) The term “assets prescribed by Presidential Decree” in the fore part of the main body of Article 58 (1) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Assets for business (excluding the land);2. Lost assets owned by others, for which the relevant businessman is liable for making up for such loss; and3. In cases where the amount of interest income or that of dividend income is contained in the tax base amount for the income tax subject to the tax credit for the loss by disasters, the bank deposit, stocks and other assets related to such amounts of income.(2) In applying Article 58 (1) of the Act, the rate of occurrence of the disasters shall be calculated by the book value as of the date of disaster occurrence; and if the book value is not be discernible due to destruction by fire or loss of the account book, such rate shall be calculated by the value as of the date the disaster occurred, which has been investigated and verified by the superintendent of the competent tax office.(3) Persons who intend to receive the tax credit for the loss by disasters under Article 58 (1) of the Act shall submit an application for the tax credit for loss by disaster as determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications network) to the superintendent of the competent tax office within the period falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases of income tax for which the deadline of the final return on tax base has not expired, its return deadline: Provided, That if the period from the date the disaster occurred to the deadline of return is less than one month, it shall be one month from the date of disaster occurrence; and2. In cases of unpaid income tax, and that payable, as of the date of disaster occurrence other than those of subparagraph 1, one month from the date the disaster occurred.(4) The superintendent of the competent tax office of disaster area shall investigate the loss rate of assets under Article 58 (7) of the Act, and obtain approval from the commissioner of the competent regional tax office. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>

(1) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>(2) Marginal profits from the sale of a residential house, etc. under Article 64 (1) of the Act shall be the amount calculated by subtracting the following amounts from the selling price of the house or parcel of land: <Amended by Presidential Decree No. 19890, Feb. 28, 2007>1. Necessary expenses of the transferred property calculated under the provisions of Article 163 (1) through (5); and2. Basic deduction amount of transfer income under the provisions of Article 103 of the Act.(3) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>(4) The calculation of amount of tax under Article 64 of the Act and other necessary matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]

The term “income prescribed by Presidential Decree” in Article 65 (1) of the Act means the income falling under the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Interest income, dividend income, earned income, annuity income or miscellaneous income;2. Income accruing from the service business related to the clerical work under the Korea Standard Industrial Classification, such as income from shorthand and typewriting service from among the businesses income;3. Income subject to occasional taxation under Article 82 of the Act from among real estate rental income and business income; and4. Other income determined by Ordinance of the Ministry of Strategy and Finance.

The notice of the amount of tax by interim prepayment under Article 65 (1) of the Act shall be made by written notice under the National Tax Collection Act. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>

(1) Persons who intend to report on the estimated amount of interim prepayment under Article 65 (3) or (5) of the Act shall submit a report on the estimated amount of interim prepayment as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where persons who are to report on the amount of gross income during the period of interim prepayment under Article 65 (5) of the Act have failed to make such report, the superintendent of the competent tax office may investigate and determine the relevant amount of gross income by applying mutatis mutandis Article 80 of the Act. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

(1) Any person who intends to report gains accruing from the sale of land, etc. under Article 69 (1) of the Act shall submit a provisional report on the gains accruing from the sale of land, etc. as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where the realtor intends to make a voluntary payment of the tax on the gains accruing from the sale of land, etc. under Article 69 (4) of the Act, he/she shall pay it to the competent tax office, the Bank of Korea (including its agents; hereinafter the same shall apply) or the postal service offices, submitting a report on gains accruing from the sale of land, etc. under paragraph (1) along with calculation of voluntary payment for provisional report on the gains accruing from the sale of land, etc. as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>

(1) Gains accruing from sale of land, etc. under Article 69 (3) of the Act shall be calculated by deducting the amount falling under the following subparagraphs from the relevant sale price of land: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. The amount equivalent to necessary expenses for asset transferred, calculated pursuant to Article 163 (1) through (5);2. The interest on the amount apportioned to the construction on the relevant land, etc. calculated pursuant to Article 75;3. The public imposts pursuant to the laws on account of sale of land, etc.; and4. The amount of special deduction for long-term retention under Article 95 (2) of the Act.(2) When the book value of the land, etc. is revised by an evaluation increase, gains accruing from the sale shall be calculated by the book value not revised by such evaluation increase.(3) The realtor shall, where concurrently trading the land, etc. and other assets, separately enter them in the account book, and shall, where necessary expenses paid for common purposes exist, make a proportional allocation pursuant to the value of relevant assets.

(1) The gains accruing from sale of land, etc. under Article 69 of the Act shall be calculated according to each of the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000>1. It shall be calculated based on a documentary evidence which the realtor submits when making the provisional return from the sale of land, etc., or by an account book kept and entered and other documentary evidences; and2. In cases falling under any of the subparagraphs of Article 143 (1), it shall be the amount calculated by applying the provisions of paragraph (3) of the same Article to the sale price.(2) In applying paragraph (1) 2, if it is possible to confirm the actual transaction price of sold land, etc., the actual transaction price shall be the sale price, and if it is impossible to confirm the actual transaction price, the standard market value under Article 99 of the Act shall be the sale price.(3) The superintendent of the competent tax office shall, with respect to those who have filed a provisional return on the gains from the sale of land, etc. or a voluntary payment of the tax on the gains from the sale of land, etc. under Article 69 (1) and (4) of the Act, determine within one month from the date of filing the relevant provisional return or the voluntary payment of the tax, and shall, with respect to those who have failed to make the provisional return on the gains from the sale, determine immediately the relevant gains from the sale and the amount of tax, and shall notify the relevant realtor thereof by applying mutatis mutandis Article 149.

(1) The final return on tax base of gross income under Article 70 (1) of the Act shall be based on the final return on tax base of gross income and the calculation of voluntary payment of tax as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The term “documents prescribed by Presidential Decree” in Article 70 (4) 1 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 19890, Feb. 28, 2007>1. Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>1-2. Documents under Article 106 (9);2. A certificate of disability in Article 107 (2);2-2. Documents under Article 108-3 (2);3. Documents under Article 113 (1);4. List of persons who have left temporarily and family members living together under Article 114 (2); and5. Documents under Articles 80 (4) and 80-2 (6) of the Enforcement Decree of the Special Tax Treatment Control Act.(3) The term “documents prescribed by Presidential Decree, which are necessary for calculating the total amount of gross income and necessary expenses” in Article 70 (4) 2 of the Act means the documents as determined by Ordinance of the Ministry of Strategy and Finance, such as the particulars of amount of income calculation, etc. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>(4) In cases of filing a report electronically under Article 5-2 of the Basic Act for National Taxes, the submission of the standard balance sheet, the standard income statement, the standard particulars of costs, the standard total remaining amount, and the written calculation of adjustment prescribed by Ordinance of the Ministry of Strategy and Finance may substitute the submission of the balance sheet, the income statement and its attached documents, the trial balance of total remaining amount and the written calculation of adjustment under the provisions of Article 70 (4) 3 of the Act. <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>(5) The superintendent of the competent tax office who has received the final return on tax base of the composite income pursuant to Article 70 of the Act shall confirm a certified transcript of resident registration card of a person who has submitted the final return on tax base of the composite income as of the completion date of the relevant year by common use of the administrative information under Article 21 (1) of the Electronic Government Act: Provided, That where the person who has submitted the final return on tax base of the composite income does not consent to the confirmation or it cannot be judged by his/her certified transcript of resident registration card whether he/she has a family dependent, the superintendent of the competent tax office shall have the person attach his/her certified transcript of resident registration card or certificate of a register of family relationship thereto. <Amended by Presidential Decree No. 21215, Dec. 31, 2008>

(1) The adjusted account statement in Article 70 (4) 3 of the Act shall be prepared by the account book kept and entered by the businessman or the documentiary evidence, but where the Commissioner of the National Tax Service deems it necessary for the honest payment of taxes, the certified tax accountant (including a certified public accountant who has been registered under Article 20-2 of the Certified Tax Accountant Act; hereafter the same shall apply in this Article) shall prepare it. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>(2) The documents determined by Ordinance of the Ministry of Strategy and Finance shall be attached to the adjusted account statement under paragraph (1). <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(3) Matters necessary for the qualifications of the certified tax accountant who may prepare the adjusted account statement under paragraph (1) shall be determined by the Commissioner of the National Tax Service.(4) A businessman who attaches an adjusted account statement prepared by a certified tax accountant, and who satisfies the requirements determined by Ordinance of the Ministry of Strategy and Finance, may omit attaching the documents determined by the Commissioner of the National Tax Service from among the documents under paragraph (2) to the adjusted account statement. In such cases, they shall be submitted if the superintendent of the competent tax office or the commissioner of the competent regional tax office, makes by a written request for submission of the documents which are not attached, as he/she deems them necessary for the analyses, etc. of the contents of returns. <Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>(2) The account statement of amount of income by simple bookkeeping under the proviso to Article 70 (4) 3 of the Act and the estimate income account statement under subparagraph 6 of the same paragraph shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(3) The detailed statement of the reception of receipts under Article 70 (4) 5 of the Act shall be that prescribed by Ordinance of the Ministry of Strategy and Finance as the detailed statement in which bills, tax bills, credit card sales checks and receipts other than cash receipts exceeding 30 thousand won per transaction and under the subparagraphs of Article 160-2 (2) of the Act are entered: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Until December 31, 2007: 50 thousand won;2. From January 1, 2008 to December 31, 2008: 30 thousand won; and3. On and after January 1, 2009: 10 thousand won.(4) The term “small-scale businessman prescribed by Presidential Decree” in Article 70 (4) 5 of the Act means a businessman who falls under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. A businessman who has commenced a new business during the pertinent taxable period;2. A businessman whose aggregate of the income from leasing real estate and the business income during the immediately preceding taxable period (including the amount of revenue increased by a decision or rectification) does not reach 48 million won; and3. A businessman to whom Article 73 (1) 5 of the Act is applicable.

(1) Where a corporation makes a return on tax base of corporation tax under the Corporation Tax Act after the expiry of deadline for the final return on tax base of gross income, or where a person having no obligation to file a final return on tax base, a person who has been exempted from filing a final return on tax base under the tax statute and a person who has filed a final return on tax base of gross income is compelled to pay the additional income tax as a change in his/her amount of income has occurred because the amount counted in the taxable revenues has been disposed of as dividends, bonuses or miscellaneous income, when the superintendent of the competent tax office determines or revises the tax base of corporation tax, if the relevant corporation (where a resident receives the notification under the proviso to Article 192 (1), the relevant resident) has made a voluntary payment by an additional report by not later than the end of the next month, but one whereto belongs the date of receiving the notification on the change of amount of income under Article 192 (1) (where a change has occurred in the amount of income due to a return by the corporation under the Corporation Tax Act, the reporting date of corporation tax by the relevant corporation), it shall be deemed to have been paid by a report, within the term under Article 70 or 74 of the Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>(2) In cases where a person, who has filed a final return on the tax base of gross income, makes an additional report as a change has occurred in the gross income amounts of the relevant revenue after the expiry of report deadline, from among the matters reported within the relevant report deadline, because the price of goods has been raised by the permission, authorization or approval of the government, it shall be deemed to have been reported under Article 70 or 74 of the Act.(3) When a person, who filed a final return on the tax base of gross income in accordance with the detailed statement of payment of miscellaneous income as furnished by the Commissioner of the National Tax Service pursuant to Article 164 (10) of the Act, files an additional return and pays the income tax voluntarily due to an error, etc. on the record furnished (including a case where a person, upon receiving a notice under the latter part of Article 215 (7), files an additional return and pays the tax voluntarily before the end of the next month but one whereto the date of receiving the notice belongs), it shall be deemed that the person files such return and pays the tax voluntarily within the time limit set in Article 70 or 74 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>(4) In cases where one applies for the reduction and exemption of amount of tax in making a voluntary payment by the additional report under paragraphs (1) through (3), he/she shall be deemed to have applied for the reduction and exemption of amount of tax under Article 75 (1) of the Act. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>

A person who intends to make a final return on tax base of retirement income under Article 71 (1) of the Act shall submit the final return on tax base of retirement income and the statement of voluntary payment as determined by Ordinance of the Ministry of Strategy and Finance, to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The term “business income prescribed by Presidential Decree” in Article 73 (1) 5 of the Act means business income received by any person subject to simple bookkeeping under Article 160 (3) of the Act, who falls under any of the following subparagraphs: Provided, That the business income received by a businessman under subparagraph 2 shall be limited to that for which a person liable to collect withholding taxes of relevant business income has made the year-end adjustment under Article 201-2: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>1. Any person who has provided with an independent qualification such services as inviting the subscription to insurances and those incidental thereto, and receives the solicitation allowance, etc. according to his/her achievements;2. Any person who has performed the door-to-door distributing business on behalf of a door-to-door distributor under the Door-to-Door Sales, etc. Act, and receives the sales allowances, etc. according to his/her achievements (including any person entrusted by a door-to-door distributor with the management and operation of a place of business under Article 6 of the said Act); and3. Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(2) The term “person who has paid the income tax by a year-end reconcilement” in the proviso to Article 73 (2) of the Act means any person who has no amount of tax payable as a voluntary payment by the final return, because he/she has paid the income tax by the year-end reconcilement.(3) A person who intends to make a return on tax base for a decedent under Article 74 (1) of the Act shall submit the documents determined by Ordinance of the Ministry of Strategy and Finance along with the final return on the tax base, to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(4) In cases where there exist two or more heirs, they may file a single return by having each heir sign jointly on the report form under paragraph (3), or each one may respectively submit by heir a report on which the names of other heirs are added. <Amended by Presidential Decree No. 15191, Dec. 31, 1996>

(1) Any person who intends to have the tax on income from overseas navigation business reduced or exempted under Articles 13 (1) 3 and 75 (1) of the Act, shall submit to the superintendent of the competent tax office an application for the reduction or exemption of amount of tax determined by Ordinance of the Ministry of Strategy and Finance along with the final return on the tax base. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) Any person who intends to have the tax on earned income reduced or exempted under Articles 13 (1) 1 and 75 (2) of the Act, shall submit an application for the reduction or exemption of tax determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office in charge of withholding tax, through the person who pays earned income in Korea, by not later than the 10th day of the month following that in which such reduction or exemption is sought. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) A person who makes a voluntary payment by the final return on the tax base pursuant to Article 76 (1) of the Act, shall pay it to the superintendent of the competent tax office along with the final return on the tax base, or pay it to the Bank of Korea or a postal service office, submitting a statement of payment under the National Tax Collection Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(2) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>

The taxes which may be paid in installments under Article 77 of the Act shall be as follows:1. In cases where the amount of tax payable is 20 million won or less, the amount exceeding 10 million won; and2. In cases where the amount of tax payable exceeds 20 million won, the amount which is 50/100 or less of such amount of tax.

(1) The report on the current status of the place of business under Article 78 of the Act shall be made on the report form on the current status of the place of business as determined by Ordinance of the Ministry of Strategy and Finance, and in cases of the place of business which the Commissioner of the National Tax Service deems necessary for the management of the characteristics of business type or of the tax sources, the relevant report shall be attached with the particulars of amount of revenue and the related data. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The term “other matters prescribed by Presidential Decree” in Article 78 (2) 4 of the Act means the following matters: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Details of the means of payment the amount of revenue;2. Details of receipts of account statements, tax invoices, credit card sales slips, and cash receipts;3. Details of expenses, including rents, purchase prices, and labor cost; and4. Other matters concerning the current statues of the place of business prescribed by Ordinance of the Ministry of Strategy and Finance.(3) The businessman having two or more places of business shall make the report on current status of place of business by place of business. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(4) In cases where a businessman closes or suspends his/her business, he/she shall submit the report on current status of place of business under paragraph (1) along with the report under Article 168 (3) of the Act, to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998>(5) The superintendent of the competent tax office in the place of business or the commissioner of the competent regional tax office may investigate and confirm the current status of place of business in cases where there exist any causes falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998>1. Where a report on the current status of place of business under Article 78 of the Act is not made;2. Where it is admitted that the important parts of basic matters, such as the current status of facilities, personnel expenses, revenue amount from among the contents of a report on the current status of place of business, are insufficient or false;3. Where it is admitted that the particulars of giving and receiving the statement of sale and purchase are significantly different from the facts; and4. Where a businessman suspends or closes his/her business.

(1) The determination and rectification of the tax base and the amount of tax under Article 80 of the Act shall be made in principle by the final return on the tax base and its attached documents, or by the actual investigations.(2) The determination under Article 80 (1) of the Act shall be completed within one year from the deadline for the final return on the tax base: Provided, That in cases where the Commissioner of the National Tax Service separately decides the investigation period or where obtaining an approval from the Commissioner of the National Tax Service due to inevitable reasons, it shall not be applicable.(3) The term “unfair methods prescribed by Presidential Decree” in Article 80 (2) 1-3 of the Act means cases falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>1. Preparation and submission of fraudulent evidenciary data or fraudulent documents; or2. Receipt (limited to receipt knowing that it is fraudulent) and submission of fraudulent evidenciary data or fraudulent document.

(1) The term “such reasons as prescribed by Presidential Decree” in the proviso to Article 80 (3) of the Act means the following occasions:1. Where the necessary books and documentary evidence is missing or important parts thereof are insufficient or false, for the calculation of the tax base;2. Where it is manifest that the contents of record-keeping are false, determining based on the scale of facilities, number of employees, market price of raw materials, merchandize or products, and various dues and charges; and3. Where it is obvious that the details of record-keeping are false, determined based on the volume of raw materials used, volume of electricity used, and other operational conditions.(2) Where the tax base is determined and revised based on estimation under the proviso to Article 80 (3) of the Act, the amount of tax base shall be calculated by making personal deduction and special deduction under Articles 50 through 52 of the Act from the amount of income assessed under paragraph (3).(3) Where the amount of income is determined and revised based on an estimation under the proviso to Article 80 (3) of the Act, it shall be made by means of the following subparagraphs: Provided, That the provisions of subparagraph 1-2 shall be applied only to those subject to the simple expense rate: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>1. The method of determining or revising, as the relevant amount of income (hereafter in this Article referred to as “standard amount of income”), the amount obtained by deducting the amount under the following items from the amount of income. In such cases, if the amount to be deducted exceeds the amount of income, the amount in excess shall be deemed non-existent: Provided, That where the standard amount of income is in excess of the amount calculated by multiplying the amount of income under subparagraph 1-2 by the multiplying factor stipulated by the Commissioner of the National Tax Service, the amount calculated by multiplication of such magnitude may be decided as the amount of income until December 31, 2009:(a) Purchase costs (excluding those for fixed assets for business; hereafter the same shall apply in this Article) and rent expenses on fixed assets for business which are paid or payable by the documentary evidences;(b) Pays, wages and retirement benefits for employees paid or payable based on documentary evidence; and(c) The amount obtained by multiplying income by standard expense rate;1-2. The method of determining or revising, as the relevant amount of income, the amount obtained by deducting the outcome of multiplying the amount of income by a simple expense rate from the income amount;2. The method of determining or revising the relevant amount of income by referring to the amount of income of other businessman in the same business type who is deemed to make the most accurate record-keeping, in cases where the standard expense rate or the simple expense rate is not determined, or where the books or other documentary evidence is missing or destroyed due to natural disasters and other force majeure: Provided, That the amount of income shall be determined or revised by the return under Article 70 of the Act and its attached documents in cases where no businessman exists in the same business type and where the books, etc. are missing or destroyed after the final return of tax base, and by the income rate during the immediately preceding taxable period in cases where the books, etc. are missing or destroyed before the final return of tax base; and3. Other methods which the Commissioner of the National Tax Service deems reasonable.(4) The term “persons subject to simple expense rate” in the proviso to paragraph (3) means businessmen falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. A businessman who has commenced a business anew in the current taxable period; and2. A businessman whose aggregate of amounts of income in the immediately preceding taxable period (including the amount of income increased by a determination or revision) falls short of the amount in the following items:(a) Agriculture, forestry, fishery, mining, wholesale, retail, real estate sales, and others not falling under items (b) and (c): 60 million won;(b) Manufacturing, lodging and restaurant, electric power, gas, water service, construction, transportation, telecommunications, financing and insurance: 36 million won; and(c) Real estate rental services, business support services, educational services, health and social welfare services, service industry related to entertainment, culture and sports, other public, repair and personal service, and household services: 24 million won.(5) The Commissioner of the National Tax Service shall determine the scope of purchase costs and rental expenses for the fixed assets for business under paragraph (3) 1 (a) and the kinds of documentary evidences under paragraph (3) 1 (a) and (b). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>(6) In applying paragraph (4) 2, if a person concurrently operates a type of business falling under (a) through (c) of the same subparagraph or has two or more places of business, it shall be governed by the amount of income computed by applying the provisions of Article 208 (7) mutatis mutandis. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>(7) Notwithstanding paragraph (4), a business operator who falls under any of the following subparagraphs shall not be included in the persons subject to simple expense rate: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. A business operator under Article 147-3;2. A person who engages in a business that falls under Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act;3. A business operator who does not hold a cash receipt merchant membership, although he/she is obligated to hold such membership of cash receipt merchant in accordance with Article 162-3 (1) of the Act (limited to the taxable period during which he/she holds no membership); and4. A business operator who holds membership of a credit card member store or cash receipt member store has refused transaction with credit card or has issued a credit card sales check different from the fact or a cash receipt, or issues either of it with any description different from the truth, and falls under any of the following items (limited to the taxable period on which the day when he/she refuses to issue either of it or issues either of it with any description different from the truth falls):(a) Where he/she has been notified of the fact falling under any of the following not less than three times in the relevant taxation year by the head of the competent tax office pursuant to the latter part of Article 162-2 (4) and the latter part of Article 162-3 (5) of the Act and the total amount of them is not less than on million won:(ⅰ) Where he/she has refused transactions with credit card;(ⅱ) Where he/she has issued a credit card sales check different from the fact;(ⅲ) Where he/she has refused to issue a cash receipt; and(ⅳ) Where he/she has issued a cash receipt different from the fact; and(b) Where he/she has been notified of the fact falling under any of item (a) not less than five times in the relevant taxation period by the head of the competent tax office pursuant to the latter part of Article 162-2 (4) or the latter part of Article 162-3 (5) of the Act.(8) When amount of income of those who have the appropriated money and reserve fund to be included in gross income under the Act or other Acts, is determined or revised through estimation under the proviso to Article 80 (3) of the Act, the appropriated money and reserve fund to be included in gross income during the current year shall be added to amount of income assessed under paragraph (3). <Amended by Presidential Decree No. 14860, Dec. 30, 1995>

(1) In cases where the amount of income of businessman cannot be calculated by the books and other documentiary evidences, such amount of income shall be governed by the amount calculated by the method falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998>1. The method of calculation by referring to the amount of income of other businessmen of same business condition, which has been investigated and determined by the record-keeping that is deemed to be accurate;2. In cases where there exists any business efficiency which is set forth by the Commissioner of the National Tax Service to define the relations between the volume or price of personal or physical facilities related to the business (such as employees, guest rooms, place of business, vehicles, tap water and electricity) and the turnover in view of the type and area of the business, the method of calculation by applying such business efficiency;3. The method of calculation by applying the market price of quantity sold during the relevant taxable period to the amount of quantity produced calculated by applying the production rate, which has been investigated by the Commissioner of the National Tax Service on the input raw materials by business kind;4. The method of calculation by the criteria falling under any of the following items, which are set forth by the Commissioner of the National Tax Service by type and area of business:(a) Input quantity per unit of won, which defines the relation between the partial or whole quantity, from among raw or secondary materials input for production, and the quantity of production;(b) Expense-related ratio which defines the relation between the partial or whole expenses, from among labor costs, rent, material cost, water, heat and light expenses and other operating expenses, and the turnover;(c) Turnover ratio of merchandizes, which defines the relation between the average inventory amount during a specified period, and the turnover or cost of sales;(d) Gross profit ratio of sales, which defines the ratio between the turnover and the gross profit of sales, during a specified period; and(e) Value-added rate, which defines the ratio between the turnover and the value-added amount, during a specified period;5. In cases where the ratio of subparagraphs 2 through 4 may be computed on the businessman subject to the estimation, determination and revision, the method of calculation by applying it thereto; and6. For business types mainly targeting the end-users, the method of calculation by the criteria for observed investigation set forth by the Commissioner of the National Tax Service.(2) In cases where the amount of miscellaneous income under Article 21 (1) 7 of the Act cannot be assessed by the books and other documentiary evidences, such income amounts shall be governed by the amount falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>1. Deleted; <by Presidential Decree No. 18173, Dec. 30, 2003>2. In cases of the goodwill (excluding the right to lease a store), the amount evaluated under Article 59 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act;3. In cases of the right to lease a store, the amount calculated by deducting the amount calculated by item (b) from the amount calculated by item (a):(a) Amount equivalent to the security money for lease at the time of transfer ＋ Appraised value of the goodwill of the businessman transferring the relevant asset; and(b) Amount equivalent to the security money for lease at the time of acquisition ＋ (Amount assessed by item (a) － Amount equivalent to the security money for lease at the time of acquisition) ×1/2; and4. In cases of assets or rights (excluding goodwill and the right to lease a store) under Article 21 (1) 7 of the Act, the amount evaluated under Article 59 (4) through (6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act.(3) The amount of income under paragraph (1) shall be what whereto added the amounts listed in each of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>1. Subsidies or bounties granted by the State or local governments in connection with the relevant projects;2. Subsidies or bounties granted by the fellow businessmen’s organization or the customers in connection with the relevant projects;and3. Amount of value-added tax deducted by issuing a credit card sales slip under Article 32-2 (1) of the Value-Added Tax Act.(4) In cases where the amount of income may be calculated by the books and other documentary evidence kept by a resident in making the estimation, determination or revision under paragraphs (1) through (3), the tax base and amount of tax of relevant taxable period shall be determined or revised by actual investigation. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17825, Dec. 30, 2002>

(1) Standard expense rate, simple expense rate and multiplying factor under Article 143 (3) shall be expense rates and multiplying factor, which has been determined by the Commissioner of the National Tax Service in view of the average expense rate investigated according to the business type and company peculiarity, against the enterprises which are of average business scale and condition, after going through a review by the Deliberation Committee of Standard Expense Rate. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002>(2) The Deliberation Committee of Standard Expense Rate under paragraph (1) shall be established at the National Tax Service, and the Deputy Commissioner of the National Tax Service shall be its chairman; and its members shall consist of eleven persons commissioned by the Commissioner of the National Tax Service at the recommendation of business colleges and universities, academic research organizations, economic organizations and financial institutions, etc. and the public officials prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(3) The Commissioner of the National Tax Service shall decide and announce the expense rate, multiplying factor and estimation method to be applied to the relevant taxable period (in cases of confirming two or more estimation methods, including matters concerning its application) through a review by the Deliberation Committee of Standard Expense Rate by not later than one month prior to the commencement of the period for the final return of tax base for the relevant taxable period. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20618, Feb. 22, 2008>(4) Matters necessary for the organization and operation of the Deliberation Committee of Standard Expense Rate shall be determined by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

(1) The term “unclear case prescribed by Presidential Decree” in Article 81 (1) of the Act means cases falling under any of the following subparagrahs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. The address, name, tax payment number (in cases of substitution by the resident registration number, the resident registration number) or the businessman’s registration number, the types of income, the reversion fiscal year of income or paid amount have not been stated or mistakenly stated in the submitted detailed statement of payment, and the fact of payment is incapable of verification; and2. The securities standard code has not been stated or mistakenly stated on the submitted detailed statement of payment and the payment specifications of interest and dividend income.(2) The payment amount falling under the following subparagraphs shall not be included in the amount of obscurity under paragraph (1): <Amended by Presidential Decree No. 15969, Dec. 31, 1998>1. The amount paid to a person who receives the tax number, or to a person who receives the business registration certificate, as of the payment date; and2. The payment amount other than those of subparagraph 1, for which it is confirmed that whereabouts of such receiver becomes unknown after the payment.(3) In applying Article 81 (1) of the Act, the annuity income and retirement income under Articles 20-3 (2) and 22 (2) of the Act shall be deemed the paid amount in cases of the annuity income and retirement income. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19890, Feb. 28, 2007>(4) The term “mentioned items prescribed by Presidential Decree” in the main body of Article 81 (3) 1 of the Act means the items mentioned under Article 211 (1) 1 through 4 (hereafter in this paragraph, referred to as the “necessary mentioned items”), and in cases where the fact of transaction is verified in view of other mentioned items on the relevant account statement while a part from among the necessary mentioned items on the issued account statement has been entered erroneously, it shall not be deemed an account statement which is entered differently from the fact under Article 81 (3) 1 of the Act. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007>(5) The entries to be made in the table of total account statements by each buyer and seller in the main body of Article 81 (3) 2 of the Act means the registration number and offering price by trader, and the term “offering or purchase price of the portion of transaction which can be confirmed under the conditions prescribed by Presidential Decree” in the proviso to the same subparagraph, means the offering or purchase price of the portion whose fact of transaction is confirmed by the account statement which is issued or received. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007>(6) The term “purchase price of the portion of a transaction is verified under the conditions prescribed by Presidential Decree” in the proviso to Article 81 (3) 3 of the Act means the purchase price of the portion of a transaction can be verified with a tax invoice issued accordingly. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>

(1) The provisions of Article 81 (4) of the Act shall not apply to the entertainment expenses which are not included among necessary expenses under Article 35 (2) of the Act. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(2) The term “small-scale businessman prescribed by Presidential Decree” in Article 81 (4), (5), and (8) of the Act means a businessman who falls under any of subparagraphs of Article 132 (4). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(3) The term “person whose amount of income is estimated under the conditions as determined by Presidential Decree” in Article 81 (4) and (5) of the Act means a person whose income is estimated in accordance with Article 143 (3): Provided, That the foregoing shall apply only to the portion of income estimated out of the amount that constitutes expenses except those under paragraph (3) 1 (a) and (b) of the same Article in cases of any person other than those subject to the simple expense rate under Article 143 (4). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(4) The term “case determined by Presidential Decree” in Article 81 (5) of the Act means cases in which the fact of transaction cannot be confirmed because such matters have not been entered or entered differently from the fact as the trade name of counterpart of trade, name, business registration number (residents registration number in cases it substitutes for such number), date of transaction and payment amount on the submitted specification of receiving receipts. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

The term “businessman determined by Presidential Decree” in Article 81 (6) of the Act means a businessman who engages in medical services under the Medical Service Act, veterinarian services under the Veterinarians Act, or pharmaceutical services with a pharmacy established under Pharmaceutical Affairs Act.[This Article Wholly Amended by Presidential Decree No. 19890, Feb. 28, 2007]

The term “case prescribed by Presidential Decree” in Article 81 (7) 2 of the Act means a case that falls under any of the following subparagraphs:1. Where any person other than a joint businessman is reported as a joint businessman;2. Where a person who falls within the category of the joint investment businessmen under Article 100 (1) (hereinafter referred to as a “joint investment businessman”) has not been reported, or a person reported as a joint investment businessman is not in fact a joint investment businessman;3. Where the allocation ratio of profit and loss as reported is different from the terms and conditions agreed upon between the joint businessmen; and4. Where any of joint businessmen or joint investment businessmen, or the allocation ratio of profit and loss was changed, but such change has not been reported in accordance with Article 87 (5) of the Act.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) In cases where a businessman ceases to correspond to a businessman under Article 208 (5) as his/her amount of income has been increased due to a determination, revision under Article 80 of the Act or amended return under the provisions of Article 45 of the Basic Act for National Taxes, he/she shall be deemed as a person subject to simple bookkeeping by not later than the taxable period whereto belongs the date of such determination, revision or amended return in applying the latter part of Article 70 (4) of the Act: Provided, That, where a businessman is converted to a person subject to bookkeeping by double-entry before the taxable period whereto belongs the date of such determination, revision or amended return, he/she shall be deemed as a person subject to simple bookkeeping not later than the taxable period immediately preceding that wherein he/she has been converted to a person subject to bookkeeping by double-entry. <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>(2) Article 81 (11) 1 of the Act shall also apply to a case where a businessman becomes obligated to hold a membership of cash receipt merchant under Article 162-3 (1) of the Act as a result of the determination or rectification under Article 80 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The superintendent of the competent tax office of the place of business (with respect to persons other than businessmen, the superintendent of the competent tax office of the place of tax payment), shall determine the tax base and the amount of tax under Article 82 (1) of the Act, by applying mutatis mutandis Article 142 (1). <Amended by Presidential Decree No. 14860, Dec. 30, 1995>(2) The superintendent of the competent tax office who intends to assess taxes occasionally under Article 82 (4) of the Act shall without delay notify his/her intention to the relevant resident with approval from the commissioner of the regional competent tax office. The same shall apply to cases of cancelling the designation of area for the occasional assessment. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(3) When a businessman receives income from the United Nations’ forces or a foreign institutions in the foreign exchange certificate or won currency through foreign exchange bank, the superintendent of the competent tax office may determine, under Article 82 of the Act, the tax base for the amount to be received.(4) and (5) Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>(6) Matters necessary for the calculation of the amount of tax in the occasional assessment under Article 82 of the Act shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In cases where the superintendent of the competent tax office or the commissioner of the competent regional tax office concerned intends to notify the tax base and the amount of tax under Article 83 of the Act, he/she shall notify the tax base, tax rate, amount of tax and other necessary matters in writing. In such cases, if there is no tax payable, the same shall apply.(2) In cases where the superintendent of the competent tax office or the commissioner of the competent regional tax office concerned imposes income tax on the income of a decedent on two or more heirs, he/she shall divide the tax base and amount of tax pro rata one’s share, and notify by heir respectively.(3) Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>

(1) The term “small or medium enterprise prescribed by Presidential Decree” in the former part of Article 85-2 (1) of the Act means an enterprise as prescribed in Article 2 of the Enforcement Decree of the Special Tax Treatment Control Act; and the term “amount of income tax as prescribed by Presidential Decree” means the assessed gross income amount of tax of the relevant small and medium enterprise for the immediately preceding taxable period. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “amount calculated under the conditions prescribed by Presidential Decree” in the former part of Article 85-2 (1) of the Act means the amount obtained by deducting the amount of subparagraph 2 from the amount of subparagraph 1 (hereinafter, referred to as “retrospectively deducted amount of tax for the loss”):1. The assessed amount of tax for the gross income of the relevant small and medium enterprise in the immediately preceding taxable period; and2. The assessed amount of tax for the gross income of the relevant small and medium enterprise which is calculated by applying the tax rate for the immediately preceding taxable period to the amount obtained by deducting the amount of deficit brought forward under Article 45 (2) of the Act entitled to the retrospective deduction (limited to the tax base for gross income of the immediately preceding taxable period), from the tax base for gross income of the immediately preceding taxable period.(3) A person who intends to obtain the refund of retrospective deduction of the loss under Article 85-2 (2) of the Act shall submit an application for the refund of retrospective deduction for the loss as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(4) The superintendent of the competent tax office shall, in cases where the deficit for the relevant taxable period of the businessman who has obtained the refund of retrospective deduction amount of tax for loss is decreased, collect as the income tax on the aggregate amount of those computed by the following formula under Article 85-2 (5) of the Act (hereinafter referred to as the “amount of tax refund of which is cancelled”), and the amount corresponding to the interest on the amount of tax whose refund is cancelled which are computed by multiplying the period from the date of refunding the amount of retrospective deduction of tax for loss to the date of deciding the refund cancellation by the rate stipulated in Article 146-2: Provided, That in cases where only a part of the deficit brought forward under Article 45 (2) of the Act has been deducted retrospectively, it shall be deemed that the deficit for which a retrospective deduction has not been granted is reduced first: <Amended by Presidential Decree No. 15969, Dec. 31, 1998> Refund amount of tax under Article 85-2 (3) of the Act

×
Decreased deficit amount exceeding the deficit not subject to retrospective deduction
Deficit amount deducted retrospectively
(5) In cases where the tax base for gross income and the amount of tax for the immediately preceding taxable period, which forms the basis for a computation of the retrospective deduction amount of tax for deficit, is changed owing to the revisions, etc., the superintendent of the competent tax office shall immediately make a re-determination of the original refund amount of tax, and refund or collect the difference between the amount of tax refunded as the amount of tax retrospectively deducted for deficit, and the refund amount of tax redetermined; and in cases where the amount of tax refunded exceeds the redetermined refund amount of tax, and such difference is collected, such collection shall be made by adding the amount corresponding to the interest computed by applying mutatis mutandis paragraph (4).(6) The calculation of amount of tax to be refunded by a retrospective deduction for deficit and other necessary matters shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]

(1) The term “representative joint businessman” in Article 87 (4) of the Act means a person who is not a joint investment businessman and falls under the following subparagraphs: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. A person appointed from among joint businessmen; and2. A person whose allocation ratio of profit and loss is the largest, if there is no representative joint businessman appointed: Provided, That such person shall be designated by the superintendent of the competent tax office, if the allocation ratios of profit and loss are the same.(2) The determination or revision of the amount of income from the joint business under Article 87 of the Act shall be made by the superintendent of the competent tax office of the address of the representative joint businessman under Article 87 (4) of the Act (hereafter in this Article referred to as a “representative joint businessman”): Provided, That the matters which the Commissioner of the National Tax Service deems to be especially important shall be determined by the superintendent of the competent tax office of the place of business or the commissioner of the competent regional tax office of the address of the representative joint businessman. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(3) The business registration for the place of joint business under Article 87 (4) of the Act shall be made by the representative joint businessman to the superintendent of the competent tax office by a report on the relocated joint place of business, etc. as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(4) The representative joint businessman shall, when there is any change in the descriptions reported in accordance with Article 87 (4) of the Act, report such change to the superintendent of the competent tax office in the form of the report on the relocation of joint place of business, etc. as prescribed by Ordinance of the Ministry of Strategy and Finance, within 15 days from the end of the taxable period on which the day when such cause or event occurred falls. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>(5) In applying Articles 64 and 94, the superintendent of the competent tax office of the place of joint business shall be the superintendent of the competent tax of the address of the representative joint businessman.(6) In cases where a joint businessman files a final return on tax base, he/she shall submit an account statement separating the income accruing from the relevant place of joint business and income other than that along with the final return on tax base. In such cases, the representative of a joint business shall submit the specification of distribution by joint place of business, of the income accruing from the relevant joint place of business, additional taxes and the amount of tax collected through withholding.(7) Matters necessary for the place of joint business other than paragraphs (1) through (6) shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The term “amount of income” in Article 87-2 (1) 1 of the Act means the amount of income of the taxable period liable for application of conscientious tax payment method calculated by applying Article 208 (7) mutatis mutandis: Provided, That the taxable period concerned is less than one year, the amount obtained by converting the amount of income of the period concerned into 12 months shall be the standard. In such cases, the number of months shall be counted according to the calendar and the days less than one month shall be counted as one month.(2) Even when the business to whom the conscientious tax payment method applies pursuant to Article 87-2 (1) of the Act exceeds the standard for amount of income (hereinafter “standard for income amount”) pursuant to subparagraph 1 of the same paragraph because of expansion, etc. of size, the conscientious tax payment method shall apply to him/her regarding him/her as not exceeding the standard for amount of income during the relevant taxable period and the next two taxable periods (hereafter in this paragraph “legal delay”), and the application of conscientious taxation method shall keep on if the amount of income of the first taxable period after the legal delay does not exceed the standard for income amount.(3) Where conscientious small and medium businesses concurrently operate the types of business in the items of Article 87-2 (1) 1 of the Act, all such types of business shall meet the requirements of Article 87-2 (1) 2.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The conscientious small and medium businesses (hereinafter “conscientious small and medium businesses”) pursuant to Article 87-2 (1) of the Act who intend to have the conscientious tax payment method applied shall submit a request for the application of conscientious tax payment method prescribed by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office within two months from the end of taxable period in which they intend to have the method applied. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) The superintendent of tax office who has received the request for the application of conscientious taxation method pursuant to paragraph (1) shall determine whether to approve it and notify the result within one month from the date he/she received the request.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) Where the conscientious small and medium businesses to whom the conscientious tax payment method applies are determined as not meeting the requirements in Article 87-2 (1) 2 of the Act, the superintendent of competent tax office shall notify the businesses concerned to explain whether they meet the requirements for the application of conscientious tax payment method after specifying a period of one month.(2) Where there is no explanation pursuant to paragraph (1) or the contents of explanation are recognized as incomplete, the superintendent of competent tax office may revoke the approval of application of conscientious tax payment method of the business concerned. In such cases, where he/ she has received an explanation, he/she shall notify whether to revoke the approval within one month from the date of receipt.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) When the superintendent of competent tax office approves the application of conscientious tax payment method pursuant to Article 1503 (2) or revokes the approval of application of conscientious tax payment method pursuant to Article 150-4 (2), he/she shall have the conscientious tax payment advisory committee (hereafter in this Article “committee”) review thereon beforehand.(2) The committee shall consist of 15 or fewer members, including one chairman; the superintendent of tax office shall be the chairman and the members shall consist of the persons falling under the following subparagraphs:1. Persons appointed by the superintendent of tax office from among the Grade V or VI public officials under his/her control: four persons or less; and2. Persons commissioned by the superintendent of tax office from among the persons with abundant knowledge and experience in law or tax affairs: ten persons or less.(3) The committee shall meet by consisting of the chairman and six persons designated by the chairman at every meeting, however, it shall include four persons or more falling under paragraph (2) 2.(4) The term of office of the members pursuant to paragraph (2) 2 shall be two years.(5) Article 53 (4) through (8), (10) and (13) of the Enforcement Decree of the Basic Act for National Taxes shall apply mutatis mutandis to the decommissioning of members, convocation and notice of meetings, method of resolution, payment of allowance, etc. In such cases, the “Commissioner of the National Tax Service” shall be deemed as the “superintendent of a tax office”, and the “National Tax Examination Committee” shall be deemed as the “conscientious tax advisory committee”.(6) Other matters necessary for the operation, etc. of the committee shall be decided by the Commissioner of the National Tax Service.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The term “amount calculated prescribed by Presidential Decree” in Article 87-3 (2) of the Act means the amount calculated by applying the straight line method pursuant to subparagraph 2 of Article 66 to the value (including over-depreciation) of depreciated asset that has not been included among necessary expenses as of the end of taxable period immediately prior to the period when the conscientious tax payment method applied for the first time.(2) The amount obtained by multiplying the depreciation cost by 1/2 when paragraph (1) is applied shall be the depreciation cost of depreciated asset used for business after acquisition during the taxable period by conscientious small and medium business operators, notwithstanding the latter part of Article 62 (1).(3) The useful life of depreciated asset shall be five years (20 years for buildings and structures) notwithstanding Article 63 (1) when paragraph (1) is applied. In such cases, the useful life of the depreciated asset that was held before the conscientious tax payment method has been applicable shall be according to the methods in the following subparagraphs:1. Buildings and structures: 20 years the years that have passed as of the end of taxable period immediately prior to the taxable period to which the conscientious taxation method applies for the first time; and2. Other depreciated assets: five years the years that have passed as of the end of taxable period immediately prior to the taxable period to which the conscientious taxation method applies for the first time.(4) If the useful life is below zero when subparagraphs of paragraph (3) is applied, the value of depreciated asset that has not been included in the necessary expense following the application of paragraph (1) in the taxable period to which the conscientious tax payment method applies for the first time shall be included in the necessary expense.(5) The term “one million won” in the main body of Article 67 (4) shall be deemed as “three million won” for the businesses to whom the conscientious tax payment method applies.(6) Matters necessary for the method of application, etc. in cases where the conscientious tax payment method has ceased to apply shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

As for businesses to whom the conscientious tax payment method applies, the cumulative amount of reserve for retirement benefits that is included in the necessary expense shall be within the bounds of 20/100 of the total wage of the employees working as of the end of the taxable period concerned, notwithstanding Article 57 (2).[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) If there is income other than business income and real estate rental income when Article 87-5 (1) of the Act is applied, the amount obtained by calculating according to the following arithmetic formula shall be deducted from the computed amount of tax:computed amount of tax × [(amount of business income + amount of real estate rental income) / amount of gross income] × 25/100 (15/100 for businesses located in the Seoul Metropolitan Area).(2) Where any of the types of business falls under Article 7 (1) 1 of the Special Tax Treatment Control Act when Article 87-5 (1) of the Act is applied, it shall be applicable to the amount of whole income of the relevant business operator.(3) Where a business is operated in two or more places of business to when Article 87-5 (1) of the Act is applied, whether a business is located in the Seoul Metropolitan Area shall be determined on the basis of the location of the place of business that has larger amount of income.(4) The carried forward deduction of the tax deduction pursuant to Article 144 (1) of the Special Tax Treatment Control Act that has not been deducted before the conscientious tax payment method applied to the conscientious smaller business shall be deemed to cease to exist.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) Where there is income other than business income and real estate rental income when Article 87-6 (1) of the Act is applied, the amount obtained by calculating according to the following arithmetic formula shall be deducted from the calculated amount of tax:calculated amount of tax × (amount exceeding 115/100 of the amount of income in the immediately prior taxable period / amount of income in the taxable period concerned) × [(amount of business income + real estate rental income) / amount of gross income].(2) The term “causes, such as relocation of place of business, change in the type of business, etc. as prescribed by Presidential Decree” in Article 87-6 (2) of the Act means the cases falling under any of the following subparagraphs:1. Where the area of the place of business increases by 50/100 (30/100 where the place of business is relocated) or more of the area in the immediately previous taxable period; or2. Where it is changed to a type of business which belongs to another large classification in the Korean Industrial Classification or a type of business belonging to another large classification is added.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The report and payment of income tax on gross income by conscientious small and medium businesses shall be pursuant to Sections 7 and 8 of Chapter Ⅱ except for those prescribed otherwise in this Chapter.(2) Matters necessary for the papers attached to the report, etc. pursuant to Articles 130 and 131, such as the application for deduction of standard amount of tax, application for deduction of increase in amount of income, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) Where the deduction of amount of income decreases as the tax base and amount of tax of the taxable period concerned are corrected, they shall be recalculated and matters necessary for decision, correction and collection shall be pursuant to Section 10 of Chapter Ⅱ except for those prescribed otherwise in this Chapter.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) In applying Article 88 (1) of the Act, if the debtor concludes a transfer contract for the property to guarantee the repayment of debts, and makes a report by attaching a copy of the contract satisfying the requirements under each of the following subparagraphs to the final return of tax base, it shall not be deemed a transfer:1. There shall be a manifestation of intention between the parties concerned to the effect that such transfer is made to guarantee the repayment of debts;2. There shall be a manifestation of intention to the effect that the debtor shall use the relevant property and receive profits therefrom as originally intended; and3. There shall be an agreement on the principal, interest rate, period of repayment, means of repayment, etc.(2) When one breaches any of requirements of paragraph (1) after entering into a contract thereunder or the relevant property is appropriated for the repayment due to a non-performance of obligation, the property shall then be deemed to have been transferred.

(1) The term “land substitution” in Article 88 (2) of the Act means cases where business executor offers other land in the relevant area to the land owner or the related persons in the business area after the completion of business in lieu of the previous land (including those to be divided, combined or exchanged, according to a business execution), pursuant to the project for urban development under the Urban Development Act, the project for arrangement of the basis for agricultural production under the Rearrangement of Agricultural and Fishing Villages Act, and other Acts. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “land secured by the authorities in recompense for development outlays” in Article 88 (2) of the Act shall, in cases where the business executor under paragraph (1) has the land owner or the related persons in the business area bear the project costs with the land in the business area pursuant to the relevant Acts, mean the relevant land (including the land in reservation under the relevant Acts).

(1) The term “such cases as prescribed by Presidential Decree” in Article 89 (1) 2 of the Act means cases where farm land falling under any of the following subparagraphs (excluding the land falling under any subparagraph of paragraph (4)) is exchanged or divided or combined, and where the difference of land value of both sides of such exchange and division or combining is not more than 1/4 of the larger value: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19463, Apr. 28, 2006>1. Farmland exchanged, divided or combined owing to the project implemented by the State or the local government;2. Farmland exchanged, divided or combined with the land owned by the State or the local government;3. Farmland exchanged owing to a necessity for cultivation: Provided, That it shall be confined to cases where one cultivates farmland newly acquired by such exchange while residing for three or more years in the location of such farmland; and4. Farmland exchanged, divided or combined under the Rearrangement of Agricultural and Fishing Villages Act, the Farmland Act, the Korea Rural Community and Agricultural Corporation and Farmland Management Fund Act, or the Agricultural Cooperatives Act.(2) Deleted. <by Presidential Decree No. 19254, Dec. 31, 2005>(3) The term “location of the farmland” in the proviso to paragraph (1) 3 means the area falling under any of the following subparagraphs (including the area which has corresponded to the relevant area at the time of commencement of cultivation, but ceases to correspond thereto due to a reorganization of administrative districts): <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008>1. The area within a Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where the farmland is located;2. The area within a Si/Gun/Gu adjacent to the area under subparagraph 1; or3. The area within a 20 kilometer radius from farmland.(4) Farmland which is excluded from the farmland under the provisions of paragraph (1) shall be as follows: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Farmland in a residential area, commercial area or industrial area under the National Land Planning and Utilization Act from among that located as of the transfer date in the Special Metropolitan City, a Metropolitan City (excluding the Gun in the Metropolitan City) or a Si area (excluding an Eup/Myeon area of a Si in an urban and rural complex form under Article 3 (4) of the Local Autonomy Act), for which three years have elapsed from the date of its incorporation into these areas: Provided, That the farmland which is incorporated into the residential area, commercial area or industrial area under the National Land Planning and Utilization Act owing to an execution of the development project within the area for the large scale development project falling under any of the following items (referring to the area executing a single project whose date of public notice for the project approval is the same) for which three years have elapsed from the date of its incorporation into such areas due to the gradual project-execution or the deferment of compensation by the project executor: Provided, That it falls under any of the following items, it shall be excluded:(a) Where there are one thousand or more land owners within the project area, or where three years have passed since the farmland was incorporated into the residential area, commercial area or industrial area pursuant to the National Land Planning and Utilization Act due to the gradual execution of project or delay in compensation by project executor following the execution of development project in the development project area (refers to the single project execution area whose date of notice of project authorization is the same) whose scale of project execution is larger than that prescribed by Ordinance of the Ministry of Strategy and Finance; or(b) Where it falls under unavoidable causes prescribed by Ordinance of the Ministry of Strategy and Finance in cases of a farmland incorporated into an residential area, commercial area or industrial area pursuant to the National Land Planning and Utilization Act due to the execution of development project in the development project area by a project executor, such as the State, local government or public agency prescribed by Ordinance of the Ministry of Strategy and Finance; and2. Where there exists a designation of the land to be substituted as the land other than farmland, prior to a disposal of substituted land, with respect to the relevant farmland, and for which three years have elapsed from the date of designating the relevant land to be substituted.(5) In applying paragraphs (1) 3, if the newly acquired farmland is purchased by consultation or expropriated under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor or expropriated under other Acts, within three years after its acquisition, such land shall be deemed to have been cultivated while residing for three years or longer in the location of farmland. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005>(6) In applying paragraphs (1) 3, if the owner of the farmland dies within three years after the acquisition of new farmland, and the heir continues to cultivate while residing in the location of farmland, the years of cultivation by the decedent and those of the heir shall be aggregated. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 19254, Dec. 31, 2005>

(1) The term “one house for one household as prescribed by Presidential Decree” in Article 89 (1) 3 of the Act means cases where one household (hereinafter referred to as the “one household”) comprised of the resident, his/her or her spouse, and family members who make their living together at the same address or domicile, possess only one house in Korea as of the transfer date, and the possessing period of relevant house is three years or longer (in cases of houses located in Seoul Special Metropolitan City, Gwacheon-si and Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong new town area which have been designated and publicly announced as the prearranged areas for developing housing sites under Article 3 of the Housing Site Development Promotion Act, the possessing period of relevant house is three years or longer and the dwelling period in such possessing period is two years or longer): Provided, That in cases falling under any of the following subparagraphs and in which one household possesses one house in Korea as of the transfer date, it shall not be subject to such limit on the possession period and period of domicile: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18127, Nov. 20, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Where a constructed house for lease under the Rental Housing Act is acquired and transferred, if the dwelling period from the date of rental the relevant constructed house for rent to the date of transferring the relevant house is five years or longer;2. The case falling under any of the following items. In such cases, the remaining house and its appurtenant land which are transferred within two years from the relevant transfer date or expropriation date shall be deemed to be included in the cases of item (a):(a) Where the whole or part of the house and its appurtenant land (limited to the house and its appurtenant land purchased prior to the public notice date for the project approval) are purchased by consultation or expropriated under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor or expropriated under other Acts;(b) Where all members of a household emigrated from Korea due to emigration under the Emigration Act: Provided, That it is limited to the transfer made within two years from the date of departure in cases where one house was held as of the date of departure; or(c) Where all members of a household have left Korea due to such conditions as study or work needing continuous overseas residence for not less than a year: Provided, That it is limited to the transfer made within two years from the date of departure; and3. Where a house resided in for not less than one year is transferred due to school, work, medical treatment and recuperation and other inevitable circumstances determined by Ordinance of the Ministry of Strategy and Finance.(2) Where falling under any of the following subparagraphs, it shall be deemed one household under paragraph (1), even if one has no spouse: <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. Where the relevant resident is 30 or more years old;2. Where one’s spouse is deceased or divorced from him; and3. Where the income under the provisions of Article 4 of the Act is not less than the level of the lowest living expenses under subparagraph 6 of Article 2 of the National Basic Living Security Act, and where an independent living may be maintained while managing and maintaining the possessed house or land: Provided, That cases of a minor shall be excluded, but the same shall not apply to cases where a formation of one household is inevitable due to the minor’s marriage, the decease of family members and other reasons provided by Ordinance of the Ministry of Strategy and Finance.(3) In applying Article 89 (1) 3 of the Act, where one building consists of a housing area and non-residential area, and where the non-residential building is located on the land appurtenant to a house, such whole construction shall be deemed as a house: Provided, That where a housing area is smaller than or the same as the area of the non-residential part, such non-residential part shall not be deemed as a house. <Amended by Presidential Decree No. 19254, Dec. 31, 2005>(4) In a case of the proviso to paragraph (3), the land appurtenant to the house shall be calculated by multiplying the whole land area by the rate occupied by the house area in the area of building.(5) The calculation of retention period under paragraph (1) shall be governed by Article 95 (4) of the Act, and the residence period under the same paragraph shall be governed by the period from the move-in date to the move-out date as recorded on the resident registration card. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>(6) The term “family” in paragraph (1) means the lineal descendants and ascendents (including their spouses) and brothers and sisters of the resident and his/her spouse, and includes those who have temporarily left the original address or domicile for school attendance, medical treatment, status of work or business. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998>(7) The term “ratio as determined by region under Presidential Decree” in Article 89 (1) 3 of the Act means the following ratio: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19254, Dec. 31, 2005>1. Land located in the urban area: Five times; and2. Land located outside the urban area: Ten times.(8) As for the calculation of residence period or retention period pursuant to paragraph (1), the period of the following subparagraphs shall be aggregated: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. The residence period and retention period in the destroyed house and reconstructed house in cases where the house is reconstructed due to loss by fire, collapse, wear and tear, etc. during residence period or retention period; and2. The residence period and retention period in cases where a nonresident has been holding the house concerned for three years or more and has been converted into a resident while residing in the house.(9) In applying the provisions of Article 89 (1) 3 of the Act, if two or more houses are transferred on the same day, such transfer of houses shall be deemed to have been made in accordance with the order selected by the relevant resident. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19254, Dec. 31, 2005>

(1) When one household having one house in Korea comes to temporarily possess two houses by acquiring another house (including cases where it acquires by constructing a new one by itself) before it transfers such house, if it transfers the previous house within two years (including cases where unable to transfer within two years, and which comes to fall under the causes determined by Ordinance of the Ministry of Strategy and Finance) from the date of acquiring another house, it shall be deemed as one house for one household, and Article 154 (1) shall be applicable. In such cases, where a part of previous house and appurtenant land is purchased by consultation or expropriated under Article 154 (1) 2 (a), if the relevant remaining house and appurtenant land are transferred within two years from the date of such transfer or expropriation, the transfer of such remaining house and appurtenant land shall be deemed to be included in the transfer or expropriation of the previous house and appurtenant land. <Amended by Presidential Decree No. 17555, Mar. 30, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008>(2) In case where one household, which owns respectively one inherited house (including the newly-built house acquired after the completion of project execution as one succeeds to the association member’s residing right; referring to one house according to the order falling under any of the following subparagraphs, when the decedent has owned two or more houses at the time of commencing an inheritance) and one other house (hereafter in this paragraph, referred to as the “general house”) within the country, transfers the general house, the provisions of Article 154 (1) shall be applied by deeming that it owns one house within the country: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20618, Feb. 22, 2008>1. One house for which the period of possession by the decedent is the longest;2. One house for which the period of domicile by the decedent is the longest, when there are two or more houses for which the period of possession by the decedent has been equal;3. One house in which the decedent has resided at the time of commencing an inheritance, when there are two or more houses for which the period of possession and period of domicile by the decedent are all equal; and4. One house whose standard market price is highest (when the standard market prices are the same, one house chosen by the heir), when there are two or more houses in which the decedent has never resided, and for which the possessing periods are the same.(3) In applying Article 154 (1), when the house other than the co-inherited house (referring to one house owned jointly by many persons due to the inheritance) is transferred, the relevant co-inherited house shall not be deemed as the house of the relevant resident: Provided, That in cases of an heir whose share in the inheritance is largest, this shall not apply, and in such cases, if there are two or more heirs having the largest shares in the inheritance, the heir falling under any of the following subparagraphs according to the order indicated thereunder, from among such persons of the two or more, shall be deemed to own the relevant co-inherited house: <Amended by Presidential Decree No. 14860, Dec. 30, 1995>1. Person who lives in the relevant house;2. Deleted; and <by Presidential Decree No. 20618, Feb. 22, 2008>3. The oldest person.(4) In cases where a person having one house and forming one household comes to combine the households in order to live together and support a lineal ascendent (including his/her spouse’s lineal ascendents) of 60 or more years old having one house, and consequently, one household comes to own two houses, the house which is first transferred within five years from the combining date shall be deemed one house for one household, and be governed by Article 154 (1). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 21301, Feb. 4, 2009>(5) In cases where a person having one house comes to own two houses by marrying another person having one house, the house which is first transferred within two years from the wedding day shall be deemed as one house for one household, and be subject to the provisions of Article 154 (1). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17751, Oct. 1, 2002>(6) In cases where one household having one house falling under any of the following subparagraphs, and another house (hereafter referred to as an “ordinary house” in this paragraph), each in Korea, transfers the ordinary house, such household shall be deemed to own one house in Korea, and be subject to the provisions of Article 154 (1): <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20222, Aug. 17, 2007>1. Designated cultural property under Article 2 (2) of the Cultural Heritage Protection Act and registered cultural property under Article 46 (2) of the same Act; and2. and 3. Deleted. <by Presidential Decree No. 16112, Feb. 8, 1999>(7) In cases where one household having one house located in the area of an Eup (excluding the area within the urban area) or Myeon (hereafter referred to as a “house in an agricultural or fishing village” in this Article) from among the areas outside of the Seoul Metropolitan area under subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as the “Seoul Metropolitan area”), which fall under any of the following subparagraphs, and another house (hereafter referred to as an “ordinary house” in this paragraph and paragraphs 11 through 13), each in Korea, transfers the ordinary house, such a household shall be deemed to own one house in Korea and Article 154 (1) shall be applicable to the household: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21138, Nov. 28, 2008>1. Inherited house (limited to cases where the decedent has resided therein for five years or longer after its acquisition);2. House of rural exodus in which those who have ceases farming (including those who quit fisheries; hereafter in this Article, the same shall apply) have resided for five years or longer after the date of acquisition; and3. House of return to the farm which has been acquired for the purpose of farming or fisheries.(8) In cases where a household that acquired and owns a house outside of the Seoul Metropolitan area and another house (hereafter referred to as “ordinary house” in this paragraph) due to education, circumstances for the job, medical treatment of a disease, or any other unavoidable cause or reason transfers the ordinary house to someone, such a household shall be deemed to own one house in Korea and Article 154 (1) shall be applicable to the household. <Newly Inserted by Presidential Decree No. 21138, Nov. 28, 2008>(9) The term “house of rural exodus” in paragraph (7) 2 means a house in which the whole or part of family members living with a resident or his/her spouse, cannot reside any longer because those who have once engaged in farming or fishing have moved into any other Si/Gu (referring to a Gu in the Special Metropolitan City and Metropolitan City) or an Eup/Myeon owing to change of their job, and which is owned by those who have ceased farming. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>(10) The term “houses of those returned to farming” in paragraph (7) 3 means houses acquired by those who intend to engage in farming or fishing (including houses acquired before returning to farming) and resided in by them, and which meet conditions under the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. A house shall be located in a place in connection with him/her prescribed by Ordinance of the Ministry of Strategy and Finance;2. A house shall not fall under an expensive house under Article 156;3. The plottage shall be 660 square meters or less; and4. A house shall be acquired for the purpose of farming or fishing, and which shall fall under any of the following items:(a) A house shall be cases where a person owning the farmland of one thousand square meters or larger acquires the house located in the seat of the relevant farmland (referring to the seat of the farmland under Article 153 (3)); and(b) A house shall be cases where a fisherman determined by Ordinance of the Ministry of Strategy and Finance acquires it.(11) Where the whole household members move into a house in an agricultural or fishing village due to return to farming, the provisions of the main body of paragraph (7) shall be applicable only to one ordinary house first transferred after a return to farming.(12) Where the owners of houses of those return to farming, who subjects to paragraph (7), fail to engage continually in farming or fishing for three years or longer from the date of returning to farming (referring to the date on which residing has begun after moving their resident registration to houses of return to farming), or fails to reside in the relevant houses during such period, ordinary houses transferred so shall not be deemed as one house for one household. In such cases, in calculating a three-year period, if any inheritance commences during such period, farming or fishing period of a decedent and that of an heir shall be aggregated. <Amended by Presidential Decree No. 15191, Dec. 31, 1996>(13) Anyone who intends to be eligible for the application of the provisions of paragraph (7) shall file an application of the special case of one house for one household that is prescribed by Ordinance of the Ministry of Strategy and Finance, accompanied by documents that are prescribed by Ordinance of the Ministry of Strategy and Finance, within the deadline for filing a return of the tax base of the transfer income tax provided for in the provisions of Article 105 or 110 of the Act. In such cases, the superintendent of the competent tax office shall confirm the documents falling under each of the following subparagraphs by mutual use of the administrative information provided for in Article 21 (1) of the Electronic Government Act, and where the person who has made the report does not consent to such confirmation in cases under subparagraph 1, the superintendent of the competent tax office shall request him/her to submit such documents: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21215, Dec. 31, 2008>1. The certified copy of his/her resident registration card;2. The certified copy of the land and building register of his/her general house; and3. The certified copy of the land and building register of his/her house in agricultural and fishing village.(14) In applying paragraphs (7) through (13), matters necessary for the scope of the house of agricultural and fishing village shall be determinedby Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(15) In applying Article 154 (1), if the tenement house determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as a “tenement house”) is not parcelled out by household, but is wholly transferred as one unit for sale, such tenement house shall be deemed a single house. <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>(16) In applying paragraph (1), The term “two years” in paragraph (1) shall be construed as “five years,” in cases where a juristic person in the Seoul Metropolitan area or a public agency under subparagraph 7 of Article 2 of the Special Act on Balanced National Development is relocated to an area outside of the Seoul Metropolitan area and another house acquired by a household of which an executive or employee of the juristic person or a worker of the public agency is a member is situated in the Si (including a Metropolitan City; the same shall apply hereafter in this paragraph) or Gun to which the public agency or juristic person is relocated or an area of another Si/Gun adjoining to the Si/Gun. <Amended by Presidential Decree No. 21138, Nov. 28, 2008>(17) Where one household possessing any of the association member’s residing right under the main text of Article 89 (2) of the Act (hereinafter referred to as the “association member’s residing right”) [limited to the household possessing the existing house falling under Article 154 (1) as of the authorization date (when the existing house is removed before the approval date, the removal date of existing house) of management disposal plans under Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents] transfers the relevant association member’s residing right, if it falls under any of the following subparagraphs, it shall be deemed to be one house for one household under Article 154 (1) notwithstanding Article 94 (1) 2 (a) of the Act: Provided, That in cases of subparagraph 2, it shall be limited to cases of transferring the relevant association member’s residing right within two years from the date of acquiring the relevant one house: <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 21138, Nov. 28, 2008>1. Where no other house exists as of the date of transfer; and2. Where one house is possessed in addition to one association member’s residing right as of the date of transfer.(18) Deleted. <by Presidential Decree No. 18173, Dec. 30, 2003>

(1) Where one household owning one house in Korea transfers a house offered as security for long-term mortgage (hereafter referred to as a “house for long-term mortgage” in this Article) after concluding a loan contract with a long-term mortgage equipped with requirements of each of the following subparagraphs, in applying the provisions of Article 154 (1), it shall not be subject to the restrictions on residing period: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. The participant who has offered a house for security as of the date of concluding a contract shall be over 60 years of age;2. A period of a contract for long-term mortgage is over 10 years, and it shall be on condition that the loan money shall be received until maturity each month, each quarter, or other methods prescribed by Ordinance of the Ministry of Strategy and Finance; and3. It shall be on condition of contract that the loan shall be refunded at one time by disposing of relevant house at maturity.(2) Where a person owning one house and consisting one household becomes to own two houses by one household as he/she joins the households in order to serve, by living together, the lineal ascendants owning a house on long-term mortgage (including the lineal ascendants of spouse), with regard to the house transferred first, it shall be deemed to have one house in Korea and the provisions of Article 154 (1) shall be applied, but the house on long-term mortgage shall not be subject to a restriction on residing period.(3) Where one household transfers the house on long-term mortgage before expiration of contract period under paragraph (1), the provisions of paragraphs (1) and (2) shall not be applicable.(4) Anyone who intends to be eligible for the application of the provisions of paragraph (2) shall make a report on the application of the special case for a long-term mortgaged house that is prescribed by Ordinance of the Ministry of Strategy and Finance, accompanied by the loan contract referred to in the provisions of paragraph (1), for the long-term mortgaged house, within the deadline for filing a return of the tax base of the transfer income tax provided for in the provisions of Article 105 or 110 of the Income Tax Act. In such cases, the superintendent of the competent tax office shall confirm the documents falling under any of the following subparagraphs by common use of the administrative information provided for in the provisions of Article 21 (1) of the Electronic Government Act: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21215, Dec. 31, 2008>1. The certified copy of the land and building register of other house than the long-term mortgaged house; and2. The certified copy of the land and building register of the long-term mortgaged house.[This Article Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005]

(1) The term “expensive house the price of which is in excess of the standard prescribed by Presidential Decree” in Article 89 (1) 3 of the Act, means a house, including land appurtenant thereto, whose aggregate of actual trade values at the time of transfer [refers to the amount obtained by dividing the total of actual transaction price by the ratio of the area of the part that is transferred (including the part held by another person) to the total area of the house in cases where a house and part of land appurtenant thereto are transferred or the part is held by another person] exceeds 900 million won. <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21062, Oct. 7, 2008>(2) In applying the provisions of paragraph (1), the actual trade values falling under the portion deemed to be a house under the main body of Article 154 (3) (including the land appurtenant thereto) shall be included.(3) In cases of the tenement house deemed to be a single house under Article 155 (15), the provisions of paragraph (1) shall apply by deeming the whole of them to be one house.[This Article Wholly Amended by Presidential Decree No. 17825, Dec. 30, 2002]

(1) The term “one household prescribed by Presidential Decree” in the main body of Article 89 (2) of the Act means one household under the provisions of Article 154.(2) The term “case prescribed by Presidential Decree” in the proviso to Article 89 (2) of the Act means cases corresponding to the provisions of paragraphs (3) through (11).(3) Where one household possessing one house in the country comes to temporarily possess one house and one association member’s relocation right by acquiring the association member’s relocation right before transferring the relevant house, and where the previous house is transferred within two years from the date of acquiring the association member’s relocation right (including cases corresponding to the reasons provided by Ordinance of the Ministry of Strategy and Finance, which is cases where it may not be transferred within two years), it shall be deemed to be one house for one household, and Article 154 (1) shall be applied. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008>(4) Where one household possessing one house in the country comes to possess temporarily one house and one association member’s relocation right by acquiring the association member’s relocation right before transferring the relevant house, and where the previous house is transferred after two years elapse from the date of acquiring the association member’s relocation right, and when all the requirements of the following subparagraphs are equipped, it shall be deemed to be one house for one household, and Article 154 (1) shall be applied: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008>1. All members of household shall move (including cases where a part of constituents of household may not be moved by entering school as provided by Ordinance of the Ministry of Strategy and Finance, status in work, medical treatment of diseases and other inevitable reasons) in the house within two years after the completion of the house acquired according to the management disposal plan of house redevelopment project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as “house redevelopment project”) or house reconstruction project of the same Act (hereinafter referred to as “house reconstruction project”), and reside in the house for not less than one year; and2. Previous house shall be transferred within two year before or after the completion of house acquired under management disposal plans for the house redevelopment project or house reconstruction project.(5) Where one household possessing one house in the country has acquired another house (hereafter in this paragraph, referred to as the “substitute house”) for residing for the period of implementation of the house redevelopment project or the house reconstruction project for the relevant house, and transfers the substitute house by meeting all the requirements of the following subparagraphs, it shall be deemed to be one house for one household, and Article 154 (1) shall be applied. In such cases, the restrictions of possessing period or residing period under the same paragraph of the same Article shall not be applied: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008>1. It shall reside for not less than one year by acquiring the substitute house after the approval date of project implementation of the house redevelopment project or the house reconstruction project;2. It shall reside for not less than two years after all members of household moving (including cases where a part of constituents of household can not move in by entering school as provided by Ordinance of the Ministry of Strategy and Finance, status in work, medical treatment of diseases and other inevitable reasons) into the relevant house within one year after the completion of house acquired under the management disposal plans for the house redevelopment project or the house reconstruction project; and3. It shall transfer the substitute house within two years before or after the completion of house acquired under the management disposal plans for the house redevelopment project or the house reconstruction project.(6) Where one household possessing the succeeded association member’s relocation right (limited to the succeeded association member’s relocation right in cases where the inheritee does not possess the house at the time of opening an inheritance and limited to one association member’s relocation right in the order of the following subparagraphs in cases where the inheritee possesses two or more association member’s relocation rights at the time of opening an inheritance) and other houses (hereafter in this paragraph, referred to as the “general house”) respectively in the country transfers the general house, it shall be deemed to have one house in the country, and the provisions of Article 154 (1) shall be applied:1. One association member’s relocation right for which the inheritee’s possessing period (referring to the period aggregating the house possessing period and the period of possessing the association member’s relocation right; hereafter the same shall apply in this paragraph) is the longest; and2. Where two or more association member’s relocation rights exist for which the period possessed by an inheritee is same, one association member’s relocation right for which the inheritee’s residing period (referring to the period of residing in the house; hereafter the same shall apply in this paragraph) is the longest; and3. Where two or more association member’s relocation rights exist for which the period possessed by the inheritee and that resided by him/her are all same, one association member’s relocation right selected by the inheritor.(7) Where one household possessing one house of subparagraph 1, or one association member’s relocation right of subparagraph 2, one house acquired by the reason other than inheritance (hereafter referred to as the “general house” in this paragraph) and one member’s relocation right acquired by the reason other than inheritance respectively in the country transfers the general house, it shall be deemed to have the general house and the association member’s relocation right acquired by reason other than inheritance in the country, and the provisions of paragraphs (3) through (5) shall be applied:1. Inherited house. In such cases, where an inheritee has possessed two or more houses at the time of commencing the inheritance, it shall be limited to one house under the order of each subparagraph of Article 155 (2); and2. Inherited association member’s relocation right in cases where an inheritee has not possessed any house at the time of commencing the inheritance. In such cases, where the inheritee has possessed two or more association member’s relocation rights at the time of commencing inheritance, it shall be limited to one association member’s relocation right under the order under each subparagraph of paragraph (6).(8) Where one household comes to possess one house and one association member’s relocation right, one house and two association member’s relocation rights, two houses and one association member’s relocation right, or two houses and two association member’s relocation rights, as the person falling under subparagraph 1 unites the households in order to care for the person falling under subparagraph 2 by living together, and where the house first transferred (hereafter referred to as the “house first transferred” in this paragraph and paragraph (9)) within five years from the date of unity falls under any of the houses under the provisions of subparagraph 3 or 4, it shall be deemed as one house for one household, and Article 154 (1) shall be applied: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Person who constitutes one household by possessing any of the following items:(a) One house;(b) One association member’s relocation right; and(c) One house and one association member’s relocation right;2. Lineal ascendant (including lineal ascendant of spouse) of over 60 years old who possesses any of the following items:(a) One house;(b) One association member’s relocation right; and(c) One house and one association member’s relocation right;3. House which has been possessed by the person falling under subparagraph 1 (a) or 2 (a) before the date of unity; and4. House which has been possessed by the person falling under subparagraph 1 (c) or 2 (c) before the date of unity: Provided, That it shall be limited to cases where any of the requirements falling under each of the following items has been fulfilled:(a) Where the association member’s relocation right possessed before the date of unity (referred to the association member’s relocation right possessed by the person who has possessed the first transferred house before the date of unity; hereafter in this paragraph, referred to as the “association member’s relocation right before the unity”) is what acquired first due to an approval of management disposal plans under the provisions of Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereafter referred to as the “first association member’s relocation right” in paragraph (9)), the first transferred house shall be acquired after the approval date of project implementation for residing in during the implementation period of such house redevelopment project or house reconstruction project and it shall have been resided in for not less than one year after acquisition; and(b) Where the association member’s relocation right before the unity is what has been acquired in succession due to a trade, etc., the first transferred house shall be what has been possessed before acquisition of association member’s relocation right before the unity.(9) Where the person falling under subparagraph 1 is married with anotherperson falling under subparagraph 1, one household comes to possess one house and one association member’s relocation right, one house and two association member’s relocation rights, two houses and one association member’s relocation right, or two houses and two association member’s relocation rights, and the first transferred house within five years from the date of marriage falls under any of the houses under the provisions of subparagraph 2 or 3, it shall be deemed as one house for one household, and Article 154 (1) shall be applied: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Person who possesses any of the following items:(a) One house;(b) One association member’s relocation right; and(c) One house and one association member’s relocation right;2. Hose possessed by the person falling under subparagraph 1 (a) before the date of marriage; and3. House possessed by the person falling under subparagraph 1 (c) before the date of marriage: Provided, That it shall be limited to cases where any requirement of the following items is met:(a) Where the association member’s relocation right possessed before the date of marriage (referring to the association member’s moving right possessed by the person who has possessed the first transferred house before the date of marriage; hereafter in this paragraph, referred to as the “association member’s relocation right before the marriage”) is the first association member’s relocation right, the first transferred house is what has been acquired after the approval date of project implementation for residing during the period of implementing a house redevelopment project or house reconstruction project, and it shall be resided in for not less than one year after acquisition; and(b) Where the association member’s relocation right before marriage is what has been acquired in succession due to a trade, etc., the first transferred house is what has been possessed before the acquisition of association member’s relocation right before marriage.(10) Where one household possessing one house falling under Article 155 (6) 1, other house (hereafter referred to as a “general house” in this paragraph) and one association member’s relocation right in the country respectively transfers the general house, it shall be deemed as possessing the general house and the association member’s relocation right in the country, and the provisions of paragraphs (3) through (5) shall be applied.(11) Where one household possessing, from among houses in an agricultural and fishing village under the provisions of Article 155 (7), one housefor ceasing farming under subparagraph 2 of the same paragraph and other house (hereafter referred to as the “general house” in this Article) and the association member’s relocation right in the country respectively transfers the general house, it shall be deemed as possessing the general house and the association member’s relocation right in the country, and the provisions of paragraphs (3) through (5) shall be applied.(12) A person intending to be subject to the provisions of paragraphs (3) through (11) shall submit the written report on special case application for one house for one household for the owner of an association member’s relocation right as provided for by Ordinance of the Ministry of Strategy and Finance together with the documents under each of the following subparagraphs within the deadline for the tax base report of transfer income tax under the provisions of Article 105 or 110 of the Act: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. The copy of the resident registration certificate (limited to a case where it is impossible to confirm based on the resident registration card);2. Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>3. The certified copy of the land and building register of the house before conversion into an association member’s relocation right: Provided, That it shall be limited to the person subject to an application of the provisions of paragraph (5) (including cases subject to an application of paragraph (5) pursuant to the provisions of paragraphs (7) through (11));4. Deleted; and <by Presidential Decree No. 19507, Jun. 12, 2006>5. Other documents provided by Ordinance of the Ministry of Strategy and Finance.(13) When one household subjected to an application of the provisions of paragraph (4) or (5) (including one household subjected to the provisions of paragraph (4) or (5) pursuant to the provisions of paragraph (7), (10) or (11)) comes to fail to meet the requirements of paragraph (4) 1 or (5) 2, it shall pay the amount of tax having been paid as the transfer income tax where it has not been subjected to an application of paragraph (4) or (5) at the time of transfer of house when tax base of the taxable year in which the cause has occurred is returned.(14) The superintendent of the competent tax office, who receives a written report on special case application of one house for one household for the owner of an association member’s relocation right pursuant to the provisions of paragraph (12), shall confirm the documents falling under each of the following subparagraphs by mutual use of the administrative information provided for in Article 21 (1) of the Electronic Government Act: Provided, That where the person who has made the report does not consent to the confirmation in cases under subparagraph 1, the superintendent of the competent tax office shall request him/her to submit the documents: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008>1. The certified copy of his/her resident registration card;2. The certified copy of the land and building register of his/her house transferred; and3. The certified copy of the land and building register of his/her house in an agricultural and fishing village (limited to a case under paragraph (11)).[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) through (3) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(4) The term “major stockholders prescribed by Presidential Decree” in Article 94 (1) 3 (a) of the Act means the persons falling under any of the following subparagraphs (hereafter referred to as “major stockholders” in this Chapter): <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Where one stockholder or one investor (hereafter referred to as “one stockholder” in this Chapter) possessing the stocks or equity investment shares of a corporation (including preemptive rights; hereafter referred to as the “stocks, etc.” in this Chapter) and his/her relative or a person in other special relations with him/her under Article 20 of the Enforcement Decree of the Basic Act for National Taxes (hereafter referred to as “other stockholders” in this Chapter) possess not less than 3/100 (5/100 in cases of the KOSDAQ-listed corporations’ stocks, etc. and the venture enterprises’ stocks, etc. under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses to be traded under Article 178 (1) of the Enforcement Decree of the Capital Market and Financial Investment Business Act; hereafter the same apply in this Article) of the total of stocks, etc. of the corporation concerned as of the end of business year immediately preceding that whereto belongs the transfer date of stocks, etc.: The relevant stockholder and other stockholders. In such cases, while it has been short of 3/100 as of the end of immediately preceding business year, but thereafter come to possess not less than 3/100 by acquiring more stocks, etc., one stockholder and other stockholders after the date of such acquisition shall be included; and2. Where the aggregate of market values of the stocks, etc. of the relevant corporation, which are owned by one stockholder and other stockholders as of the end of the business year immediately preceding that whereto belongs the transfer date of stocks, etc., is not less than 10 billion won (5 billion won in cases of the KOSDAQ-listed corporations’stocks, etc. and the venture enterprises’ stocks, etc. under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses to be traded under Article 178 (1) of the Enforcement Decree of the Capital Market and Financial Investment Business Act): The relevant stockholder and other stockholders.(5) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(6) The gross market prices under paragraph (4) 2 shall be in accordance with amounts under the following subparagraphs: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>1. In case of stocks, etc. of listed stock corporations, the final market price as of the expiration date of the preceding business year to which the transfer date of stocks, etc. belongs: Provided, That where there is no final market price as of the expiration date of the preceding business year, it shall be in accordance with the final market price on the preceding trade day; and2. In case of stocks, etc. other than subparagraph 1, an estimated price under Article 165 (4).

(1) The term “assets prescribed by Presidential Decree” in Article 94 (1) 4 (c) of the Act means any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. In case where one stockholder or other stockholders of the corporation falling under the following items (a) and (b) transfer 50/100 or more of the aggregate of the stocks, etc. of the relevant corporation to persons other than one stockholder and other stockholders: The relevant securities, etc.:(a) The corporation in which the ratio occupied by the total of asset values under Article 94 (1) 1 and 2 of the Act, from among the aggregate of assets of the relevant corporation, is 50/100 or more; and(b) The corporation in which the ratio occupied by the aggregate of the stocks, etc. owned by one stockholder and other stockholders from among the aggregate of the stocks, etc. of the relevant corporation, is 50/100 or more;2. Deleted; <by Presidential Decree No. 14860, Dec. 30, 1995>3. and 4. Deleted; and <by Presidential Decree No. 18173, Dec. 30, 2003>5. The relevant stocks, etc. in cases where the stocks of the corporations falling under the following items (a) and (b) are transferred:(a) The corporation in which the ratio occupied by the aggregate of the asset values under Article 94 (1) 1 and 2 of the Act from among the gross asset values of the relevant corporation, is 80/ 100 or more; and(b) The corporation which runs a sports facility business such as the operation of golf courses and ski courses under the Installation and Utilization of Sports Facilities Act, and the business related to recreation facilities among the tourism business under the Tourism Promotion Act, and the real estate business and the real estate development business, which are determined by Ordinance of the Ministry of Strategy and Finance.(2) If one stockholder and other stockholders transfer securities, etc. over several occasions under paragraph (1) 1, the number of securities transferred by them shall be aggregated within three years retrospectively from the date on which any of them transfers the stocks, etc. In such cases, the determination as to whether it falls under the text and each subparagraph of the same paragraph shall be based on the aggregate of securities or the aggregate of assets of the relevant corporation as of the first day of such summing-up retrospectively from the date on which any of them transfers the stocks, etc.(3) The gross asset sums and the asset values under the provisions of paragraph (1) 1 (a) and 5 (a) shall be determined by the book value of the relevant corporation (in cases of land, its standard market value). In such cases, the amount falling under any of the following subparagraphs shall not be included in the gross asset sums: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>1. Amount of intangible fixed assets under “Article 24 (1) 2 (f) and (g) of the Enforcement Decree of the Corporation Tax Act”; and2. Aggregate amount of cash, financial assets (referring to the financial assets under Article 22 of the Inheritance Tax and Gift Tax Act) and the loans which have been increased by the borrowings or an increase in capital stock during the period from the date which becomes retrospectively just one year from the transfer date, to the date of such transfer.

For the gains on transfer of onerous donation under the latter part of Article 88 (1) of the Act, its acquisition value and transfer value shall be pursuant to the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Acquisition value:The amount gained by multiplying the value (where the value of transfer has been calculated according to the standard market price, the acquisition value shall be calculated according to the standard market price) pursuant to Article 97 (1) 1 of the Act by the ratio of the part equivalent to the liability to the value of donation; and2. Transfer value:The amount gained by multiplying the ratio of the part equivalent to the liability to the value of donation evaluated pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act.

The term “one house for one household prescribed by Presidential Decree” in the proviso to the main body of Article 95 (2) of the Act means the relevant house (including the house deemed as one house for one household under the provisions of Articles 155, 155-2, 156-2 and other provisions) where one household possesses one house in the country as of the transfer date. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>[This Article Wholly Amended by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The gains on transfer of an asset corresponding to an expensive house under Article 95 (3) of the Act and the amount of special reduction for the long-term retention, shall be the amount which is calculated by the formulae under the following subparagraphs. In such cases, if the period of possession of the relevant house or its appurtenant is different each other or it corresponds to the unregistered assets transferred or it is transferred partly, it shall be proportionally calculated by multiplying 900 million won by the rate occupied by the transfer value of the relevant house or its appurtenant land in the aggregate of transfer value of such house and its appurtenant land: <Amended by Presidential Decree No. 16556, Sep. 18, 1999; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Gains on transfer applicable to the asset corresponding to an expensive house: and Gains on transfer under Article 95 (1) of the Act
×
transfer value － 900 million won
transfer value
2. Amount of the special reduction for the long-term retention applicable to the asset corresponding to an expensive house: Amount of the special reduction for long-term possession under Article 95 (2) of the Act
×
transfer value － 900 million won
transfer value
(2) The provisions of Article 100 (2) of the Act shall be applied mutatis mutandis to the proportional calculation of the transfer value under the latter part of paragraph (1).

(1) The time of acquisition or transfer under Article 98 of the Act shall be the date on which the purchase price of relevant asset (if the transferee has agreed to bear the transfer income tax and the additional tax to transfer income tax for the transfer of the relevant asset, the relevant transfer income tax and the additional tax to transfer income tax shall be excluded), except for the cases indicated in the following subparagraphs, is paid in full: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>1. Where the date on which the purchase price is fully paid is indistinct, the acceptance date of registration or register, or the date of entering a change of ownership, which are entered on the registry, registration book, or roll, etc.;2. Where the registration for passage of title prior to the full payment of purchase price (including the registration and the entry of a change of ownership) is made, the acceptance date of registration entered on the registry, register, or roll;3. Where falling under the conditions of long-term installment determined by Ordinance of the Ministry of Strategy and Finance, the earliest date from among the acceptance date of registration for passage of title (including a registration and an entry of a change of holders), the transfer date or the date of using and taking profits;4. In a case of the structures of self-construction, the delivery date of a certificate of the completion of inspection for use: Provided, That if it has been in fact used or a permit for use has been obtained before an inspection for use, it shall be the date of use in fact or the date of approval for use, and in cases of the structures built without obtaining any construction permit, it shall be the date of use in fact;5. With respect to the property acquired by inheritance or donation, it shall be the date on which such inheritance commences or on which the donation is received; and6. Where acquiring the ownership of real estate under Article 245 (1) of the Civil Act, the date on which an occupation of the relevant real estate commences.(2) In cases of transferring or acquiring the asset which is not completed or fixed, if the subject-matter is not completed or fixed by not later than the date on which the purchase price of relevant asset is paid in full, such date of completion or fixing shall be deemed such date of transferring or acquisition.(3) The acquisition time of land which has been acquired by a land substitution under the Urban Development Act and other Acts shall be the date of acquiring the land before its substitution: Provided, That, in cases where the size of the land delivered has been increased or decreased from its title area under a land substitution, the time of acquisition or transfer of such increased or decreased land shall be the day following the date of public notice of the land substitution. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>(4) In cases of Article 158 (2), the transfer time of asset shall be the date on which not less than 50/100 of the aggregate of the stocks, etc. of the relevant corporation are transferred as one stockholder and other stockholders have transferred the stocks, etc., and such transfer price shall be determined by the transfer price when they have actually transferred the stocks, etc. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>(5) In applying paragraphs (1) through (4), if the acquiring time of transferred asset is obscure, the asset first acquired shall be deemed first transferred.(6) The term “asset prescribed by Presidential Decree” in Article 8 of Addenda of Act No. 4803, the amended Income Tax Act, means the asset falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>1. Asset under Article 94 (1) 2 and 4 of the Act, which has been acquired before December 31, 1984;2. Deleted; and <by Presidential Decree No. 14860, Dec. 30, 1995>3. Asset under Article 94 (1) 3 of the Act, which has been acquired before December 31, 1985.(7) The term “day prescribed by Presidential Decree” in Article 8 of Addenda of Act No. 4803, the amended Income Tax Act, means the day falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005>1. In cases of assets under Article 94 (1) 2 and 4 of the Act; January 1, 1985;2. Deleted; and <by Presidential Decree No. 14860, Dec. 30, 1995>3. In cases of the asset under Article 94 (1) 3 of the Act; January 1, 1986.(8) The provisions of paragraphs (1) through (4) shall apply mutatis mutandis to the time of receipt of the transfer price under Article 95 of the Act.

(1) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(2) The case wherein the transfer price of an asset is based on an actual transaction price under Article 96 (2) 5 of the Act shall be such case wherein real estate is acquired or transferred in an unfair manner, such as the preparation of false contract document, the false transfer of resident registration, etc., and which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19327, Feb. 9, 2006>1. Where real estate has been traded in violation of the Act on the Registration of Real Estate under Actual Titleholder’s Name;2. Where a broker under the Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions Act has transferred real estate which has been directly acquired in violation of the same Act;3. Where real estate has been acquired under a minor’s title (excluding the acquisition by an inheritance or donation), and transferred thereafter;4. Where real estate has been transferred or acquired not less than three times during the period within a year retrospective from the date of transferring the real estate by the constituents of a household, and where the aggregate of actual transaction price is not less than 300 million won; and5. Where the gains on a transfer based on the standard market price by trade unit are not less than 100 million won.(3) Where the right pertaining to a license for gathering earth, sand or stones and the right to the development and use of underground water (hereafter referred to as the “right to the development and use of underground water” in this paragraph) are transferred together with the land or building under Article 94 (1) 1 of the Act (hereafter referred to as the “land, etc.” in this paragraph), and where the acquisition price or the transfer price of the right, etc. to the development and use of underground water and the land, etc. is inseparable, such acquisition price or transfer price shall be calculated by applying mutatis mutandis to the criteria under each subparagraph of Article 51 (8). In such cases, “forest trees” shall be deemed “right, etc. of the development and use of underground water”, and “forest land” as “land, etc.” <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20618, Feb. 22, 2008>(4) In applying Article 96 (4) of the Act, if the real estate acquired by inheritance is transferred within one year after its aquisition, or a transfer is made within one year after its aquisition due to the inevitable causes such as an expropriation under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and other Acts (including a purchase through consultation), and which is deemed not to be a transaction under the purpose of gains from short-term trade in view of the circumstances of acquisition or transfer of real estate and its real status of use, it may be governed by the standard market price through consultation under Article 176-2 (5). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>(5) For the purpose of Article 96 (2) 9 of the Act, the term “case where Presidential Decree prescribes” means cases where one household possessing two houses or more transfers a house (including the land appurtenant thereto). In such cases, the provisions of Article 155 (15) shall apply mutatis mutandis to a calculation of the number of tenement house (limited to cases of selection by residents), the provisions of Article 1673 (2) 2 shall apply mutatis mutandis to the calculation of the house number of the jointly inherited houses, and the provisions of Article 154 (9) shall apply mutatis mutandis to the method of determination of transferred housing in cases where two or more houses are transferred on the same day. <Newly Inserted by Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19254, Dec. 31, 2005>(6) The term “market price” that is deemed as the actual transaction price pursuant to Article 96 (3) 2 of the Act means the amount obtained by subtracting the value of donation pursuant to the Inheritance Tax and Gift Tax Act from the price. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>[This Article Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999]

Article 163 (Necessary Expenses for Transferred Assets)(1) The term “actual transaction price disbursed for the acquisition of such assets” in the main body of Article 97 (1) 1 (a) of the Act, means the aggregate of the amounts of the following subparagraphs: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 19254, Dec. 31, 2005>1. Values corresponding to the cost for acquisition computed by applying mutatis mutandis Article 89 (1) (including the discounted debt estimated by the present value under Article 89 (2) 1, but excluding the amount exceeding the market price under the unfair act and calculation);2. The amount such as the cost of a lawsuit and the expenses for reconciliation, which have been directly required for securing the relevant ownership, etc. with respect to the asset under controversy as to its acquisition, from which those included among necessary expenses are excluded, in the calculation of each amount of income in the year wherein such cost and expenses are paid; and3. In applying subparagraph 1, if the transaction price is fixed by adding the amount equivalent to the interest to the acquisition cost according to the means of paying the purchase price under the party contract, the relevant amount equivalent to the interest shall be included in the acquisition cost: Provided, That such amount equivalent to the interest as additionally incurred due to a deferment of payment term for the transaction price under the original agreement shall not be included in the acquisition cost.(2) Where the discounted debt estimated by the present value under Article 89 (2) 1 pursuant to paragraph (1) 1 is included in the acquisition cost, if there exists any amount which has been included or is to be included among necessary expenses at the time of calculating the real estate rental amount or amount of business income in each year, from among the depreciation amounts of the discounted debts estimated by the present value during the retention period of the transferred asset, it shall be deducted from the amount under paragraph (1). <Amended by Presidential Decree No. 19890, Feb. 28, 2007>(3) The term “capital expenses prescribed by Presidential Decree” in Article 97 (1) 2 of the Act means what falls under any of the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19687, Sep. 22, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Capital expenses computed by applying mutatis mutandis Article 67 (2);2. The amount such as the cost of a lawsuit and the expenses for reconciliation, which have been directly required for securing the relevant ownership when the transferred asset is under controversy after its acquisition, from which those included among necessary expenses are excluded, in the calculation of each amount of income in the year wherein such cost and expenses are paid;3. Expenses paid for the change of intended usage, improvement, or convenience in use of the transferred asset;3-2. Development shares (where the person obligated to pay the development share and the transferrer are different, referring to the amount equivalent to the development share to be factually distributed to the transferrer) pursuant to the Restitution of Development Gains Act;3-3. Reconstruction shares (where the person obligated to pay the reconstruction share and the transferrer are different, referring to the amount equivalent to the reconstruction share to be factually distributed to the transferrer) pursuant to the Restitution of Excess Rebuilding Gains Act; and4. Other expenses determined by Ordinance of the Ministry of Strategy and Finance, which are equivalent to subparagraphs 1 through 3, 3-2 and 3-3.(4) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(5) The term “things prescribed by Presidential Decree” in Article 97 (1) 4 of the Act means things falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Expenses under the following items as expenses directly paid for transfer of assets under the subparagraphs of Article 94 (1) of the Act; and(a) Securities transaction taxes paid pursuant to the Securities Transaction Tax Act;(b) Expenses for preparation of a report of tax base on transfer income tax and for preparation of a contract;(c) Notarial fees, stamp charges and brokerage; and(d) Expenses prescribed by Ordinance of the Ministry of Strategy and Finance as expenses similar to expenses under items (a) through (c);2. Marginal loss incurred by selling national housing bonds and land development bonds purchased under the Acts and subordinate statutes in acquiring the asset under Article 94 (1) 1 of the Act, before their maturity. In such cases, the marginal loss shall, in cases where such bonds are transferred to any person other than a financial institution specified by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “financial institution” in this subparagraph), be limited to the marginal loss that would be incurred if they were sold to the financial institution on the same day.(6) The term “amount prescribed by Presidential Decree” in Article 97 (3) 2 of the Act means the amount under the following subparagraphs: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Land:Publicly announced individual land prices at the time of its acquisition under Article 99 (1) 1 (a) of the Act × 3/100 (3/1,000 in cases of unregistered transferred assets under Article 104 (3) of the Act);2. Buildings:(a) Building under Article 99 (1) 1 (c) of the Act (including its appurtenant land) and housing under item (d) of the same subparagraph:Value under Article 99 (1) 1 (c) or (d) of the Act at the time of its acquisition × 3/100 (3/1,000 in cases of unregistered transferred assets under Article 104 (3) of the Act); and(b) Building other than those under item (a):Value under Article 99 (1) 1 (b) of the Act at the time of its acquisition × 3/100 (3/1,000 in cases of unregistered transferred assets under Article 104 (3) of the Act);3. Assets under Article 94 (1) 2 (b) and (c) of the Act (excluding the unregistered transferred assets under Article 104 (3) of the Act):Standard market price at the time of its acquisition × 7/100; and4. Assets other than those of subparagraphs 1 through 3:Standard market price at the time of its acquisition × 1/100.(7) The term “assets prescribed by Presidential Decree” in Article 97 (4) of the Act means assets under Article 94 (1) 4 (b) of the Act. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 18173, Dec. 30, 2003>(8) The amount equivalent to gift tax under Article 97 (4) and (5) of the Act shall be that which is calculated by multiplying the assessed amount of gift tax on the assets donated to a resident by his/her spouse or a lineal ascendant or descendant (referring to the assessed amount of gift tax under Article 56 of the Inheritance Tax and Gift Tax Act) by the rate occupied by the relevant assets value transferred pursuant to Article 97 (4) of the Act (referring to the taxable value for gift tax whereon a gift tax is levied) in the taxable value for gift tax under Article 47 of the Inheritance Tax and Gift Tax Act. In such cases, the amount equivalent to the gift tax to be included among necessary expenses shall be limited to the balance obtained by deducting the amount under Article 97 (1) and (2) of the Act from the transfer value. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(9) In applying the main body of Article 97 (1) 1 (a) of the Act to the asset inherited or donated (excluding the donations under the provisions of Articles 33 through 42 of the Inheritance Tax and Gift Tax Act), the assessed value under Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the commencement date of inheritance or the date of donation shall be deemed as the actual transaction price at the time of its acquisition: Provided, That where falling under any of the following subparagraphs, it shall be governed by the provisions of each of the following subparagraphs: <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 19254, Dec. 31, 2005>1. In cases of the land inherited or donated under the Public Notice of Values and Appraisal of Real Estate Act before a publicly announced individual land price was published on August 30, 1990, the larger amount between the value assessed under the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing an inheritance or of donation, and the value under the provisions of Article 164 (4); and2. In cases of the building inherited or donated before the standard market value of the building was published under the provisions of Article 61 (1) 2 through 4 of the Inheritance Tax and Gift Tax Act, the larger amount between the value assessed under the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing an inheritance or of donation, and the value under the provisions of Article 164 (5) through (7).(10) The main body of Article 97 (1) 1 (a) of the Act shall apply according to the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Where donation tax has been taxed pursuant to Articles 33 through 42 of the Inheritance Tax and Gift Tax Act, the value of donated property concerned, or the increase or decrease thereof shall be added to or subtracted from the acquisition value; and2. Where the asset pursuant to the subparagraphs of Article 94 (1) of the Act has been acquired from a corporation (including a foreign corporation) in special relations pursuant to Article 52 of the Corporation Tax Act, and money has been disposed of as bonuses, dividends, etc. of a resident pursuant to Article 67 of the same Act, the amount that has been disposed of as bonus, dividend, etc. shall be added to the acquisition value.(11) The term “method determined by Presidential Decree” in the main body of Article 97 (7) of the Act means the method set forth in any of the following subparagraphs: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Submitting by the resident a personal seal impression certificate under Article 169 (1) 1 (e) at the time when the preceding owner files an estimated or final return on the tax base of the income from the transfer of the real estate; and2. Verifying the actual selling price of the real estate under Article 27 (1) of the Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions Act (referring to the selling price of a residential house under Article 80-2 (1) of the Housing Act in cases of a residential house subject to the reporting on the transaction of residential houses under Article 80-2 of the said Act; hereafter referred to as “actual selling price” in this subparagraph) by a method prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That the foregoing shall apply only where the actual selling price is the same as the transferring price declared at the time of filing an estimated return or a final return on the tax base of the income from transferring the real estate.(12) The term “price in the transaction example, assessment price, or conversion price prescribed by Presidential Decree” in Article 97 (1) 1 (b) of the Act means the prices under Article 176-2 (2) through (4). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19254, Dec. 31, 2005>(13) Where transferring the stocks acquired by exercising the stock option, the market value at the time of exercising the stock option shall be the acquisition value under Article 97 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>

(1) The term “amount appraised by such method as determined by Presidential Decree” in the proviso to Article 99 (1) 1 (a) of the Act means the amount assessed by regarding the neighboring land whose primary factors to form the land price are similar, such as the land which has no individually assessed official land price falling under any of the following subparagraphs, the land category and the status of use, as the standard land, and pursuant to the comparative reference table under Article 9 (2) of the Public Notice of Values and Appraisal of Real Estate Act, by the superintendent of the competent tax office (where the superintendent of the competent tax office is different from the superintendent of the competent tax office of the location of land, and where the superintendent of the competent tax office requests therefor, the superintendent of the competent tax office of the relevant land). In such cases, the superintendent of the competent tax office may evaluate, by choosing the value calculated by the head of Si/Gun under the proviso to Article 111 (2) 1 of the Local Tax Act as the evaluation value, or by inquiring of two or more appraisal institutions, in the light of the assessed amount on the relevant land by the appraisal institutions: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006>1. Newly registered land under the Cadastral Act;2. Any land partitioned or merged under the Cadastral Act;3. Any land the lot number of which under the Cadastral Act is changed due to a form and quality alteration or a change of specific use; and4. Any land for which the decision and public notice of the individually assessed official land price is omitted (including national and public land).(2) The term “area prescribed by Presidential Decree” in the proviso to Article 99 (1) 1 (a) of the Act means the area designated by the Commissioner of the National Tax Service, in which the land price rises rapidly or is likely to rise rapidly on account of various development project, etc.(3) In applying Article 99 (1) 1 (a) of the Act, if it is acquired or transferred prior to a public notice of the new standard market price, it shall be governed by the immediately preceding standard market price. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>(4) The standard market price at the time of aquisition of the land which has been acquired prior to a public notice of the individually assessed official land price on Aug. 30, 1990 under the Public Notice of Values and Appraisal of Real Estate Act, shall be the amount computed under the following formula. In such cases, the standard market value of the following formula means the standard market value under the Local Tax Act prior to the amendment by Act No. 4995: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005> Individually
assessed official land price on the
basis of Jan. 1, 1990

Standard market value at the time of acquisition
×


Values computed by dividing the standard market value as of Aug. 30, 1990 and that decided immediately before it, by 2
(5) The standard market price of the building acquired before a public notice of the standard market price under Article 99 (1) 1 (b) of the Act, at the time of its acquisition, shall be the price computed under the following formula: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000>Standard market price first notified publicly on the relevant asset by the Commissioner of the National Tax Service × Standard rate notified publicly by the Commissioner of the National Tax Service in view of the year of acquisition, year newly-built, structure, the life, etc. of the relevant building.(6) The standard market price of the collective housing, officetel and buildings for commercial use (including the land attached therewith) which has been acquired before a public notice of the standard market price under Article 99 (1) 1 (c) and (d) (proviso) of the Act, shall be the amount computed under the following formula. In such cases, if there exists no amount under Article 99 (1) 1 (b) of the Act at the time of public notice of the standard market price first notified by the Commissioner o the National Tax Service on the relevant asset, or at the time of acquisition, it shall be governed by the amount computed by applying mutatis mutandis the provisions of paragraph (5): <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18988, Aug. 5, 2005> Standard market price first notified publicly on the relevant asset by the Commissioner of the National Tax Service


×
Aggregate of the prices under Article 99 (1) 1 (a) and (b) of the Act at the time of acquisition
Aggregate of the prices under Article 99 (1) 1 (a) and (b) of the Act at the time of public notice of the standard market price first notified publicly by the Commissioner of National Tax Service on the relevant asset (where the price at the time of acquisition and that at the time of pubic notice of the standard market price first notified publicly are identical, the provisions of paragraph (8) shall be applied mutatis mutandis)
(7) The standard market price at the time of acquisition of the housing acquired before the public announcement of the individual housing price and the collective housing price under the Public Notice of Values and Appraisal of Real Estate Act (including the land appurtenant thereto) shall be the value calculated by the following formula. In such cases, if there exists no value under Article 99 (1) 1 (b) of the Act at the time of public announcement of housing price first announced publicly by the Minister of Land, Transport and Maritime Affairs on relevant housing or at the time of acquisition, it shall be governed by the value calculated by applying mutatis mutandis the provisions of paragraph (5). <Newly Inserted by Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 20720, Feb. 29, 2008>Housing price first announced publicly by the Minister of Land, Transport and Maritime Affairs on the relevant housing × Aggregate of the prices under Article 99 (1) 1 (a) and (b) of the Act at the time of acquisition / Aggregate of the prices under Article 99 (1) 1 (a) and (b) of the Act at the time of public announcement of housing price first announced publicly by the Minister of Land, Transport and Maritime Affairs on the relevant housing (where the value at the time of acquisition and the value at the time of first public announcement of housing price are identical, the provisions of paragraph (8) shall apply mutatis mutandis).(8) Where the standard market price at the time of transfer and that at the time of acquisition under Article 99 (1) 1 of the Act are identical because the new standard market price has not been publicly notified during the retention period, the amount computed by the method determined by Ordinance of the Ministry of Strategy and Finance in view of the retention period of the land or building and of the increase rate of the standard market price before and after the transfer date or before and after the acquisition date, shall be the standard market price at the time of its transfer. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(9) Where the value falling under any of the following subparagraphs is lower than the value under Article 99 (1) 1 (a) through (d) of the Act, the standard market price at the time of transfer shall be calculated by deducting such difference from values under provisions of items (a) through (d) of the same subparagraph: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. In case of purchasing through consultation, expropriation under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and expropriation under other Acts, the less amount from among the amount of compensation and the market price becoming basis of computation of the amount of compensation; and2. In case of public sale under the National Tax Collection Act, compulsory sale by official auction or judicial sale for the execution of mortgage under the Civil Procedure Act, the price at such public sale or knockdown.(10) The term “officetel and commercial building (including the land appurtenant thereto) prescribed by Presidential Decree” in Article 99 (1) 1 (c) of the Act means the officetel and commercial building (including the land appurtenant thereto) located in the area designated by the Commissioner of the National Tax Service by taking account of the usage and floor space of the relevant building and the number of buildings under partitioned ownership. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18988, Aug. 5, 2005>(11) The term “amount appraised by the methods prescribed by Presidential Decree” in the proviso to Article 99 (1) 1 (d) of the Act means the value under the provisions of the followings. In such cases, the superintendent of the competent tax office may evaluate, by choosing the value calculated by the head of Si/Gun under the proviso to Article 111 (2) 1 of the Local Tax Act as the evaluation value, or by asking two or more appraisal institutions, in the light of the assessed amount on the relevant land by the appraisal institutions: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>1. In cases of an individual house having no individual housing price under the Public Notice of Values and Appraisal of Real Estate Act, a neighboring house having similar usefulness, such as the structure, use and status of usage, shall be deemed to be a standard house, and the amount appraised by the superintendent of the competent tax office (where the superintendent of the competent tax office is different from the superintendent of the competent tax office of the location of relevant house, and where the superintendent of the competent tax office requests therefor, the superintendent of the competent tax office of the location of relevant house) according to the reference table under Article 16 (7) of the same Act; and2. In cases of a collective house having no collective housing price under the Public Notice of Values and Appraisal of Real Estate Act, the amount assessed by the superintendent of the competent tax office (where the superintendent of the competent tax office is different from the superintendent of the competent tax office of the location of relevant house, and where the superintendent of the competent tax office requests therefor, the superintendent of the competent tax office of the location of relevant house) in overall consideration of traded prices and rents of neighboring collective houses and estimated cost, etc. to build a collective house deemed to have similar usefulness to the relevant collective house.(12) The term “multiplying factor determined by Presidential Decree” in Article 99 (2) of the Act means the magnification factor notified publicly by the Commissioner of the National Tax Service in view of the price of trade example of land under similar price status located in the particular area of each region in addition to the individually assessed official land price at the time of transfer or acquisition. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>

Public announcement under Article 99 (4) of the Act shall contain the matters of the following subparagraphs:1. Perusal period and place of the perusal register of standard market prices;2. Submission period and place of opinions; and3. Methods to present the opinions.[This Article Newly Inserted by Presidential Decree No. 18988, Aug. 5, 2005]

(1) A person intending to apply for recalculation and public announcement on the standard market prices calculated and publicly announced by the Commissioner of the National Tax Service under Article 99-2 (1) of the Act shall submit a written application for recalculation and public announcement of standard market prices stating the matters falling under each of the following subparagraphs to the Commissioner of the National Tax Service by going through the superintendent of the competent tax office:1. Name and address of the applicant;2. Location of subject properties; and3. Reasons for application.(2) Where the Commissioner of the National Tax Service announces publicly the standard market prices under the latter part of Article 99-2 (2) of the Act and paragraph (3) of the same Article, he/she shall do so by way of statement on the Internet.[This Article Newly Inserted by Presidential Decree No. 18988, Aug. 5, 2005]

(1) The term “value appraised by such method prescribed by Presidential Decree” in Article 99 (1) 2 (a) of the Act means the aggregate of the amount paid until the date of acquisition or transfer and the amount corresponding to the premium as of the date of acquisition or transfer.(2) The term “value appraised by such method as prescribed by Presidential Decree” in Article 99 (1) 2 (b) of the Act means the valuation by applying mutatis mutandis Article 51 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(3) The term “those prescribed by Presidential Decree” in Article 99 (1) 4 of the Act means those falling under Article 53 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. In such cases, “six months before or after the evaluation base date (three months in cases of stocks or investment shares subject to the gift tax)” in the proviso to the same paragraph shall be “one month before the date of acquisition or transfer”. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) The appraisal base date and evaluated amount under the latter part of Article 99 (1) 5 of the Act shall be as follows: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. The appraised value per share shall be the weighted average value calculated by applying the weight ratio of 3 to 2 to the valuation in accordance with the formula under item (a) (hereafter referred to as “net value of profit or loss” in this paragraph) and the valuation in accordance with the formula under item (b) (hereafter referred to as “net asset value” in this paragraph) respectively: Provided, That the ratio of the net value of profit or loss to the net asset value shall be 2 to 3 in cases of a corporation under Article 158 (1) 1 (a):(a) Net amount of profit or loss for each week of the business year immediately prior to the business year on which the date of transfer or acquisition falls / the interest rate determined and publicly notified by the Commissioner of the National Tax Service, taking into consideration the current yield from trading corporate bonds with maturity of 3 years guaranteed by a financial institution under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy; and(b) Book value of the corporation as of the end of the business year immediately preceding the business year on which the date of transfer or acquisition falls (or the standard market price under Article 99 (1) 1 (a) of the Act in cases of land) / total number of outstanding stocks;2. In applying subparagraph 1, if the corporation that issued stocks, etc. under Article 99 (1) 5 of the Act (hereafter referred to as “non-listed stocks, etc.” in this subparagraph) owns stocks or investment equities equivalent to 10 percent or less of the total number of outstanding stocks of any other corporation that issued non-listed stocks, etc. or total investment amount of such corporation, such non-listed stocks, etc. issued by another corporation may be appraised by the acquisition value under Article 74 (1) 1 (e) of the Enforcement Decree of the Corporation Tax Act, notwithstanding subparagraph 1;3. The value of stocks, etc. falling under any of the following items shall be the valuation in accordance with the formula under subparagraph 1 (b), notwithstanding the provisions of the main body of subparagraph 1:(a) Stocks, etc. of a corporation under the proceedings of liquidation during the time period set for filing a final return on the transfer income tax base under Article 110 of the Act, or a corporation in which case it is deemed difficult to continue its business because of death of the businessman or any other reason;(b) Stocks, etc. of a corporation that has not yet commenced its business, a corporation that has been in the business for less than one year, or a corporation temporarily or permanently closed down; and(c) Stocks, etc. of a corporation that had a deficit (referring to the total amount of losses which is or shall be attributed to each business year under the Corporation Tax Act less the total amount of profits which is or shall be attributed to the business year) continuously for three years from the business year on which the date of transfer or acquisition falls; and4. In applying subparagraph 1 (b), the term “total number of outstanding stocks” shall mean the total number of outstanding stocks as of the end of the business year immediately preceding the business year on which the date of transfer or acquisition falls.(5) The standard market price at the time of acquisition shall, notwithstanding paragraph (4), be in accordance with a value computed by the following formula, where stocks, etc. fall under stocks. etc. under paragraph (3) as of the transfer date, but do not fall under stocks, etc. under paragraph (3) at the time of the acquisition. In such cases, if an appraised value under paragraph (4) as of the acquisition date and an appraised value under paragraph (4) as of the date listing stocks in the KOSDAQ Market under the Securities and Exchange Act are identical, a value computed by applying mutatis mutandis paragraph (9) shall be an appraised value under paragraph (4) as of the date listing stocks in the KOSDAQ Market: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>[An average amount of the final value in quotation of stocks every day in the KOSDAQ Market published for one month after the date of listing stocks in the KOSDAQ Market] × (an appraised value under paragraph (4) as of the acquisition date / an appraised value under paragraph (4) as of the date of listing stocks in the KOSDAQ Market).(6) The standard market price at the time of acquisition shall be in accordance with a value computed by applying mutatis mutandis paragraph (5), where stocks, etc. fall under stocks, etc. of a listed stock corporation as of the transfer date of stocks, etc., but do not fall, at the time of the acquisition, under stocks, etc. of a listed stock corporation and stocks, etc. under paragraph (3). In such cases, the “date of listing on the KOSDAQ Market” shall be deemed the “listing date”, and the “final value in quotation of stocks in the KOSDAQ Market” as the “final value in quotation of stocks in the Korea Exchange”. <Amended by Presidential Decree No 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>(7) The term “valuation by such method as prescribed by Presidential Decree” in Article 99 (1) 6 of the Act means the valuation by applying mutatis mutandis Article 58-2 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(8) The term “value appraised by method prescribed by Presidential Decree” in Article 99 (1) 7 of the Act means a value appraised according to the following subparagraphs: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Stocks, etc. under Article 158 (1) 1 and 5 of this Decree and Article 94 (1) 4 (b) of the Act:Valuation under Article 99 (1) 3 through 5 of the Act;2. Goodwill under Article 94 (1) 4 (a) of the Act:Valuation by applying mutatis mutandis Article 59 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; and3. Right to use facilities under Article 94 (1) 4 (b) of the Act (excluding stocks, etc.):A standard amount of market price announced pursuant to the Local Taxes: Provided, That in cases where a standard amount of market price at the time of acquisition or transfer cannot be confirmed, a value computed by a method prescribed by Ordinance of the Ministry of Strategy and Finance.(9) Where the standard market price at the time of transfer computed under Article 99 (1) 3 through 5 of the Act and the standard market price at the time of acquisition are identical, the standard market price at the time of transfer shall, notwithstanding Article 99 (1) 3 through 5 of the Act, be the value computed by the method determined by Ordinance of the Ministry of Strategy and Finance in view of the retention period of the relevant asset and the rising rate of the standard market prices. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(10) In assessing the goodwill under paragraph (8) 2, if the equity capital is not verifiable by the documentiary evidences presented by the transferor, it shall be the higher amount of those computed by each of the following formulas: <Amended by Presidential Decree No. 20720, Feb. 29, 2008> 1.
Amount of business income
; and

PER of equity capital as determined by Ordinance of the Ministry of Strategy and Finance
2.
Amount of revenue
Equity capital turnover rate prescribed by Ordinance of the Ministry of Strategy and Finance
(11) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>

(1) In computing the gains from transfer under Article 100 of the Act, where a member of the consolidation project cooperatives, who executes the housing redevelopment project or the housing reconstruction project, transfers the title selected as an occupant, acquired by furnishing (including cases of furnishing buildings or land only) his/her existing building and its appurtenant land to the relevant cooperatives, the gains from transfer obtained by such member shall be computed by the formula under any of the following subparagraphs: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18044, Jun. 30, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19245, Dec. 31, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. When the settlement balance is paid:[Transfer value － (Appraised value of the existing building and its appurtenant land ＋ Settlement balance paid) － Necessary expenses under Article 97 (1) 2 and 4 of the Act] (hereafter referred to as “marginal gain from transfer after approval on the management and disposition plan” in this Article) + [Appraised value of the existing building and its appurtenant land － Acquisition value of the existing building and its appurtenant land) － Necessary expenses under Article 97 (1) 2 and 4 of the Act or Article 163 (6)] (hereinafter referred to as “marginal gain from the transfer before approval on the management and disposition plan” in this Article); and2. When the settlement balance is received:[Transfer value － (Appraised value of the existing building and its appurtenant land － Settlement balance received) － Necessary expenses under Article 97 (1) 2 and 4 of the Act] ＋ [(Appraised value of the existing building and its appurtenant land － Acquisition value of the existing building and its appurtenant land － Necessary expenses under Article 97 (1) 2 and 4 of the Act or Article 163 (6)) × (Appraised value of the existing building and its appurtenant land －Settlement balance received) ÷ Appraised value of the existing building and its appurtenant land].(2) In calculating the gain from transfer in accordance with Article 100 of the Act, if a member of a renovation project association that executes a housing redevelopment project or a housing reconstruction project provides an existing house and its appurtenant land to the association and thereafter transfers the house and its appurtenant land acquired in accordance with the management and disposition plan, the marginal gain from the actual selling price shall be calculated by any of the following formulas: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. When the settlement balance is paid:[Marginal gain from the transfer after approval on the management and disposition plan × Settlement balance paid / (Appraised value of the existing building and its appurtenant land + settlement balance paid)] (hereafter referred to as “marginal gain from the transfer of the settlement balance paid” in this Article) + {[Marginal gain from the transfer after approval on the management and disposition plan × Appraised value of the existing building and its appurtenant land / (Appraised value of the existing building and its appurtenant land + Settlement balance paid)] + Marginal gain from the transfer before approval on the management and disposition plan} (hereafter referred to as “marginal gain from the transfer of an existing building” in this Article); and2. When the settlement balance is received: The value under paragraph (1) 2.(3) In applying paragraphs (1) and (2), if the acquisition value of the existing building and its appurtenant land is not verifiable, the amount computed by the following formula shall govern: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18850, May 31, 2005; Presidential Decree No. 19890, Feb. 28, 2007> Appraised value of existing building and appurtenant land


×
Standard market price of existing building and appurtenant land under Article 99 (1) 1 of the Act as of acquisition date
Standard market price of existing building and appurtenant land under Article 99 (1) 1 of the Act as of authorization date of management and disposition plan
(4) The appraised value of the existing building and its appurtenant land under paragraphs (1) through (3) means the following values: <Amended by Presidential Decree No. 19890, Feb. 28, 2007>1. The price stipulated by the management and disposition plan under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents: Provided, That it shall be the price as changed, if there is a change in the price; or2. The value calculated by applying the method under Article 176-2 (3) 1, 2, or 4 in the order enumerated above, if there is no price set under subparagraph 1. In such cases, the term “before or after the date of transfer or acquisition” in Article 176-2 (3) 1 and 2 shall be construed as “before or after the date of approval on the management and disposition plan.”(5) When deducting the special long-term holding deduction amount under Article 95 (2) of the Act from the marginal gain from the transfer under paragraph (2) 1 in calculating the transfer income under Article 95 of the Act, the holding period shall be that set forth in the following subparagraphs: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. Holding period when deducting the special long-term holding deduction amount from the marginal gain from the transfer of the settlement balance paid: The period from the date of approval on the management and disposition plan to the date of transfer of the newly built house and its appurtenant land; or2. Holding period when deducting the special long-term holding deduction amount from the marginal gain from the transfer of the existing building: The period from the date acquisition of the existing building and its appurtenant land to the date of transfer of the newly built house and its appurtenant land.(6) In applying Article 100 (2) of the Act, if the distinction between the value of land and that of buildings, etc. is obscure, it shall be computed proportionately under the proviso to Article 48-2 (4) of the Enforcement Decree of the Value-Added Tax Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(7) In computing the margin from transfer under Article 100 of the Act, where the members of consolidation project cooperatives, which execute the housing redevelopment project or the housing reconstruction project offer the existing building and the land appurtenant thereto to the relevant cooperatives, and transfer the newly-built building and the land appurtenant thereto which have been acquired pursuant to the management and disposition plan, the margin from transfer according to the standard market price shall be the aggregate of margins from transfer calculated under the classifications falling under each of the following subparagraphs (where the settlement balance is received, the margin from transfer corresponding thereto shall be deducted): <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18044, Jun. 30, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18850, May 31, 2005; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 19245, Dec. 31, 2005>1. Margin from transfer from the date of acquisition of the existing building and the land appurtenant thereto to the date preceding the authorization date of the management and disposition plan: Standard market price of the existing building and the land appurtenant thereto as of the date preceding the authorization date of the management and disposition plan (referring to that under the provisions of Article 99 (1) 1 of the Act; hereafter in this paragraph, the same shall apply) － Standard market price of an existing building and the land appurtenant thereto as of the date of acquiring the existing building and the land appurtenant thereto － Necessary expenses for an existing building and the land appurtenant thereto (referring to that under the provisions of Article 163 (6); hereafter the same shall apply in this paragraph);2. Margin from transfer from the authorization date of the management and disposition plan to the date preceding the completion date of the newly-built building (referring to the acquisition date under Article 162 (1) 4): Standard market price of the land appurtenant to the existing building as of the date preceding the completion date of the newly-built building － Standard market price of the land appurtenant to the existing building as of the authorization date of management disposal plan; and3. Margin from transfer from the completion date of the newly-built building to the transfer date of the newly-built building: Standard market price of the newly-built building and the land appurtenant thereto as of the transfer date of the newly-built building － Standard market price of the newly-built building and the land appurtenant thereto as of the completion date of the newly-built building (where there exists the standard market price under Article 99 (1) 1 (c) and (d) of the Act as of the transfer date of the newly-built house, the standard market price calculated by applying mutatis mutandis the provisions of Article 164 (6) and (7)) － Necessary expenses for the newly-built building and the land appurtenant thereto (limited to the portion which is increased more than the land appurtenant to the existing building).[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) and (2) Deleted. <by Presidential Decree No. 16664, Dec. 31, 1999>(3) The term “case where it is deemed that any act makes the burden of unreasonably reduced tax” in Article 101 (1) of the Act means an occasion falling under any of the following subparagraphs: Provided, That the foregoing shall apply only where the difference between the market price and actual transaction price is not less than 300 million won or reaches an amount equivalent to five percent of the market price or more: <Amended by Presidential Decree No. 19890, Feb. 28, 2007>1. When an asset is purchased from the person in special relations at a price higher than the market price or when an asset is transferred to a person in special relations at a price lower than the market price; and2. When it is deemed otherwise that the tax burden has been unduly reduced at the time when calculating the transfer price or necessary expenses for the pertinent year by a transaction with a person in special relations.(4) In trade with persons in special relations under each subparagraph of Article 98 (1), where deemed that the burden of tax has been reduced unreasonably by acquiring the land, etc. in excess of their market price, or by transferring them short of their market price, the relevant acquisition value or transfer value shall be computed by their market price.(5) In applying paragraphs (3) and (4), the market price shall be governed by the value assessed by applying mutatis mutandis Articles 60 through 64 of the Inheritance Tax and Gift Tax Act, Articles 49 through 59 of the Enforcement Decree of the same Act and Article 101 of the Special Tax Treatment Control Act. In such cases, the term “period within six months before the date of appraisal standard (three months in cases of a gift property)” in the main body of Article 49 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be deemed “respective period of three months before and after the date of transfer or acquisition”, and “in cases of inheritance or gift” in Article 101 of the Special Tax Treatment Control Act shall be deemed “in cases of transfer”. <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007>(6) Where any asset is acquired or transferred between an individual and a juristic person, and if the provisions of Article 52 of the Corporation Tax Act are not applicable to the transactions of relevant juristic person as the price thereof falls under the value pursuant to the provisions of Article 89 of the Enforcement Decree of the Corporation Tax Act, the provisions of Article 101 (1) of the Act shall not apply: Provided, That the same shall not apply to cases where it is admitted that the transfer income tax has been reduced by false or other illegal means. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005>(7) Deleted. <by Presidential Decree No. 16664, Dec. 31, 1999>

(1) Any marginal loss under the provisions of Article 102 (2) of the Act shall be successively deducted from the amount of transfer income of the assets falling under each of the following subparagraphs:1. Amount of transfer income of the assets subjected to the same tax rate as the assets whereon a transfer marginal loss has been incurred; and2. Amount of transfer income of the assets subjected to the tax rate different from the assets whereon a transfer marginal loss has been incurred. In such cases, if the amount of transfer income of the assets subjected to the different tax rate is two or more, the deduction shall be made in proportion to the ratio occupied by the relevant amount of transfer income in the aggregate of amount of transfer income by each tax rate.(2) In calculating the reduced or exempted amount of income under Article 90 of the Act, if the amount of transfer income under paragraph (1) contains the reduced or exempted income amount, the amount obtained by deducting the portion equivalent to the relevant transfer marginal loss from the reduced or exempted amount of income shall be deemed to be the reduced or exempted amount of income under Article 90 of the Act, by considering that the relevant transfer marginal loss has been deducted in proportion to the ratio occupied by the net amount of transfer income (referring to the portion excluding the reduced or exempted income amount) and the reduced or exempted income amount.[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]

(1) The term “house falling under three or more houses owned by one household as prescribed by Presidential Decree” in Article 104 (1) 2-3 of the Act means housing owned by one household having three or more houses in Korea (housing in subparagraph 1 shall not be counted in the number of houses), which do not fall under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18850, May 31, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20931, Jul. 24, 2008; Presidential Decree No. 21062, Oct. 7, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Housing located in areas other than the Seoul Metropolitan area under subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereafter in this Article referred to as the “Seoul Metropolitan area”) and the Metropolitan City (excluding areas falling under any of the following items), for which the aggregate of standard market prices of relevant housing and land appurtenant thereto does not exceed 300 million won when the relevant housing or any other housing is transferred:(a) Gun belonging to the Metropolitan City, and Eup/Myeon under Article 3 (3) and (4) of the Local Autonomy Act; and(b) Areas prescribed by Ordinance of the Ministry of Strategy and Finance by taking into account the distribution rate and price of housing and their trend, etc. in the relevant area within the Seoul Metropolitan area;2. Housing leased after registration of the rental house by the resident who has made registration of a business under Article 168 of the Act and of a lease business under Article 6 of the Rental Housing Act (hereafter in this Article referred to as “registration of business operator, etc.”), which fall under any of the following items (hereafter in this Article referred to as a “long-term rental house”): Provided, That when the resident failing to make registration of a business under Article 168 of the Act, while he/she made registration of a lease business under Article 6 of the Rental Housing Act as of October 29, 2003 (hereafter in this Article referred to as “standard date for existing business operators”), has made registration under the same paragraph of same Article not later than June 30, 2004, it shall be deemed that he/she has made registration of a business under Article 168 of the Act on the date of registration of the rental business under Article 6 of the Rental Housing Act:(a) National housing leased for not less than ten years (seven years in cases of houses located in areas outside the Seoul metropolitan area) by the resident making a lease of five (one national house in the cases of houses located in areas outside the Seoul metropolitan area) or more national houses (in case of areas outside the Seoul metropolitan area, a house under the Housing Act, the area of housing lot of which is not larger than 298 square meters and the gross area (including part deemed a house pursuant to the main sentence of Article 154 (3) and the area of basement part used as exclusive use for living, referring to the area of exclusive use in case of apartment house) of which is not larger than 149 square meters; hereinafter the same shall apply in this item) in the same city (including the Special Metropolitan City and Metropolitan City; the same shall apply hereinafter) and Gun, and the aggregate of standard market prices of relevant housing and land appurtenant thereto do not exceed 300 million won, when the ownership of the relevant housing or general houses under the provisions of subparagraph 10 is acquired:(b) National housing leased for not less than five years by the resident making a lease of two or more national housing after making registration of business operator, etc. before the standard date for existing businesses (limited to a lease after registration of rental house before the standard date for existing business operators), and the aggregate of standard market prices of relevant housing and land appurtenant thereto do not exceed 300 million won, when the ownership of the relevant housing or general houses under the provisions of subparagraph 10 is acquired;(c) Housing leased for not less than five years or made a parcelling-out conversion (including cases where selling to the rental businesses under the Rental Housing Act) by the resident who leases more than two constructed rental houses whose site area is less than 298 square meters under the Rental Housing Act and the total area of house is less than 149 square meters (including the portions deemed to be a residence under the main body of Article 154 (3) and the area of underground room exclusively used for residing, and referring to the exclusive use area in cases of apartment houses). In such cases, it refers to the residence for which the aggregate of standard market prices of the relevant house and the land appurtenant thereto (in case where there exists the house price under the Public Notice of Values and Appraisal of Real Estate Act, it refers to the said price) is not exceeding 600 million won, when the ownership of the relevant housing or general houses under the provisions of subparagraph 10 is acquired; and(d) Housing satisfying all the following requirements as purchased rental housing under subparagraph 3 of Article 2 of the Rental Housing Act [limited to housing for which the first contract for sale in lot has been made from June 11, 2008 to June 30 2009 and the earnest money has been paid for as unsold housing (referring to housing being supplied by method of firstcome first-served because a contract for sale in lot has not been made by June 10, 2008 in a housing complex where the contract date for an occupant according to the public announcement for invitation of occupants has passed as housing being supplied pursuant to Article 38 of the Housing Act by the main body of business under the same Article)]:(ⅰ) Plottage is 298 m² or less, and the total floor space (including area deemed as housing under the main body of Article 154 (3) and area of basement exclusively used for living area; referring to living area in cases of tenement housing) of housing shall be 147 m² or less;(ⅱ) Housing shall be rented for five years or more;(ⅲ) The total amount of tax standard value for the relevant housing and land annexed thereto shall be 300 thousand won or less at the time of acquiring ownership thereof;(ⅳ) Housing shall be located in an area other than the Seoul Special Metropolitan area; and(ⅴ) The number of purchased-rental houses that meets all the requirements (ⅰ) through (ⅳ) (hereafter referred to as “unsold purchased-rental house” in this article) shall be five or more in the one Si/Gun [in cases where the number of purchasedrental houses under item (a) is five or more or where the number of purchased-rental houses under item (b) is two or more, the total number of purchased-rental houses under item (a) or (b) and unsold purchased-rental houses shall be five or more (if the number of purchased-rental houses under item (b) is added thereto, it is limited only to cases where unsold purchasedrental houses is located in one Si/Gun)];3. National housing leased for not less than five years (hereafter in this Article referred to as “long-term rental housing subject to reduction or exemption”), which are rental houses whose transfer income tax is reduced or exempted under Articles 97, 97-2 and 98 of the Special Tax Treatment Control Act;4. Housing (hereafter in this Article referred to as “long-term houses for employees”) whose relevant free provision period is not less than 10 years (hereafter in this Article referred to as the “compulsory free provision period”), which is the housing owned by the employer and provided gratuitously to employees (excluding those in special relations with the employer under each subparagraph of Article 98 (1));5. New construction housing whose transfer income tax is reduced or exempted under the provisions of Articles 99 and 99-3 of the Special Tax Treatment Control Act;6. Cultural property housing falling under the provisions of Article 155 (6) 1;7. Inherited housing falling under the provisions of Article 155 (2) (limited to cases where five years have not elapsed since the date of receiving an inheritance);8. Housing where three years have not elapsed since the date of acquisition, which are those acquired due to an exercise of mortgage or in substitution for credit reimbursement;8-2. Housing used by the constituents of one household as the family nurture facility (hereafter referred to as a “long-term family nurture facility” in this Article) for not less than five years after obtaining an authorization of the head of Si/Gun/Gu (referring to the head of autonomous Gu) under the provisions of Article 13 of the Infant Care Act and making a business registration under the provisions of Article 168 of the Act (hereafter referred to as the “compulsory use period” in this Article), and six months has not elapsed since the date of ceasing its usage as a family nurturing facility;9. Small housing falling short of the specific size prescribed by Ordinance of the Ministry of Strategy and Finance by taking account of the value and floor space, etc. of the housing; and10. Relevant housing where one household possesses only one house except for the housing falling under subparagraphs 1 through 8 and 8-2 (hereafter in this Article referred to as the “general housing”).(2) In applying the regulations of paragraph (1), a calculation of the number of houses shall be made in accordance with the methods falling under each of the following subparagraphs:1. Tenement house: The number of houses shall be calculated by applying mutatis mutandis the provisions of Article 155 (15). In such cases, it shall be limited to cases chosen by the residents;2. Jointly inherited house: The number of houses shall be calculated by making them owned by the inheritor having the largest inheritance shares, but if persons having the largest inheritance shares are not less than two, any person pursuant to the order of each subparagraph of Article 155 (3) shall be deemed to possess the relevant jointly inherited house; and3. House which is an inventory asset owned by real estate sales businessman: It shall be included in a calculation of the number of houses.(3) The provisions of Article 97 of the Enforcement Decree of the Special Tax Treatment Control Act shall apply mutatis mutandis to a calculation of lease period of the long-term lease housing under the provisions of paragraph (1) 2. In such cases, it shall be deemed to have commenced the lease from the date of making a lease after a registration of business was made and then a registration of rental house was made. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) Even where the general housing under the provisions of paragraph (1) 10 is transferred before one household satisfies the requirements for a compulsory lease period, compulsory gratuitous period or compulsory use period (hereafter referred to as the “compulsory lease period, etc.” in this Article) for the long-term rental houses, long-term rental houses subject to reduction or exemption, or the long-term houses for employees or long-term family nurture facilities (hereafter referred to as the “long-term rental houses, etc.” in this Article) under paragraph (1) 2 through 4 or 8-2, the provisions of paragraph (1) 10 shall apply by regarding the relevant rental houses, or the houses for employees, or the family nurture facilities (hereafter referred to as the “rental houses, etc.” in this Article) as the long-term rental houses, etc. under the provisions of paragraph (1). <Amended by Presidential Decree No. 19254, Dec. 31, 2005>(5) When the causes that one household subjected to the provisions of paragraph (4) becomes unable to satisfy the requirements for a compulsory lease period, etc. of the long-term rental houses, etc. (including cases where the period failing to lease the number of compulsory rental houses under the provisions of each item of paragraph (1) 2 and the provisions of paragraph (1) 3, passes six months) have occurred, the amount obtained by deducting the amount of tax under subparagraph 2 from subparagraph 1 shall be paid as the transfer income tax at the time of the return of the tax base during the taxable year in which such causes have occurred: Provided, That when the requirements for a relevant compulsory lease period, etc. become impossible to satisfy, or the number of compulsory rental houses becomes unable to be rent due to the inevitable causes prescribed by Ordinance of the Ministry of Strategy and Finance, such as an expropriation, etc. under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor, it shall be deemed to continuously lease, use or to gratuitously use the relevant rental houses, etc.: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. Amount of tax that has to be paid pursuant to a tax rate under the provisions of Article 104 of the Act where not regarding the relevant rental houses, etc. as the long-term rental houses, etc. under the provisions of paragraph (1) 2 though 4 or 8-2 at the time of a transfer of general housing; and2. Amount of tax that has been paid pursuant to a tax rate under the provisions of Article 104 of the Act under application of the provisions of paragraph (4) at the time of a transfer of general housing.(6) In applying the provisions of paragraphs (1) through (5), where two or more houses are transferred on the same day, the provisions of Article 154 (9) shall apply mutatis mutandis to the said determination methods.(7) Any person who intends to obtain an application of the provisions of paragraphs (1) 2, 3 and 8-2 and (4) shall submit to the superintendent of the competent tax office a written return of tax base for the taxable year whereto belongs the date of transferring the relevant rental houses, etc. or general housing and a written application prescribed by Ordinance of the Ministry of Strategy and Finance together with the documents falling under each of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. A registration certificate of a lease business under the provisions of Article 6 of the Rental Housing Act or an authorization certificate of the nursery facility under the provisions of Article 13 of the Infant Care Act;2. A copy of the lease contract;3. A certified copy of a resident registration or a copy of resident registration certificate of the lessee;4. Deleted; and <by Presidential Decree No. 19507, Jun. 12, 2006>5. Other documents prescribed by Ordinance of the Ministry of Strategy and Finance.(8) Upon receiving the application filed pursuant to the provisions of paragraph (7), the superintendent of the competent tax office shall confirm the certified copy of the register of the rental house, etc. or the certified copy of the house and building register thereof by mutual use of the administrative information provided for in the provisions of Article 21 (1) of the Electronic Government Act: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008>[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]

(1) The term “one household prescribed by Presidential Decree” in Article 104 (1) 2-4 of the Act means one household under the provisions of Article 154.(2) In calculating the number of houses (including the land annexed to the house; hereafter the same shall apply in this Article) and association member’s relocation rights possessed by one household in the provisions of Article 104 (1) 2-4 of the Act, the houses or the association member’s relocation rights located in an area other than the Seoul Metropolitan area under the provisions of subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereafter referred to as the “Seoul Metropolitan area” in this Article) and Metropolitan Cities (excluding the area falling under any of the following subparagraphs), of which the standard market price or the value (referring to the price of previous houses under the provisions of Article 48 (1) 4 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) does not exceed 300 million won at the time of transfer of relevant house or other houses, shall not be counted in: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Gun belonging to the Metropolitan Cities and Eup/Myeon under the provisions of Article 3 (3) and (4) of the Local Autonomy Act; and2. Areas as provided by Ordinance of the Ministry of Strategy and Finance by taking account of the house diffusion rate, house price, and their trends, etc. of the relevant area from among the Seoul Metropolitan area.(3) The term “cases prescribed by Presidential Decree” in Article 104 (1) 2-4 of the Act means the houses possessed by one household possessing three or more cases by aggregating the houses and the association member’s relocation rights in the country, which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Houses under the provisions of paragraph (2);2. Houses falling under any of Article 167-3 (1) 2 through 8 and 8-2;3. Small houses less than a specific scale as provided by Ordinance of the Ministry of Strategy and Finance by taking into account the price and area, etc. of houses; and4. Where one household possesses only one house with the exception of houses falling under subparagraphs 1 and 2, relevant houses.(4) In applying the provisions of paragraphs (2) and (3), the provisions of Article 167-3 (2) through (7) shall apply mutatis mutandis.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “houses falling under two houses for one household prescribed by Presidential Decree” in Article 104 (1) 2-5 of the Act means houses possessed by one household possessing two houses in Korea (houses falling under subparagraph 1 shall not be included in the calculation of the number of houses), which do not fall under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21062, Oct. 7, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 21195, Dec. 31, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. A house, as that located in any of the following areas within the Seoul metropolitan area under subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as “Seoul metropolitan area” in this Article) and in an area outside the Seoul metropolitan area, of which total amount of standard market price of the relevant house and the land annexed thereto does not exceed 300 million won at the time when the relevant house or other house is transferred;(a) Gun belonging to a Metropolitan City and Eup/Myeon under Article 3 (3) and (4) of the Local Autonomy Act; and(b) An area prescribed by Ordinance of the Ministry of Strategy and Finance taking the housing supply rate, housing prices and such housing trend, etc. of the relevant area into account;2. A house falling under any of Article 167-3 (1) 2 through 8 and 8-2;3. Where a part of constituents of one household has become two houses for one household by acquiring one house due to the moving into another Si (including the Special Metropolitan City and Metropolitan Cities; hereafter the same shall apply in this subparagraph)/Gun due to entering school, circumstances of duty, medical treatment, other unavoidable reasons prescribed by Ordinance of the Ministry of Strategy and finance (limited to the house the total amount of standard market price under Article 99 of the Act at the time of acquisition of which does not exceed 300 million won as the house located in the same Si/Gun as the location of a school, a place of work or a place of medical treatment) (limited to cases where it has been resided for not less than one year after the acquisition and for which three years have not elapsed from the date on which the relevant reasons have been settled), relevant houses;3-2. A house situated outside of the Seoul Metropolitan area under Article 155 (8);4. Where the person who possesses one house and constitutes one household joins the household in order to care for a lineal ascendant (including the lineal ascendant of his/her spouse) over 60 years old who possesses one house by living together, and one household comes to possess two houses (limited to cases where five years have not elapsed from the date of joining), relevant houses;5. Where the person who possesses one house has married another person who possesses one house, and one household comes to possess two houses (limited to cases where five years have not elapsed from the date of marriage), relevant houses;6. Houses for which a lawsuit on ownership is in progress, or which are acquired as a result of the relevant lawsuit (limited to cases where three years have not elapsed from the date of final decision due to a lawsuit);7. Where one household possessing one house comes to possess two houses temporarily by acquiring another house before transferring the relevant house (including cases to acquire by constructing by himself), the previous house [limited to cases where two years have not elapsed from the date of acquiring another house (including the cases where two years have elapsed, and which falls under the reasons provided by Ordinance of the Ministry of Strategy and Finance)];8. Houses provided by Ordinance of the Ministry of Strategy and Finance by taking into account of the price and area, etc. of houses; and9. Where one household possesses only one house with exception of houses falling under subparagraphs 1 through 6, relevant house.(2) In applying the provisions of paragraph (1), the provisions of Article 167-3 (2) through (8) shall apply mutatis mutandis. <Amended by Presidential Decree No. 21062, Oct. 7, 2008>[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “one household prescribed by Presidential Decree” in Article 104 (1) 2-6 of the Act means one household under the provisions of Article 154.(2) In calculating the number of houses (including the land annexed to the house; hereafter in this Article, the same shall apply) and association member’s relocation rights possessed by one household under Article 104 (1) 2-6 of the Act, the houses and association member’s relocation rights falling under the provisions of Article 167-4 (2) shall not be counted therein.(3) The term “cases prescribed by Presidential Decree” in Article 104 (1) 2-6 of the Act means houses possessed by one household possessing one house and one association member’s relocation right respectively in the country, which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 21159, Dec. 31, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Houses subject to an application of provisions of Article 154 (1) by regarding as one house for one household under the provisions of Article 156-2 (3) through (5) whereon the transfer income tax is levied;2. Houses falling under any of Article 167-3 (1) 2 through 8 and 8-2;3. Houses falling under Article 167-4 (2);4. Where one household comes to possess one house and one association member’s relocation right as a part of constituents of one household acquires one house (limited to the house the total amount of standard market price under Article 99 of the Act at the time of acquisition of which does not exceed 300 million won as the house located in the same Si/Gun as the location of a school, a place of work or a place of medical treatment) in order to move his/her residence to another Si (including the Special Metropolitan City and Metropolitan Cities; hereafter the same shall apply in this subparagraph)/Gun due entering school, circumstances of duty, medical treatment, other unavoidable reasons prescribed by Ordinance of the Ministry of Strategy and finance work, relevant house (limited to cases where it has been resided in for not less than one year after acquisition, and three years have not elapsed from the date on which the relevant reasons have been terminated);4-2. A house situated outside of the Seoul Metropolitan area under Article 155 (8);5. Where one household comes to possess one house and one association member’s relocation right as a person owning one house or one association member’s relocation right and constituting one household joins the households in order to care, by living together, for the lineal ascendant possessing one house or one association member’s relocation right (including the lineal ascendant of his/her spouse) over 60 years old, the relevant house (limited to cases where five years have not elapsed from the date of joining);6. Where one household comes to possess one house and one association member’s relocation right as a person possessing one house or one association member’s relocation right marries another person possessing one house or one association member’s relocation right, the relevant house (limited to cases where five years have not elapsed from the date of marriage);7. Houses for which the lawsuit on ownership is in progress, or which are acquired as a result of relevant lawsuit (limited to cases where three years have not elapsed from the date of final decision due to a lawsuit); and8. Houses provided by Ordinance of the Ministry of Strategy and Finance by taking the price and area, etc. of houses into account.(4) In applying the provisions of paragraphs (2) and (3), the provisions of Article 167-3 (2) through (7) shall apply mutatis mutandis.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

The term “property prescribed by Presidential Decree” in Article 104 (1) 2-8 of the Act means the stocks, etc. falling under the provisions of Article 158 (1) 1 or 5, and the ratio occupied by the value of land for non-business purposes under the provisions of Article 104-3 of the Act is over 50/ 100 of the total amount of properties of relevant corporation.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

The term “small or medium enterprises prescribed by Presidential Decree” in Article 104 (1) 4 (a) of the Act means the enterprises falling under the small or medium enterprises under Article 2 of the Framework Act on Small and Medium Enterprises as of the end of the business year immediately preceding that whereto belongs the transfer date of stocks, etc. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>[This Article Wholly Amended by Presidential Decree No. 17456, Dec. 31, 2001]

(1) The term “such assets as prescribed by Presidential Decree” in Article 104 (3) (proviso) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19327, Feb. 9, 2006>1. Assets acquired under a long-term installment, whose registration for an acquisition of such assets at the time of transfer is impossible under the term of such contract;2. Assets whose registration for an acquisition of such assets at the time of transfer is impossible under the provisions of Acts or a decision of the court;3. Lands as stipulated in Article 89 (1) 2 of the Act, and Articles 69 (1) and 70 (1) of the Special Tax Treatment Control Act;4. One house for one household as stipulated in Article 89 (1) 3 of the Act, whose registration is impossible as it fails to obtain a construction permit under the Building Act; and5. Asset for which a registration for a transfer of title under an inheritance has not been made, and which is transferred to the project operator under Article 18 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor.(2) In applying Article 104 (1) 1 of the Act, if any amount of tax paid or payable by the major stockholder is included in the computed tax on transfer income from the stocks, etc. under Article 158 (1) 1, the computed tax on transfer income shall be the amount computed by subtracting such tax paid or payable. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>

The term “houses falling under two or more houses for one household as prescribed by Presidential Decree” in Article 104 (4) 2 of the Act means houses owned by one household possessing not less than two houses (the houses falling under Article 167-3 (1) 1 shall not be included in calculating the number of houses) in Korea, which do not fall under any subparagraph of Article 167-5 (1). In such cases, Article 167-3 (2) through (7) apply to the determination of number of possessing houses. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005>[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]

(1) The term “designated area” in Article 104-2 (1) of the Act means, from among the area falling under any of the following subparagraps, the area for which the Minister of Land, Transport and Maritime Affairs makes a request for a designation (including cases where the head of related central administrative agency makes a request by undergoing the Minister of Land, Transport and Maritime Affairs), as he/she determines that there exists a possibility for continuing a rise of real estate prices in the relevant area, or concerns over spreading to other areas by taking national real estate price trends and the relevant area’s characteristics, etc. into consideration, and which is designated by the Minister of Strategy and Finance by undergoing deliberation by the Committee for Deliberation of Real Estate Price Stability under the provisions of Article 168-4. In such cases, as for the area falling under any of the following subparagraphs or for which the Minister of Land, Transport and Maritime Affairs has not made any request for designation, the Minister of Strategy and Finance shall refer it to the Committee for Deliberation of Real Estate Price Stability and undergo its deliberation after receiving its reasons from the Minister of Land, Transport and Maritime Affairs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Area for which the increasing ratio of the house transaction price for immediately preceding month of the month whereto the designation day belongs (hereafter referred to as the “immediately preceding month” in this paragraph) is higher than 130/100 of the increasing ratio of the national consumer price, which falls under any of the following items:(a) The area wherein a increasing ratio of the monthly-average house transaction price for two months retrospectively from the immediately preceding month is higher than 130/100 of the increasing ratio of national transaction price of houses; and(b) The area wherein a increasing ratio of the annual average house transaction price for one year retrospectively from the immediately preceding month is higher than the annual average national transaction price of houses for three years retrospectively from the immediately preceding month;2. The area wherein a increasing ratio of land price for the immediately preceeding month is higher than 130/100 of the increasing ratio of national consumer price, which falls under any of the following items:(a) The area wherein a increasing ratio of monthly average land price for two months retrospectively from the immediately preceding month is higher than 130/100 of the increasing ratio of national land price; and(b) The area wherein a increasing ratio of annual average land price for one year retrospectively from the immediately preceding month is higher than the increasing ratio of annual average national land price for three years retrospectively from the immediately preceding month;3. The area equipped with all the requirements of the following items, which is the area wherein the development project under the provisions of subparagraph 2 of Article 2 of the Restitution of Development Gains Act (including the development project whereon development allotment money is not levied) and the house reconstruction project (hereinafter referred to as “development project, etc.”) are in progress (including cases where the head of central administrative agency or the head of local government have announced the relevant development project, etc.):(a) The increasing ratio of house transaction price for immediately preceeding month shall be higher than 130/100 of the increasing ratio of national consumer price; and(b) The increasing ratio of house transaction price for the immediately preceeding month shall be higher than 130/100 of the increasing ratio of national house trade price; and4. The area falling under any of the following items, which is the scheduled district for housing site development under the Housing Site Development Promotion Act, the scheduled area and the peripheral area of the construction project for administration-centered complex city under the Special Act on the Construction of a Multi-functional Administrative City in Yeongi-Gongju Area for Follow-up Measure of New Administrative Capital, or other area scheduled for promotion of large-scale development projects provided by Ordinance of the Ministry of Strategy and Finance (hereafter in this subparagraph, referred to as “scheduled districts, etc.”). In such cases, where the administrative agency announces the proposed place for scheduled districts, etc., the relevant proposed place shall be deemed as scheduled districts, etc.:(a) The area where the increasing ratio of house transaction price for the immediately preceding month is higher than the increasing ratio of national consumer price; and(b) The area where the increasing ratio of land price for the immediately preceding month is higher than the increasing ratio of national consumer prices.(2) Where the Minister of Strategy and Finance deems it necessary, he/she may refer the matters for designation of designated area to the Committee for Deliberation of Real Estate’s Price Stability without any request from the Minister of Land, Transport and Maritime Affairs, notwithstanding the provisions of paragraph (1). <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) The term “real property prescribed by Presidential Decree” in Article 104-2 (2) of the Act means the real estate falling under any of subparagraphs 1 through 3 from among the following subparagraphs, however the house falling under subparagraph 4 shall be excluded. In such cases, in applying the provisions of subparagraph 4, in cases of tenement house deemed as an individual house under the provisions of Article 155 (15), the portion divided to enable one household to reside independently shall be made as the standard:1. Case of the designated area under the provisions of paragraph (1) 1 through 3: Houses (including the land annexed thereto);2. Case of the designated area under the provisions of paragraph (1) 2: Real estate other than subparagraph 1;3. Case of the designated area under the provisions of paragraph (1) 4: Real estate of subparagraphs 1 and 2; and4. Houses falling under any of the following items (excluding officetels under subparagraph 10 (b) of the attached Table 1 of the Enforcement Decree of the Building Act; hereafter the same shall apply in this Article): Provided, That houses located in the area designated and publicly announced as readjustment area under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (including the project sites of the reconstruction association receiving authorization for establishment under the Housing Construction Promotion Act before amendment as Act No. 6916, the amended Act under the Housing Act) shall be excluded:(a) Apartments under the provisions of the attached Table 1 of the Enforcement Decree of the Building Act, whose exclusive use area is not more than 60 square meters and whose standard market price under the provisions of Article 99 of the Act at the time of transfer shall be not more than 40 million won;(b) Tenement house and multi-household house under the provisions of the attached Table 1 of the Enforcement Decree of the Building Act, whose exclusive use area is not more than 85 square meters and whose standard market price at the time of transfer under the provisions of Article 99 of the Act shall be not more than 100 million won; and(c) Individual houses under the provisions of the attached Table 1 of the Enforcement Decree of the Building Act, whose site area is not more than 170 square meters, and the total area of house (including the portion deemed as house under the provisions of the main body of Article 154 (3) and the area of underground room used for exclusive use for residence; hereafter the same shall apply in this Article) is not more than 85 square meters and the standard market price under Article 99 of the Act at the time of transfer shall be not more than 100 million won.(4) When the Minister of Strategy and Finance has designated the designated area under the provisions of paragraph (1), he/she shall announce publicly the relevant details without delay, and notify the Commissioner of the National Tax Service of the details of public announcement. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(5) When the Commissioner of the National Tax Service has received the notice under the provisions of paragraph (4), he/she shall take measures so as to enable perusal of such details by the general public.(6) Designation of designated area shall be effective from the day of public announcement of the designation of designated area under the provisions of paragraph (4).(7) Where there exists a request for revocation of designation by the Minister of Land, Transport and Maritime Affairs as he/she admits that the designation reasons are revoked, such as a stabilization of real property price in the relevant area, after a designation of designated area under the provisions of paragraph (1) (including cases where the head of related central administrative agency requests by undergoing the Minister of Land, Transport and Maritime Affairs), the Minister of Strategy and Finance shall revoke the designated area by undergoing deliberation of the Committee for Deliberation of Real Estate’s Price Stability. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(8) The provisions of paragraphs (2) and (4) through (6) shall apply mutatis mutandis to a revocation of designation under the provisions of paragraph (7).(9) The designated area under the provisions of paragraph (1) shall be designated by the unit of administrative districts of the Special Metropolitan City, a Metropolitan City, Do or Si/Gun/Gu: Provided, That for the areas under paragraph (1) 3 and 4 and the permission districts under the provisions of Article 117 of the National Land Planning and Utilization Act, only the relevant area may be designated as a designated area.(10) Notwithstanding the provisions of paragraph (9), a part of areas from among the administrative districts corresponding to the area which has been designated as the designated area or area scheduled for a designation may be excluded from the relevant designated area by going through a deliberation of the Committee for Deliberation of Real Estate’s Price Stability by taking account of the tendency of real estate price in the relevant area and the special character of area, etc.(11) Statistics of the increasing ratio of national consumer price, increasing ratio of house trade price, increasing ratio of national house transaction, increasing ratio of land price and increasing ratio of national land price under the provisions of paragraph (1) shall be based on the statistics approved by the Commissioner of the National Statistical Office on the preparation of statistics in accordance with Article 8 of the Statistics Act. In such cases, where there exist only the statistics of increasing ratio of transaction price for apartment houses under the provisions of the attached Table 1 of the Enforcement Decree of the Building Act, it shall be deemed as the statistics of increasing ratio of the house transaction price for the relevant area, and where there exist no statistics of increasing ratio of real estate price of the immediately preceeding month, it shall be based on the statistics of the month before the last one.(12) In applying the provisions of paragraph (1), where the number corresponding to 130/100 of a increasing ratio of the national consumer price as provided for in subparagraph 1 through 3 of the same paragraph, the number corresponding to 130/100 of a increasing ratio of the national house trade price, or the number corresponding to 130/100 of a increasing ratio of the national land price is less than 5/1,000 respectively, it shall be made 5/1,000, and where the number corresponding to a increasing ratio of national consumer price as provided for in subparagraph 4 of the same paragraph is a negative number, it shall be made as zero.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The Committee for Deliberation of Real Estate Price Stability under the provisions of Article 104-2 (3) of the Act (hereafter referred to as the “Deliberation Committee” in this Article) shall be organized by less than 12 members, including one chairman and one vice chairman.(2) The chairman of the Deliberation Committee shall be the Vice Minister of Strategy and Finance designated by the Minister of Strategy and Finance, and the vice chairman shall be the Vice Minister of Land, Transport and Maritime Affairs designated by the Minister of Land, Transport and Maritime Affairs, and the members shall be the persons appointed or commissioned by the Minister of Strategy and Finance from among the public officials of the Vice Minister level of related Ministry, the public officials in general service who belong to the senior civil service, and the persons having the profound knowledge and experiences in economy and real estate. <Amended by Presidential Decree No. 19513, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(3) Meetings of the Deliberation Committee shall commence by the attendance of a majority of all incumbent members, and resolutions shall require the consent of a majority of those present.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

In applying the provisions of Articles 168-3 and 168-4, the necessary matters for designation procedures for designated area, application methods of statistics, term of the members of the Deliberation Committee, and duties of the chairman and the operation of the Deliberation Committee shall be under the conditions provided by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

The term “period prescribed by Presidential Decree” in the main body of Article 104-3 (1) of the Act means the period falling under any of the following subparagraphs: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Where the possession period of land is not less than five years, the period falling under all of the following items:(a) Period exceeding two years from among five years immediately before the transfer date;(b) Period exceeding one year from among three years immediately before the transfer date; and(c) Period exceeding the period corresponding to 20/100 of land possession period. In such cases, the calculation of period shall be based on the number of days;2. Where the possession period of land is not less than three years but less than five years, the period falling under all of the following items:(a) Period exceeding the period deducting three years from the period of land possession;(b) Period exceeding one year from among three years immediately before the transfer day; and(c) Period exceeding the period corresponding to 20/100 of land possession period. In such cases, the calculation of period shall be made by the number of days; and3. Where the possession period of land is less than three years, the period falling under all of the following items: Provided, That in cases where the period of possession is less than two years, item (a) shall not apply:(a) Period exceeding the period deducting two years from the land possession period; and(b) Period exceeding the period corresponding to 20/100 of land possession period. In such cases, the calculation of period shall be made by the number of days.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

In applying the provisions of Article 104-3 of the Act, the determination of farmland, forest land, pasturage land and other land shall be governed by the factual current situations, with the exception of cases specially provided for in this Decree: Provided, That where the factual current status are not obvious, it shall be based on the current status stated on the public registers.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “farmland” in Article 104-3 (1) 1 of the Act means the paddy field, ordinary field and orchard, which are land used for actual cultivation without any relations to the land category on cadastral books. In such cases, the portion of land, such as the farm hut, compost hut, pumping station, swamp, farming road, water channel, which are directly required for farmland management, shall be included.(2) The term “farmland which the owner does not reside in, or which is not cultivated by the owner” in the main body of Article 104-3 (1) 1 (a) of the Act means the farmland excluding the farmland where a person for whom the resident registration has been made and who actually resides in a region within the same Si/Gun/Gu (refers to an autonomous Gu; hereafter the same shall apply in this Article) as the location of farmland, in a Si/Gun/Gu adjacent thereto or in a place within a 20 kilometer radius of the farmland (hereinafter referred to as “residing in village”) makes self cultivation under the provisions of subparagraph 5 of Article 2 of the Farmland Act (hereinafter referred to as “self cultivation”). <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(3) The term “case prescribed by Presidential Decree, which is the farmland possessable under the Farmland Act and other Acts” in the proviso to Article 104-3 (1) 1 (a) (proviso) of the Act means cases of farmland falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Farmland falling under Article 6 (2) 2, 3, 9 and 10 (a) or (c) of the Farmland Act;2. Farmland acquired by inheritance under Article 6 (2) 4 of the Farmland Act, which is the land for which three years have not elapsed from the day of commencing the inheritance;3. Farmland possessed at the time of ceasing farming under Article 6 (2) 5 of the Farmland Act, which is the land for which three years have not elapsed from the day of giving up farming;4. Farmland possessed by a person who has received permission for exclusive use of farmland under Article 6 (2) 7 of the Farmland Act or who has made a report on exclusive use of farmland, or the farmland for which a consultation on exclusive use of farmland under Article 6 (2) 8 of the same Act has been completed, which is the land used for relevant purpose for exclusive use;5. Farmland acquired under Article 6 (2) 10 (d) through (f) of the Farmland Act, which is the land used for relevant business purposes;6. Farmland possessed by a clan (limited to that acquired before December 31, 2005);7. Land equipped with all of requirements falling under each of the following items, on which it is impossible for an owner (including the person engaged together in farming while living together with the owner among the family members under the provisions of Article 154 (6)) to make self cultivation due to disease, age, enrollment, school attendance, appointment of public offices by election, and other inevitable reasons provided by Ordinance of the Ministry of Strategy and Finance:(a) It is required to be farmland for which an owner has resided in a village and made self cultivation continuously for not less than five years retrospectively from the day the reasons occur and the owner has resided in a village after the occurrence of such reasons. In such cases, where a family member under Article 154 (6), who lived together with the owner at the time of occurrence of such reason, resides in the location of the farmland, the owner shall be deemed to reside in a village; and(b) It is required to rent or rent for use the farmland pursuant to Article 23 of the Farmland Act;8. Farmland used by the non-profit making business under the provisions of the main body of subparagraph 1 of Article 186 of the Local Tax Act for the purpose of ancestral rites, religion, charity, science, craft and other public benefits project;9. Farmland which has been leased on entrustment (limited to farmland entrusted by individuals) or has been leased without compensation by the Korea Rural Community & Agriculture Corporation under Article 3 of the Korea Rural Community & Agricultural Corporation and Farmland Management Fund Act for eight years or more pursuant to Article 24-4 (1) of the same Act; or10. Farmland possessable under the Farmland Act and other Acts, which is provided by Ordinance of the Ministry of Strategy and Finance.(4) The term “area prescribed by Presidential Decree” in the main body of Article 104-3 (1) 1 (b) of the Act means the green area and area limited of development prescribed in the National Land Planning and Utilization Act.(5) The term “farmland cultivated by oneself while the owner resides in a location of farmland” in the proviso to Article 104-3 (1) 1 (b) of the Act means the farmland falling under any of the following subparagraphs:1. Farmland cultivated by oneself while residing in a village for not less than one year retrospectively from the date of incorporation into an urban area under the provisions of main body of Article 104-3 (1) 1 (b) of the Act; and2. Farmland falling under any subparagraph of paragraph (3).(6) The term “period prescribed by Presidential Decree” in the proviso to Article 104-3 (1) 1 (b) of the Act means two years.(7) Any person intending to be subject to application of paragraph (3) 7 shall submit the documents provided by Ordinance of the Ministry of Strategy and Finance within a deadline for the tax base return of the transfer income tax under the provisions of Article 105 or 110 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “affairs prescribed by Presidential Decree, which are forest land necessary for the public interest or the protection and fosterage of forest” in Article 104-3 (1) 2 (a) of the Act means the forest land falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20763, Apr. 3, 2008, Presidential Decree No. 21025, Sep. 22, 2008>1. Protection forest for genetic forest resources, preservation forest, seed-growing forest or experimental forest under the Creation and Management of Forest Resources Act;2. Forest land falling under any of the following items, which is the forest land within a mountainous district under the Management of Mountainous District Act: Provided, That the forest land passing two years from the date of incorporation into an urban area, which is the forest land within an urban area under the National Land Planning and Utilization Act (excluding preservation greenbelts under Article 30 of the Enforcement Decree of the same Act; hereafter the same shall apply in this subparagraph), shall be excluded:(a) Forest land in operation with an approval on the forest management plan under the Creation and Management of Forest Resources Act; and(b) Forest land within a special forestry project area under the Creation and Management of Forest Resources Act;3. Buddhist temple forest or forest possessed by a village;4. Forest land within the park nature preservation district and the park natural environment district under the Natural Parks Act;5. Forest land within the urban park under the Urban Parks, Green Areas, etc. Act;6. Forest land within the cultural property protection district under the Cultural Heritage Protection Act;7. Land within a precinct possessed by the traditional Buddhist temple under the Preservation of Traditional Buddhist Temples Act;8. Forest land within the development restriction district under the Act on Special Measures for Designation and Management of Areas of Restricted Development;9. Forest land in military bases or military facility zones under the Protection of Military Bases and Installations Act;10. Forest land within the contiguous zone under the Road Act;11. Forest land within the railway protection district under the Railroad Safety Act;12. Forest land within flood management areas under the River Act;13. Forest land within water supply source protection district under the Water Supply and Waterworks Installation Act; and14. Other forest land provided by Ordinance of the Ministry of Strategy and Finance, which are necessary for public interest or the protection and fostering of forests.(2) The term “forest land possessed by the person residing in the location of forest land” in Article 104-3 (1) 2 (b) of the Act means forest land possessed by a person whose resident registration has been made and who actually resides in a region within the same Si/Gun/Gu (refers to the autonomous Gu; hereafter the same shall apply in this Article) as the location of the forest land, in the Si/Gun/Gu adjacent thereto or in a place within 20 kilometers in a straight line from the farmland. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(3) The term “cases prescribed by Presidential Decree” in Article 104-3 (1) 2 (c) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 0720, Feb. 29, 2008>1. Forest land used by the successor to a forestry operator under the Forestry and Mountain Villages Development Promotion Act for the production of seeds for forests, saplings for forest, mushrooms, plants in pots, wild flowers, edible herbs and other forest products;2. Forest land used by the seed and sapling production business under the Creation and Management of Forest Resources Act for the production of seed for forest or sapling for forest;3. Forest land used for the business to create or manage and operate the natural recreation forest under the Forestry Culture and Recreation Act;4. Forest land used for the business to create or manage and operate the arboretum under the Creation and Furtherance of Arboretums Act;5. Forest land used directly by a forest fraternity for its proper purpose;6. Forest land used directly by a nonprofit business under the provisions of the main body of subparagraph 1 of Article 186 of the Local Tax Act for the purpose of ancestral rites, religion, charity, science, craft and other public interest business;7. Inherited forest land, which is forest land for which three years have not elapsed from the date of commencing inheritance;8. Forest land owned by the clan (limited to what has been acquired before December 31, 2005); and9. Other forest land having a direct relation with a residence or business by taking into account the land owner, location, utilization situations, possession period and area, etc., which is provided by Ordinance of the Ministry of Strategy and Finance.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “pasturage land” in Article 104-3 (1) 3 of the Act means the barn used for stock raising and land with annexed facilities, grassland and grazing field.(2) The term “those prescribed by Presidential Decree, which are pasturage land having considerable reasons for deeming that they have direct relations with a residence or business” in the proviso to the main body of Article 104-3 (1) 3 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Inherited land for pasturage, for which three years have not elapsed from the date of commencing such inheritance;2. Pasturage land owned by a clan (limited to that acquired before December 31, 2005);3. Pasturage land used directly by a nonprofit business under the provisions of the main body of subparagraph 1 of Article 186 of the Local Tax Act for the purpose of ancestral rites, religion, charity, science, craft and other public interest business; and4. Other pasturage land having a direct relation with a residence or business by taking into account of the land owner, location, utilization situations, possession period and area, etc., which are provided by Ordinance of the Ministry of Strategy and Finance.(3) The term “standard area of land for stock raising as prescribed by Presidential Decree” in Article 104-3 (1) 3 (a) of the Act means the area of land calculated by applying the standard area by livestock and the number of livestock as provided for in Table 1-3. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(4) The term “area prescribed by Presidential Decree” in Article 1043 (1) 3 (a) of the Act means the green area and development-restriction zone pursuant to the National Land Planning and Utilization Act. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>(5) The term “period prescribed by Presidential Decree” in Article 1043 (1) 3 (a) of the Act means two years.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) The term “cases prescribed by Presidential Decree, which is land having considerable grounds admittable that it has a direct relation with a residence or business” in Article 104-3 (1) 4 (c) of the Act means the land falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Cases falling under any of the following items, which is land for athletic facilities, such as the athletic places and sports grounds:(a) Land for athletic facilities for exclusive use by players:(ⅰ) Land within the standard area of athletic facilities for exclusive use by players as provided by Ordinance of the Ministry of Strategy and Finance, which is land for athletic facilities continuously provided for the players’ exclusive use by the person who has established an at-work athletic contest department under the National Sports Promotion Act: Provided, That the same shall not apply where an at-wok athletic contest department does not fall under the requirements for players and leaders, etc. as provided by Ordinance of the Ministry of Strategy and Finance; and(ⅱ) Land within the standard area as provided by Ordinance of the Ministry of Strategy and Finance, which is the land for athletic facilities directly used for the players’ training by the person operating the athletic contest business;(b) Land for employees athletic facilities:Land within the standard area of employees athletic facilities as provided by Ordinance of the Ministry of Strategy and Finance from among the land for athletic facilities installed for the welfare of employees: Provided, That the same shall not apply where it does not meet the standard for employees athletic facilities as provided by Ordinance of the Ministry of Strategy and Finance;(c) Land used directly by a person operating an athletic installation business under the Installation and Utilization of Sports Facilities Act for the relevant business, after equipping with adequate facilities and equipments under the provisions of the same Act; and(d) Land used directly by the person operating a contest place operation business for the relevant business;2. Land for parking lots, which falls under any of the following items:(a) Land within the standard area for installing annexed parking lots under the Parking Lot Act (excluding parking lots annexed to houses; hereafter in this item, the same shall apply), which is for annexed parking lots under the same Act: Provided, That land for annexed parking lots within land for a recreation facility business under the provisions of subparagraph 6 shall be under conditions provided for in subparagraph 6;(b) Land for parking lots of automobile for business which is provided to the business to indispensably possess an automobile for business (excluding a passenger car, two-wheel automobile and omnibus for employees’ commuter automobile), which is for persons other than businesses under the provisions of Article 131-2 (3) 2 of the Enforcement Decree of the Local Tax Act: Provided, That it shall be limited to the land within the area calculated by multiplying the area aggregating the area calculated by multiplying the area standard for the lowest possessing garage by car types as provided for in the Passenger Transport Service Act or the Trucking Transport Business Act by the number of automobiles for business by each car type the person owns (hereinafter referred to as the “standard area for the lowest garage”) by 1.5; and(c) Land for business operating parking lots:The land owned by the person operating a parking lot operation business, and used for a parking lot off a road under the Parking Lot Act, of which the ratio of income amounts for one year to the value of the land is over the ratio provided by Ordinance of the Ministry of Strategy and Finance;3. The land created by an implementation of civil investment project provided by the Act on Private Participation in Infrastructure by the business implementation person designated under the same Act and the land created by the project executor under other Acts, which are provided by Ordinance of the Ministry of Strategy and Finance: Provided, That the land for which two years have elapsed from the date of completing creation of such land shall be excluded;4. Land for juvenile training facilities under the Juvenile Activity Promotion Act, which is equipped with standards for facilities and equipment under the same Act: Provided, That land exceeding the standard area provided by Ordinance of the Ministry of Strategy and Finance shall be excluded;5. Land owned for executing reserve forces training for employees etc., which is equipped with all requirements under the following items:(a) Land category shall not be a site or land for factory;(b) It shall not be located within a residential area, commercial area and industrial area of the urban area under the National Land Planning and Utilization Act;(c) It shall be equipped with the facility standard provided by Ordinance of the Ministry of Strategy and Finance, and shall be within the standard area provided by Ordinance of the Ministry of Strategy and Finance; and(d) It shall be owned by the person subject to the entrustment of an execution of reserve forces training by the commander of an entrusted military unit;6. Land within the standard area provided by Ordinance of the Ministry of Strategy and Finance, which is the land for a recreation facility business provided by Ordinance of the Ministry of Strategy and Finance, such as the specialized recreation business, complex recreation business, under the Tourism Promotion Act;7. Land for depository, etc.:The depository, field depository and yard, etc. installed and used separately for storing and managing goods (including buildings to receive a construction permit or file a report under the Building Act, and the land annexed to the building for warehouse built without any permit or report), which is the land within 120/100 of the largest area used for the storage and management of goods each year;8. Land for aggregate collection place:Land used for collecting the aggregate by the person receiving a permit for collection of aggregate from the head of Si/Gun/Gu (limited to the head of autonomous Gu) under the Aggregate Picking Act;9. Land used for relevant business by the person operating the wastes disposal business by receiving a permit under the Wastes Control Act;10. Mineral spring (referring to the eruption hole erupting warm water or medicinal water, etc. from underground and a site for maintaining it as land used for manufacturing business of refreshing drinks and hot spring business, etc.) for which the ratio of amount of income for one year to the value of land is over the ratio provided by Ordinance of the Ministry of Strategy and Finance;11. Land falling under any of the following items, which is the land for a fish farm under the Cadastral Act or swamp (referring to dams, reservoirs, small ponds, and naturally formed marshes, and sites for their maintenance used for inland water fish-breeding business, fishing place operation business, etc.):(a) Land used for overland sea-water breeding fisheries and seed production fisheries permitted under the Fisheries Act;(b) Land used by persons who have received a license or permission under the Inland Water Fisheries Act from the head of Si/Gun/Gu (referring to the head of autonomous Gu, and in cases of Han river of Seoul Special City, referring to the agency in charge of duties for Han river management; hereafter the same shall apply in this item) or has reported to the head of Si/Gun/Gu for the relevant licensed fisheries, the permitted fisheries and the reported fisheries; and(c) Land other than items (a) and (b) for which the ratio of amount of income for one year to the value of land is over the ratio provided by Ordinance of the Ministry of Strategy and Finance;12. In cases of land provided by Ordinance of the Ministry of Strategy and Finance, which is the land for manufacturing business of blocks, stone work sets and clay pipes, business for flower sale facilities, business for landscape crop growing, schools teaching automobile maintenance, heavy equipment maintenance, heavy equipment driving or courses for agricultural businesses, and other similar land, for which the ratio of amount of income for one year to the value of land is over the ratio provided by Ordinance of the Ministry of Strategy and Finance;13. Land (limited to smaller than 660 square meters) falling under the standard provided by Ordinance of the Ministry of Strategy and Finance by taking into account whether possible to newly construct the house, which is one lot of bare land (referring to land which does not correspond to subparagraphs 1 through 12, and which is not used for any purposes) owned by one household which does not own any house; and14. Other land similar to subparagraphs 1 through 13, which are the land admittable as having a direct relation with business by taking into account of land utilization, whether implementing the related Acts and subordinate statutes, etc., which are provided by Ordinance of the Ministry of Strategy and Finance.(2) In applying the provisions of paragraph (1) 2 (c), 10, 11 (c) and 12, the ratio of amount of income for one year to the land value (hereafter in this paragraph referred to as the “income amount ratio”) shall be calculated by taxable periods, but it shall be the larger of any of the ratio in each of the following subparagraphs. In such cases, where the amount of income generated from relevant land may be classified by lots of land, the ratio of amount of income shall be calculated by lots:1. Ratio obtained by dividing the annual amount of income in the relevant taxable period by the land value in the relevant taxable period; and2. (Annual amount of income in the relevant taxable period + amount of annual income in the immediately preceeding taxable period) ÷ (Land value in the relevant taxable period + Land value in the immediately preceeding taxable period).(3) The term “amount of annual income” in paragraph (2) means the amount calculated by the methods as provided for in each of the following subparagraphs:1. It shall be the amount of income of one taxable period of the business related to the relevant land, buildings, facilities, etc., and where a contract for a lease on deposit basis or rent on the relevant land, buildings, facilities, etc. is concluded and the money for lease on deposit basis or guarantee money is received, the amount calculated by applying mutatis mutandis the formula as provided for in Article 49-2 (1) of the Enforcement Decree of the Value-Added Tax Act shall be added up;2. Where the relevant actual reversion is undividable as the amount of income of one taxable period is related jointly to the relevant land, buildings, facilities, etc. (hereafter referred to as the “relevant land, etc.” in this subparagraph) and other land, buildings, facilities, etc. (hereafter referred to as “other land, etc.” in this subparagraph), the amount of income of one taxable period related to the relevant land, etc. shall be calculated by the following formula:Amount of income one taxable period related to the relevant land, etc.= Amount of income one taxable period related jointly to the relevant land, etc. and other land, etc. × (Value of the relevant land in the relevant taxable period ÷ Aggregated amount of value of the relevant land and value of other land in the relevant taxable period); and3. Where the period for operating business on the relevant land during one taxable period is less than one year due to a newly opening of business, discontinuance of business, transfer of land or prohibition of use of land under the Acts and subordinate statutes and other inevitable reasons, the annual amount of income shall be calculated by converting the amount of income during relevant period into one year.(4) The term “land value of the relevant taxable period” in paragraphs (2) and (3) means the standard market price of the completion date of relevant taxable period (where transferring during the taxable period, the date of transfer).(5) In applying the provisions of Article 104-3 (1) of the Act, where multitude lots of land in connection are used in bundle for one usage, and its total area exceeds the area to become the standard for determination whether corresponding to non-business land (hereafter referred to as the “standard area” in this paragraph), the whole or a part of the land under the order of each item of relevant subparagraph according to the classification of following subparagrahs shall be deemed as the portion to exceed the standard area:1. Where no buildings nor facilities exist on land:(a) Land whose acquisition timing is late; and(b) Where the acquisition time is same, land selected by resident; and2. Where buildings or facilities exist on land:(a) Land whose acquisition timing is late from among land excluding the floor area of buildings or horizontal reflection area of facilities; and(b) Where the acquisition timing is same, land selected by residents.(6) In applying the provisions of Article 104-3 (1) of the Act, where one or more buildings (including facilities, etc.; hereafter the same shall apply in this paragraph) are on the land, and the portion used for the residence and specific business of a resident (including a partial building used for residence and specific business among a number of buildings; hereafter referred to as the “specific usage portion” in this paragraph) and the different portion are located altogether in the buildings, the calculation of an area, etc. of annexed land of the specific usage portion from among the building’s floor area and the annexed land’s area (hereafter referred to as the “annexed land’s area, etc.” in this paragraph) shall be made under the following formula:1. Where one building is used for complex usage:Annexed land’s area, etc. of specific usage portion = Annexed land’s area, etc. of a building × Total area of specific usage portion / Total area of a building; and2. Where many buildings of different usage are located in the same boundary:Annexed land’s area of specific usage portion = All annexed land’s area of many buildings × Floor area of specific usage portion / Floor area of many buildings.(7) When applying Article 104-3 (1) of the Act, the classification of business types shall be based on the Korea Standard Industrial Classification notified publicly by the Commissioner of the National Statistical Office under the Statistics Act except cases where there exist special provisions in this Decree. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

The term “magnification ratio prescribed by Presidential Decree by areas” in Article 104-3 (1) 5 of the Act means the magnification ratio falling under each of the following subparagraphs:1. Five times the land within an urban area; and2. Ten times the land outside an urban area.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

The term “agricultural and fishing village houses corresponding to the scope and criteria prescribed by Presidential Decree and their annexed land” in Article 104-3 (1) 6 of the Act means the houses and the annexed land thereto, equipped with all the requirements of the following subparagraphs:1. Total area of a building shall be within 150 square meters and the area of land annexed to the building shall be within 660 square meters;2. Value of the building and its annexed land shall be not more than 100 million won of the standard market prices; and3. It shall be located in the area excluding the area corresponding to any item of Article 99-4 (1) 1 of the Special Tax Treatment Control Act.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) Land falling under any of the following subparagraphs under Article 104-3 (2) of the Act shall be deemed land not falling under any subparagraph of Article 104-3 (1) of the Act during the period as provided for in the relevant subparagraphs, and it shall be determined whether it falls under non-business land under the provisions of the same paragraph (hereinafter referred to as “non-business land”): <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. After acquiring the land, its use has been prohibited or restricted under Acts and subordinate statutes: Period for which its use has been prohibited or restricted;2. After acquiring the land, the land within the protection districts designated under the Protection of Cultural Properties Act: Period designated as the protection districts;3. Land falling under subparagraphs 1 and 2, which has been inherited: Period calculated pursuant to subparagraphs 1 and 2 from the day the inheritance commenced; or4. Other land falling under inevitable reasons prescribed by Ordinance of the Ministry of Strategy and Finance taking into account other legal restriction due to public interest, restructuring of an enterprise or an inevitable reason, the current status of land, reasons for aquisition or utilization situations, etc.: Period prescribed by Ordinance of the Ministry of Strategy and Finance.(2) As for the land falling under any of the following subparagraphs under Article 104-3 (2) of the Act, the date provided for in each of relevant subparagraphs shall be deemed as the transfer date, and it shall be determined whether it falls under the non-business land by applying the provisions of Article 168-6: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Land transferred under the auction under the Civil Execution Act: First auction date;2. Land transferred under the public sale under the National Tax Collection Act: First public sale date; and3. Other land falling under inevitable reasons provided by Ordinance of the Ministry of Strategy and Finance, such as cases where a specific period is required for transfer of land.(3) Land falling under any of the following subparagraphs shall not be deemed non-business land pursuant to Article 104-3 (2) of the Act: <Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21062, Oct. 7, 2008; Presidential Decree No. 21195, Dec. 31, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Farmland, forest land and pasture inherited before December 31, 2006, which are transferred not later than December 31, 2009;1-2. As farmland, forest land and pasture which a lineal ascendant has cultivated directly for not less than eight years while living in the location of land prescribed by Ordinance of the Ministry of Strategy and Finance, land of which inherited or donated by the relevant lineal ascendant: Provided, That land in the urban area (excluding the green belt zone and development restriction zone) under the National Land Planning and Utilization Act at the time of transfer shall be excluded;2. Farmland, forest land and pasture owned for not less than 20 years before December 31, 2006, which are the land transferred not later than December 31, 2009;3. Land which is purchased by means of consultation or expropriated pursuant to the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and other Acts, and of which business authorization is published before December 31, 2006 or of which acquisition date (referring to the date of acquisition of the relevant land by an ancestor in case of land inherited) is five years before the business authorization is published;4. Farmland falling under Article 104-3 (1) 1 (b) of the Act and any of the following items:(a) Farmland possessed by the clan (limited to that acquired before December 31, 2005); and(b) Farmland acquired by inheritance, which is the land transferred within five years from the day of commencing the inheritance; and5. Other land falling under the inevitable reasons prescribed by Ordinance of the Ministry of Strategy and Finance taking into account the statutory restrictions under Acts and subordinate statutes due to public interest, restructuring of an enterprise or inevitable reasons, current status of land, reasons for acquisition or utilization status, etc.[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]

(1) Any person who intends to file a preliminary return under Article 105 (1) of the Act shall submit an estimated return on the tax base of transfer income and an accounting statement of voluntary payment prescribed by Ordinance of the Ministry of Strategy and Finance along with the documents according to the classifications under the following subparagraphs to the superintendent of the competent tax office: Provided, That in cases where he/she has reported the actual transaction prices pursuant to Article 163(11) 2, affixing his/her seal which is used in a certificate of his/her seal impression under subparagraph 1 (d) and presentation of a certificate of his/her seal impression under item (e) of the same subparagraph may be omitted: <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Documents falling under each of the following items where the assets under Article 94 (1) 1 and 2 of the Act are transferred:(a) and (b) Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>(c) A certificate of scheduled land of substitution, an application for verification of temporary grade, and documents, etc. capable of verifying the details of management and dispositions;(d) A copy of the contract for sale and purchase of the relevant asset. In such cases, a seal to be used for a certificate of seal impression of the transferee shall be affixed on a copy of contract;(e) A certificate of seal impression of a transferee;(f) A specification of capital expenditures amount and transfer expenses, etc.; and(g) A specification of the depreciation expense; and2. Documents falling under each of the following items where the assets under Article 94 (1) 3 and 4 of the Act are transferred:(a) A copy of contract for sales and purchase of relevant assets;(b) A specification of transfer expenses, etc.;(c) In cases falling under the major stockholders, etc. of a corporation (including other corporations than the listed-stock corporations; hereafter the same shall apply in this Chapter), a specification of stock transactions as stipulated by Ordinance of the Ministry of Strategy and Finance; and(d) In cases of one stockholder of a corporation and other stockholders who fall under the latter part of Article 157 (4) 1, the written report on major stockholders, etc. as stipulated by Ordinance of the Ministry of Strategy and Finance.(2) The superintendent of the competent tax office, who receives the preliminary return referred to in the provisions of paragraph (1), shall confirm the documents related to the transfer of assets provided for in the provisions of Article 94 (1) 1 and 2 of the Act by mutual use of the administrative information provided for in Article 21 (1) of the Electronic Government Act: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008>1. The certified copies of the land register and the building register; and2. The certified copy of the land and building register book.[This Article Wholly Amended by Presidential Decree No. 17456, Dec. 31, 2001]

A person who makes a voluntary payment by preliminary return under Article 106 (1) of the Act shall submit a preliminary return on the tax base of transfer income along with a preliminary return on the tax base of transfer income and an account statement of voluntary payment as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008>

Where a person who has failed to make a voluntary payment by preliminary return under Article 106 of the Act makes a voluntary payment by preliminary return due to the transfer of other assets after the expiry of such return deadline, the deduction of the paid amount of tax by preliminary return, when the amount of tax, subject to the amount of transfer income from the asset for which no voluntary payment by such preliminary return is made, has been concurrently paid, shall be 10/100 of the amount of tax payable voluntarily by preliminary return. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>

(1) In making a final return under Article 110 (1) of the Act, the documents falling under each subparagraph of paragraph (2) shall be attached to a final return on the tax base of transfer income and an account of voluntary payment as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008>(2) The term “documents prescribed by Presidential Decree” in Article 110 (5) of the Act means the documents falling under each of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008>1. Documents provided for in the provisions of each subparagraph of Article 169 (1) and (2);2. A copy of the notification under Article 177 (1) (a person who has failed to make a preliminary return under Article 105 of the Act shall attach an account statement of the transfer income as determined by Ordinance of the Ministry of Strategy and Finance); and3. Where the amount of income is calculated under Article 101 of the Act, an account statement of the non-inclusion among necessary expenses.(3) Where a person who has made a final return falls under Article 96 (3) of the Act as an alteration has occurred in his/her amount of transfer income because a corporation makes a return on the tax base of corporation tax under the Corporation Tax Act after the expiry of the final return deadline, or the amount included in the taxable revenue has been disposed of as dividend income, bonus or other income by the superintendent of the competent tax office in determining or revising the tax base of corporation tax, if the relevant corporation (where a resident has received the notification under the proviso to Article 192 (1), the relevant resident) has made a voluntary payment by an additional return (including the return on refund) by not later than the end of two months after the month whereto belongs the date on which the notice of the change of amount of income under Article 192 (1) has been received (where the amount of transfer income has been changed by a return made by a corporation under the Corporation Tax Act, the return deadline of corporation tax by the relevant corporation), it shall be deemed to have been paid by self-assessment within the term under Article 110 of the Act. <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>(4) The term “cases prescribed by Presidential Decree” in the proviso to Article 110 (4) of the Act means those falling under any of the following subsparagraphs: <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>1. Where a person, who has made two or more preliminary returns on the assets subject to progressive rates in the current year, fails to make a return summing up the amount of transfer income already reported under Article 107 (2) of the Act;2. Where the computed amount of tax for transfer income already reported varies if Article 103 (2) of the Act is applied to cases where the rights on the land, building or real estate, and other assets under Article 94 (1) 1, 2 and 4 of the Act are transferred twice or more; and3. Where the computed amount of tax for transfer income already reported comes to vary if Article 103 (2) of the Act is applied to cases where the stocks, etc. under Article 94 (1) 3 of the Act are transferred twice or more.

(1) A person who makes a voluntary payment by final return under Article 111 of the Act shall pay it to the superintendent of the competent tax office along with a final return, or pay it to the Bank of Korea or to the postal service offices, submitting a statement of payment under the National Tax Collection Act along with a final return on the tax base for transfer income and an account statement of voluntary payment. <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>(2) In case where a statement of payment is submitted to the Bank of Korea or to the postal service offices along with a final return on the tax base for transfer income and an account statement of voluntary payment under paragraph (1), it shall be deemed that a return under Article 110 (1) of the Act has been made. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>

The amount of tax payable in installments under Article 112 of the Act shall be governed by each of the following subparagraphs:1. In cases where the amount of tax payable is 20 million won or less, the amount in excess of ten million won; and2. In cases where the amount of tax payable is more than 20 million won, the amount not exceeding 50/100 of the relevant amount of tax.

(1) Bonds under Article 112-2 (1) of the Act means the compensation bonds issued by the operator of a project under Article 63 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>(2) Receipt value of the bonds to be appropriated as payment in kind under Article 112-2 (1) of the Act shall be governed by the amount assessed by applying mutatis mutandis Article 63 (1) 2 of the Inheritance Tax and Gift Tax Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(3) The payment of the transfer income tax in kind under Article 112-2 (1) of the Act shall be limited to cases where the paid amount of tax in the year wherein the land, etc., are transferred exceeds ten million won, with limiting to the amount of transfer income of tax on the gains from transfer which have accrued from the transfer to, or the expropriation by, the operator of the public project under the said paragraph of the said Article.(4) A person who intends to pay the transfer income tax in kind under paragraph (3) shall file an application with the superintendent of the competent tax office not later than ten days prior to the return deadline under Articles 105 and 110 of the Act under the conditions as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(5) The superintendent of the competent tax office shall, upon receipt of an application under paragraph (4), assess the receipt value of the bonds under paragraph (2) by not later than the return deadline under Articles 105 and 110 of the Act, and shall notify the applicant of the status of a decision on such payment in kind.(6) The term “case where Presidential Decree prescribes” in Article 1122 (1) (proviso) of the Act means the cases where the Minister of Strategy and Finance deems it necessary for the adjustment of revenue or currency. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Wholly Amended by Presidential Decree No. 15191, Dec. 31, 1996]

(1) Deleted. <by Presidential Decree No. 16664, Dec. 31, 1999>(2) The tax base and amount of tax under Article 114 of the Act shall be determined or revised by the superintendent of the competent tax office: Provided, That in cases where the Commissioner of the National Tax Service deems particularly important, it shall be determined or revised by commissioner of the competent regional tax office. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>(3) In cases of paragraph (2) (proviso), the superintendent of the competent tax office shall without delay forward the documents necessary for the determination or revision of the relevant tax base, amount of tax or the amount of transfer income to commissioner of the competent regional tax office. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>(4) The commissioner of the competent regional tax office who has examined, determined or revised the amount of transfer income under paragraph (2) (proviso) shall without delay notify the superintendent of the competent tax office of the matters of such examination, decision or revision. <Amended by Presidential Decree No. 16664, Dec. 31, 1999>(5) The term “case prescribed by Presidential Decree, considering the tax base and amount of tax of the transfer income or whether or not the person liable for the final return reassesses the actual transaction value” in Article 114 (5) of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>1. Where the amount of transfer income tax calculated to be paid by presuming the value entered in the register as the actual selling price is less than 500 thousand won; and2. Where the amount of transfer income tax calculated to be paid by presuming the value entered in the register as the actual selling price is not less than 500 thousand won, but all the following requirements are met:(a) The superintendent of the competent tax office or commissioner of the competent regional tax office has issued a notice to the person liable for filing the final return, stating that the tax base and amount for the transfer income should be determined by presuming the value entered in the register as the actual selling price, unless the person files the tax base return after the term under Article 45-3 of the Basic Act for National Taxes (hereafter referred to as the “return after the term” in this Article) along with the accompanying documents specified in Article 173 (2); and(b) The person liable for filing the final return fails to file the return after the term within 30 days of the day on which such notice under item (a) is delivered.

(1) The term “cases prescribed by Presidential Decree” in the main sentence of Article 114 (5) of the Act means cases falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Where the books, sales contract, receipts and other evidentiary documents required for verification of the actual transaction price at the time of transfer or acquisition do not exist or their key parts are incomplete; and2. Where the contents of books, sale contract, receipts and other evidential documents are apparently false in light of the value of example sales and the appraised values as assessed by the certified public appraisal corporation under the Public Notice of Values and Appraisal of Real Estate Act (hereafter in this Article referred to as the “certified public appraisal corporation”).(2) The term “acquisition price converted by the method as determined by Presidential Decree” in Article 114 (7) of the Act means the acquisition price converted by the method falling under any of the following sub-paragraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008>1. In cases of stocks, etc. under Article 94 (1) 3 of the Act or other assets in Article 94 (1) 4 of the Act, the amount calculated by the following formula: and Actual transaction price at the time of transfer, price of transaction examples under paragraph (3) 1, or appraisal price under paragraph (3) 2
×
Standard market price at time of acquisition
Standard market price at time of transfer
2. In cases of the rights to acquire the land, building and real estate under Article 96 (1) and (2) 1 through 9 of the Act (provisions of subparagraph 6 shall apply only to the assets acquired before a fictitious acquisition date under paragraph (4)), the amount calculated by the following formula: Actual transaction price at time of transfer, the price of transaction examples under paragraph (3) 1, or appraisal price under paragraph (3) 2

×
Standard market price at time of acquisition
Standard market price at time of transfer (in cases of falling under Article 164 (8), standard market price at time of transfer under same paragraph)
(3) Where the transfer price or the acquisition price is decided on estimate or revised under Article 114 (7) of the Act, it shall be based on the amount computed by successively applying the methods falling under the following subparagraphs: Provided, That where the value of transaction examples under subparagraph 1 or the appraised value under subparagraph 2 is the value, etc. from the transaction with a person who is in special relations under Article 98 (1), and is deemed to be objectively unfair, it shall not be applied: <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. In cases where there are transaction examples of assets bearing the identity or similarity with the relevant assets (excluding stocks, etc. of listed stock corporations or KOSDAQ-listed corporations) within three months before and after the date of transfer or acquisition respectively, such amount;2. In cases where there exist the appraisal prices which are appraised by two or more certified public appraisal corporations on the relevant assets (excluding stocks, etc.) within three months before and after the date of transfer or acquisition respectively, and deemed to bear credibility (limited to those whose standard date of appraisal is within three months before and after the date of transfer or acquisition respectively), the average value of such appraisal prices;3. Acquisition price converted under paragraph (2); and4. Standard market value.(4) When applying paragraph (3) 1 through 3 to the assets (including the assets inherited or donated) acquired before the date under Article 8 of Addenda of the Act No. 4803, the amended Act of the Income Tax Act (hereinafter referred to as the “date of fictitious acquisition”), the acquisition value as of the date of fictitious acquisition shall be a larger value of the values under the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Prices under paragraph (3) 1 through 3 as of the date of fictitious acquisition; and2. In cases where the actual transaction price at the time of acquisition or the price under paragraph (3) 1 and 2 is confirmed, the price which sums up the actual transaction price of the relevant assets or the price under paragraph (3) 1 and 2, and the amount computed by multiplying the said price by the rising rate of the producers’ price during the retention period from the acquisition date to the date immediately preceding the fictitious acquisition date.(5) The Commissioner of the National Tax Service may, in cases where he/she deems it necessary for the superintendent of the competent tax office of the address or commissioner of the competent regional tax office in making a decision or revision of the amount of transfer income, let him/ her ensure fairness in such decision or revision by consulting with persons of extensive learning and experience in the appraisal and evaluation of real estate pursuant to Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999]

(1) In making a notification under Article 114 (8) of the Act, it shall be made in writing stating the tax base, tax rate, amount of tax and other necessary matters on a tax notice. In such cases, if commissioner of the competent regional tax office has determined or revised the tax base and the amount of tax, such purport shall be mentioned in addition. <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20618, Feb. 22, 2008>(2) The provisions of paragraph (1) shall be applied to cases where no payable tax exists.(3) The superintendent of the competent tax office shall, in cases where he/she levies the transfer income tax of the decedent on two or more heirs, distribute the tax base and amount of tax among them based on their shares, and notify thereof by heir, respectively.

When applying Article 114 (9) of the Act, the superintendent of the competent tax office or commissioner of the competent regional tax office shall request, by a written document stating the matters falling under the following subparagraphs, the representative of an investment trading business operator or an investment intermediary business operator under the Capital Market and Financial Investment Business Act and a corporation which has issued stocks or certificates of investment to furnish the transaction particulars of the stocks, etc. and other necessary matters: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Personal matters of the traders;2. Purpose of use; and3. Details of the requested data.[This Article Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999]

(1) The term “right to real estate determined by Presidential Decree” in subparagraph 2 of Article 118-2 of the Act means that (including the unregistered transferred assets) under each of the following subparagraphs:1. Superficies, lease on a deposit basis, and leasehold; and2. Right to acquire real estate (including the right to acquire a building upon completion of its construction and its appurtenant land).(2) The term “stocks prescribed by Presidential Decree” in subparagraph 3 of Article 118-2 of the Act means stocks, etc. listed in a foreign market as a market similar to the securities market as stocks, etc. issued by a foreign corporation (excluding the stocks, etc. listed in securities market and stocks, etc. falling under paragraph (3)) and stocks, etc. issued by a domestic corporation.<Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(3) The term “assets determined by Presidential Decree” in subparagraph 4 of Article 118-2 of the Act means the assets located overseas, which are other assets under the provisions of Article 94 (1) 4 of the Act. <Amended by Presidential Decree No. 18173, Dec. 30, 2003>(4) The provisions of Article 158 (2) and (3) shall apply mutatis mutandis to cases of levying the transfer income tax under paragraph (3).[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) In cases of calculating the market value of assets overseas under Articles 118-3 (1) (proviso) and 118-4 (1) 1 (proviso) of the Act, if the value falling under any of the following subparagraphs is confirmed, such value shall be the market value of the relevant assets: Provided, That the provisions of subparagraphs 2 through 4 shall not apply to such cases as the stocks, etc. under Article 178-2 (2), and the assets under Article 94 (1) 4 (b) of the Act and Article 158 (1) 1 and 5 of this Decree (in cases of assets under Article 94 (1) 4 (b) of the Act, limited to the stocks, etc. under the same subparagraph) from among the assets under Article 178-2 (3): <Amended by Presidential Decree No. 18173, Dec. 30, 2003>1. Values assessed by a foreign government (including local governments) in connection with a taxation on the transfer of assets overseas;2. Actual transaction prices taking place within 6 months before and after the date of transfer or acquisition of the assets overseas;3. Values assessed by a certified public appraisal institution within 6 months before and after the date of transfer or acquisition of the assets overseas; and4. Compensation price of an overseas asset which has been fixed by an expropriation, etc. within six months before and after the date of transfer or acquisition of the assets overseas.(2) The term “method determined by Presidential Decree” in Articles 1183 (1) (proviso) and 118-4 (1) 1 (proviso) of the Act means the method of assessment falling under any of the following subparagraphs: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>1. In cases of real estate and the right to real estate, the assessment of the value of an asset overseas by applying mutatis mutandis Articles 61, 62, 64 and 65 of the Inheritance Tax and Gift Tax Act: Provided, That if an assessment of the value of assets overseas by applying mutatis mutandis Articles 61, 62, 64 and 65 of the Inheritance Tax and Gift Tax Act is not appropriate, it means an assessment by a certified public appraisal institution established under the Act on Publication of Real Estate Prices and Their Appraisal and Evaluation; and2. In cases of a computation of the values of securities, an assessment by applying mutatis mutandis the evaluation method under Article 63 of the Inheritance Tax and Gift Tax Act. In such cases, the term “two months respectively before and after the standard date of appraisal” in paragraph (1) 1 (a) of the same Article shall be deemed “one month before the date of transfer or acquisition”.[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The provisions of Article 163 (1) and (2) shall apply mutatis mutandis to cases of computing the actual transaction price required for acquisition under the text of Article 118-4 (1) 1 of the Act.(2) Deleted. <by Presidential Decree No. 18173, Dec. 30, 2003>(3) The term “capital expenditure determined by Presidential Decree” in Article 118-4 (1) 3 of the Act means those falling under any of the subparagraphs of Article 163 (3). <Amended by Presidential Decree No. 17456, Dec. 31, 2001>(4) The term “transfer cost determined by Presidential Decree” in Article 118-4 (1) 4 of the Act means those falling under any of the subparagraphs of Article 163 (5).[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) In cases of calculating gains from transfer under Article 118-4 (2) of the Act, it shall be computed under the standard exchange rate or arbitrated exchange rate pursuant to the Foreign Exchange Transactions Act as of the date of receiving or paying a transfer price and necessary expenses. <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>(2) In applying the provisions of paragraph (1), in cases of a condition of long-term installment arrangement under Article 162 (1) 3, the dates of transfer and acquisition under the said subparagraph shall be deemed the date of receiving or paying the price of transfer or acquisition. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The term “such amount of transfer income of tax of assets abroad as determined by Presidential Decree” in the text of Article 118-6 (1) of the Act (hereafter in this Article, referred to as “amount of transfer income of tax on assets abroad”) means the amount of tax falling under any of the following subparagraphs, which has been imposed by a foreign government (including the local governments) on the transfer income of assets abroad:1. Amount of tax imposed by making the amount of transfer income of an individual as the tax base; and2. Additional amount of tax on the tax imposed by making the amount of transfer amount of income of an individual as the tax base.(2) A person, who intends to receive the deduction of the transfer income tax of assets abroad or to have it included in the necessary expense under Article 118-6 (1) of the Act, shall submit an application form for the deduction of transfer income tax of assets abroad (included in the necessary expense) prescribed by Ordinance of the Ministry of Strategy and Finance within the term of final return under Article 110 of the Act (including a preliminary return under Article 105 of the Act) to the superintendent of the competent tax office. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The term “tools prescribed by Presidential Decree” in subparagraph 4 of Article 119 of the Act means transport appliances, tools, machineries and equipment. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003>(2) The term “income prescribed by Presidential Decree” in the main sentence of subparagraph 5 of Article 119 of the Act means the income falling under the following subparagraphs which accrue from the business operated in Korea from among the businesses under Article 19 of the Act: Provided, That in cases of a nonresident who operates the business both home and abroad, the income falling under each of the following subparagraphs shall be deemed the income accruing from the business operated domestically: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. In case where a nonresident transfers the inventory assets in Korea (including cases where the relevant inventory assets are transferred after manufacturing, etc. in Korea) without manufacturing, processing, fostering and any other activities to increase values thereof in a foreign country on the inventory assets acquired abroad by transfer (hereafter in this Article, referred to as “manufacturing, etc.”), all income accruing from such transfer in Korea;2. In case where a nonresident transfers in Korea the inventory assets on which a manufacturing, etc. has been made abroad (including cases where the relevant inventory assets are transferred after manufacturing, etc. in Korea), when presumed that he/she had acquired the relevant asset under ordinary trade conditions with others who have engaged in manufacturing, etc. overseas, in cases where transferring such assets (including cases of transfer after a manufacturing, etc. in Korea), the income which would be accrued from such transfer, from among the income accruing from such transfer;3. In case where a nonresident transfers overseas the inventory assets on which a manufacturing, etc. has been made in Korea (including cases where the relevant inventory assets are transferred after manufacturing, etc. abroad), when it is presumed that he/she had transferred the relevant inventory asset produced in Korea under ordinary trade conditions to others overseas, the income which would accrue from such manufacturing, etc. in Korea, from among income accruing from such transfer;4. In case where a nonresident concludes a contract for the construction, installation, assembly and other operations overseas, or where performing operation in Korea by providing the necessary persons or materials, all income accruing from the relevant operation;5. In case where a nonresident operates accident insurance business or life insurance business both in Korea and abroad, the income accruing from the insurance contracts which have been concluded through the business office related to the relevant business or the agent for concluding the insurance contracts, in Korea, from among the income accruing from the relevant business;6. In case where a nonresident operating a publishing business or broadcasting business engages in the business related to advertisement both in Korea and abroad for others, the income accruing from the advertisement performed in Korea, from among the income accruing from the business related to the relevant advertisement;7. In case where a nonresident runs the international transport business by ships both in Korea and abroad, the income accruing from the business in Korea of the relevant nonresident which are assessed on the basis of the amount of income accruing in connection with the passengers boarding or the cargos shipped in Korea;8. In case where a nonresident operates the international transport business by aircraft both in Korea and abroad, the income accruing from the business in Korea of the relevant nonresident which are computed by the method as determined by Ordinance of the Ministry of Strategy and Finance in consideration of the amount of income and expenses in connection with the passengers boarding or the cargos shipped in Korea, the value of fixed assets for a domestic business, and other levels, etc. of contributions of such domestic business to the income accruing from the relevant transport business;9. In case where a nonresident operates businesses other than those in subparagraphs 1 through 8 both in Korea and abroad, when assumed that a separate independent businessman runs each business by dividing the business related to the relevant one into a domestic business and a foreign one, and that a transaction has been made between these independent businessmen under the transaction price based on the ordinary conditions of trade , the income accruing in relation to such domestic business which are assessed in consideration of the factors determined to be reasonable in measuring the income accruing from such domestic business, or the amount of income, expenses, and earnings, etc. relevant to such domestic business, from among the income accruing from such business;10. Income accruing from investment or similar activity in the stocks or equity shares issued by a foreign corporation which are listed in the securities market; and11. Income accruing from the transfer of industrial, commercial or scientific machinery, installation, apparatus, transport appliances, tools, utensils and equipments by the nonresident.(3) Notwithstanding the provisions of paragraph (2), the income accruing overseas and falling under each of the following subparagraphs, which revert to a domestic place of business, shall be deemed included in the income accruing from domestic sources under subparagraph 5 of Article 119 of the Act: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>1. Income accruing from investing in the securities overseas, loaning cash to a person located abroad, or other similar activities;2. Income accruing from renting, permitting for use, transferring or exchanging the asset or the rights overseas;3. Income accruing from issuing, acquiring, transferring or exchanging the assets overseas, such as the stocks or bonds; and4. Other income as determined by Ordinance of the Ministry of Strategy and Finance.(4) Where a nonresident performs overseas the advertisement, propagation, collection and provision of information, market survey, and other activities of preliminary or supplementary nature for the business run in Korea, or where he/she performs these activities in Korea for the business run overseas, it shall be deemed that no income accrue from such activities.(5) Where the inventory assets under paragraph (2) 1 through 3 fall under any of the following subparagraphs, the provisions of the same paragraph shall apply, deeming that the relevant inventory assets are transferred in Korea: <Amended by Presidential Decree No. 18173, Dec. 30, 2003>1. Where the inventory assets are located in Korea immediately before their transfer to the transferee, or where they are managed through the business run by the relevant nonresident in his/her domestic place of business, who is the transferor;2. Where a contract for the transfer of the relevant inventory assets is concluded in Korea; and3. Where the important portions from among activities such as taking orders or making negotiations for concluding contracts for the transfer of relevant inventory assets are performed in Korea.(6) The term “personal services prescribed by Presidential Decree” in the former part of subparagraph 6 of Article 119 of the Act means the services falling under any of the following subparagraphs: <Amended by Presidential Decree No 19327, Feb. 9, 2006>1. Services provided by lawyers, certified public accountants, tax consultants, architects, registered surveyors, patent attorneys, and other similar professionals;2. Services provided by persons of professional knowledge or special skill in the field of scientific technology or business management and other similar ones, making use of such knowledge or skill;3. Services provided by the professional athletes; and4. Services provided by actors, musicians, and other entertainers.(7) The term “expenses prescribed by Presidential Decree” in the latter part of subparagraph 6 of Article 119 of the Act means air fare, accommodation expenses or meal expenses which the person who is provided with manpower service directly paid to an airline, accommodation business or restaurant business with regard to the provision of manpower service. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>(8) The term “wages received in consideration of service as prescribed by Presidential Decree” in subparagraph 7 of Article 119 of the Act means those falling under the following subparagraphs:1. Wages received by the crew of ships sailing overseas, pelagic fisheries ship and aircraft operated by a resident or a domestic corporation; and2. Wages received in the capacity of officer of a domestic corporation.(9) The term “income prescribed by Presidential Decree which are retirement benefits” in subparagraph 8 of Article 119 of the Act means the pension and retirement benefits commensurate with the service provided in Korea.(10) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>(11) The term “income prescribed by Presidential Decree” in the part other than the items of subparagraph 12 of Article 119 of the Act means the income falling under the following subparagraphs: <Amended by Presidential Decree No. 15500, Oct. 25, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17339, Aug. 14, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Income accruing from the transfer of the securities or equity shares by a nonresident: Provided, That with respect to the income accruing from a transfer of the securities or equity shares through securities markets (including cases where the stocks are transferred by intermediation under Article 78 of the Capital Market and Financial Investment Business Act), such case shall be excluded as where the relevant transferor and a person in special relations under Article 98 (1) with him/her possess, in the year to which the transfer date of the relevant securities or equity shares belongs and for the period of the preceding five years, less than 25/100 of the gross amount of issued stocks or that of equity shares of a corporation which has issued such stocks or equity shares (in cases of the stocks or equity shares issued by a foreign corporation, the gross amount of stocks or equity shares listed in the securities market);2. Income accruing from transfer of securities other than stocks and equity shares by a nonresident having a domestic place of business: Provided, That the income subject to a taxation under subparagraph 1 of Article 119 of the Act at the time of transfer of the relevant securities, shall be excluded; and3. Income accruing from transfer of securities other than the stocks or equity shares by a nonresident, having no domestic place of business, to a domestic corporation, a resident, or the place of business of a nonresident or foreign corporation: Provided, That such income shall be excluded as those subject to a taxation under subparagraph 1 of Article 119 of the Act at the time of transfer of relevant securities.(12) An income acquired by a nonresident, having no domestic place of business, through derivatives on exchange, shall not be deemed a domestic withholding income. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(13) The term “indemnity prescribed by Presidential Decree” in subparagraph 13 (b) of Article 119 of the Act means the compensation for losses by violation or termination of a contract on property rights, and which are the value of money or other valuables indemnified in excess of the losses on the payment itself consisting the original contract terms in spite of whatever pretext. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(14) Article 158 (3) shall apply mutatis mutandis to the calculation of the total amount of assets and the value of assets under subparagraph 9 (b) of Article 119 of the Act. In such cases, the “transfer date” shall be deemed the “beginning date of the business year to which the transfer date belongs”. <Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 21301, Feb. 4, 2009>(15) The term “nonresident in special relations prescribed by Presidential Decree” in subparagraph 13 (i) of Article 119 of the Act means a nonresident in relations falling under any of the following: <Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>1. Special relations with a resident or a domestic corporation under Article 2 (1) of the Act for the Coordination of International Tax Affairs; and2. Special relations with a nonresident or a foreign corporation under Article 23 (8) 1 (a) or (b).(16) The term “income generated from the increase in the value due to capital transaction prescribed by Presidential Decree” in subparagraph 13 (i) of Article 119 of the Act means income generated from the profits distributed to a nonresident who is a stockholder, etc. by another stockholder in special relations under the subparagraphs of paragraph (15) due to the transactions falling under any of the items of Article 88 (1) 8 or subparagraph 8-2 of the same paragraph of the Enforcement Decree of the Corporation Tax Act. <Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>(17) The amount equivalent to compensation money such as dividends, etc. received by the nonresident having no place of business in Korea by making the loan trade of securities (excluding securities, etc. under Article 102; hereafter the same shall apply in this paragraph) under the Capital Market and Financial Investment Business Act with the nonresident and foreign corporation having no place of business in Korea shall not be deemed as withholding income in Korea. <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>(18) In cases where the proviso to paragraph (11) 1 is applicable, the ratio of owned stocks or the ratio of investment shall be the ratio greater of the ratios calculating in accordance with the following guidelines: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. In cases where shareholders or investors (hereafter referred to as “shareholder or such” in this paragraph) acquire, or invests in (hereafter referred to as “invest” in this paragraph), stocks (hereafter referred to as “stocks” in this paragraph) of a domestic corporation or a foreign corporation (referring to a foreign corporation listed in the securities market) through a fund (referring to a legal entity in which case taxes are levied upon the shareholders or investors of such legal entity in connection with the gains from the transfer of stocks or investment securities for the purposes of taxation by the state of which the legal entity is a resident; hereinafter the same shall apply): The ratio of stocks owned by funds or the ratio of investment by funds. In such cases, the ratio shall be calculated by adding up the ratio of stocks owned by such funds or the ratio of investment by such funds if there are two or more funds involved in the investment; or2. In cases where shareholders or the like has made investment through a fund (hereafter referred to as “indirect investment” in this subparagraph) and direct investment without involving the fund (hereafter referred to as “direct investment” in this subparagraph) at the same time: The ratio calculated by adding up the ratio of stocks owned by the shareholders, or the like or the ratio of investment made by the shareholders or the like, through direct and indirect investments. In such cases, the ratio of indirect investment made by the shareholders or the like shall be calculated by multiplying the ratio of investment made by the share holders or the like in the fund by the ratio of investment made by the fund in domestic corporations, etc.

The term “persons prescribed by Presidential Decree” in Article 120 (3) of the Act means persons falling under any of the following subparagraphs:1. Persons who always keep the assets of a nonresident, and customarily delivers or transfers them;2. Persons as intermediaries, dealers on general consignment and other independent agents, who conduct the activities of important parts of business such as conclusion of contracts, mainly for the specified nonresident only (including cases where he/she displays activity in the normal phases of his/her own business); and3. Persons who collect insurance premiums or underwrite insurances on the insured article in Korea, for nonresidents who operate insurance business (excluding re-insurance business).

(1) The calculation of the tax base and amount of tax in cases of aggregate taxation under Article 122 of the Act shall be based on the following subparagraphs: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001>1. In the calculation of necessary expenses for allowance for bad debt under Article 28 of the Act, such bad debt shall be confined to that concerning the business operated domestically by a nonresident;2. In the calculation of necessary expenses for allowance for severance benefits under Article 29 of the Act, employees shall be limited to those who work regularly in Korea for business operated domestically by a relevant nonresident;3. Expenses under Article 33 (1) 1 through 4 and 12 of the Act shall include those imposed by a foreign government or foreign local government;4. In the calculation of necessary expenses for contribution or entertainment expenses under the Articles 34 and 35 of the Act, such contribution or entertainment expenses shall be confined to those concerning the business operated domestically;5. Sale of the commodities, etc. under the long-term installment plan under subparagraph 4 of Article 48 shall be confined to that concerning the business operated domestically by a nonresident;6. Construction, manufacturing and other services (including contracted construction and reservation sale) under the long-term installment plan under subparagraph 5 of Article 48 shall be confined to those concerning the business operated domestically by a nonresident;7. Depreciable property under Article 62 (2) 1 and 2 (a) through (d) shall be confined to that located in Korea from among depreciable assets of a nonresident;8. Inventory assets or securities under Articles 91 and 93 shall be confined to those located in Korea among the relevant assets of a nonresident;9. Intangible fixed assets under Article 62 (2) 2 (e) through (g) shall be confined to those to be reverted to the business operated domestically by a nonresident, or those concerning the assets in Korea of a relevant nonresident, from among the intangible fixed assets of a nonresident; and10. Interest income or dividend income under subparagraphs 1 and 2 of Article 119 of the Act shall be confined to those received in Korea.(2) Those unrelated to the accrual of domestic source income from among the expenses, such as sales costs, general management costs and other expenses incurred at a domestic place of business, which are determined by Ordinance of the Ministry of Strategy and Finance, shall not be included among necessary expenses under Article 27 of the Act. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In the determination of the amount of income for each taxable period of a nonresident’s domestic place of business, the joint expenses among those of a relevant main office or related branch offices, etc. controlling the relevant domestic place of business, which are reasonably connected with the accrual of domestic source income of relevant domestic place of business, shall be included among necessary expenses by distributing among the domestic place of business.(2) The scope and distribution method of the expenses to be distributed among the domestic place of business, the method of distributing expenses by business type, the method of converting foreign currency into won currency upon distribution of expenses, the submission of attached documents such as the account statement of expense distribution, and other necessary matters, shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

In aggregate taxation on the domestic source income of nonresident under Article 124 of the Act, the provisions concerning the report and payment by the residents among this Decree shall apply mutatis mutandis to reports and payments with regard thereto.

(1) The term “acquisition value and transfer expenses of the relevant securities confirmed as prescribed by Presidential Decree” in Article 126 (1) 1 of the Act, means the amount falling under any of the following subparagraphs, after confirming the acquisition value and transfer expenses of such securities by the receipt for investment amount or payment for the stocks, the transfer certificate, the receipt for purchase price, and other data proving the amount required for the investment, acquisition and transfer, which are to be submitted by the transferor of the securities under Article 179 (11) or his/her agent, not later than the date for a tax collection through withholding on the tax withholding agent: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Amount actually spent directly for the acquisition or transfer of relevant securities (including taxes, public charges or brokerage fees directly required following such acquisition or transfer): Provided, That in cases where such securities are equity shares or stocks, and they contain those acquired by transferring the whole or part of surplus funds of the corporation to the amount of contribution or capital, it shall be the amount computed by applying mutatis mutandis Article 14 (2) of the Enforcement Decree of the Corporation Tax Act; and2. The acquisition value of the securities transferred by the heir, donee and other persons corresponding thereto shall be the amount computed under subparagraph 1, by regarding the original decedent of relevant transferred property, the donor and other persons corresponding to them as the transferor of relevant securities: Provided, That in cases where the relevant securities have been subjected to taxation under the Inheritance Tax and Gift Tax Act, the market value at the time of inheritance or donation of the relevant securities.(2) In applying paragraph (1), the acquisition value to be deducted from the transfer value at the time of transfer of relevant securities by a nonresident retaining the securities of same item whose acquisition values are mutually different (in cases of bonds, referring to those of same item whose issuance conditions such as the face value, issuance date and maturity date, interest rate, etc. are identical), shall be calculated by the moving average method under Article 92 (2) 5. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(3) The term "awards, supplementary awards, etc. prescribed by Presidential Decree" in Article 126 (1) 2 of the Act means awards and supplementary awards under subparagraph 1 of Article 87. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(4) The term "amount of money prescribed by Presidential Decree" in Article 126 (1) 2 of the Act means an amount of money equivalent to 80/100 of an amount of money received by a non-resident: Provided, That in cases where necessary expenses actually involved exceed an amount of money equivalent to 80/100, the exceeding amount shall be included also. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>

(1) The term “normal price determined by Presidential Decree” in the main body of Article 126 (3) of the Act means the value computed by applying mutatis mutandis the method under Article 5 of the Act for the Coordination of International Tax Affairs and Article 4 of the Enforcement Decree of the same Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(2) The term “special relations determined by Presidential Decree” in Article 126 (3) 1 of the Act means relations falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19327, Feb. 9, 2006>1. A nonresident, and his/her spouse, linear blood relatives and siblings; and2. Where a nonresident owns directly or indirectly not less than 50% of the stocks with voting rights of a foreign corporation.(3) Where a normal price under paragraph (1) is incomputable, such normal price shall be the amount assessed by applying mutatis mutandis Article 99 (1) 3 through 6 of the Act. <Amended by Presidential Decree No. 17339, Aug. 14, 2001>(4) With regard to the calculation of the indirect ownership ratio of the stocks under paragraph (2) 2, the provisions of Article 2 (2) of the Enforcement Decree of the Act for the Coordination of International Tax Affairs shall apply mutatis mutandis. <Newly Inserted Amended by Presidential Decree No 19327, Feb. 9, 2006>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

Where transfer of securities falling under Article 126 (3) 1 of the Act has been made without going through the securities market, the payer of income accruing from transfer of the relevant securities shall submit an examination paper on stock transfer value between the outside persons in special relations prescribed by Ordinance of the Ministry of Strategy and Finance, not later than the payment deadline of the withholding tax under Article 156 (1) of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) A nonresident shall report and pay the amount equivalent to the withholding tax on income which has not been withheld, from among the income accruing from the transfer of stocks or equity shares, because he/she has failed to satisfy the tax base under the tax treaty at the time of transfer under Article 126-2 of the Act, to the superintendent of the competent tax office of the location of the domestic corporation issuing the relevant securities.(2) A nonresident who intends to report and pay the amount equivalent to the withholding tax on income which has not been withheld, from among income accruing from the transfer of stocks or equity shares under paragraph (1), shall submit a settlement return on income from transfer of the securities by nonresident as determined by Ordinance of the Ministry of Strategy and Finance, by dividing the gross amount of transferred stocks of relevant corporation which has been transferred in the same business year from the gross amount of transferred stocks for which the withholding tax has not been collected. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(3) The term “cases prescribed by Presidential Decree as cases of transferring to nonresident without a domestic place of business or to a foreign corporation” in the main body of Article 126-2 (3) of the Act means the cases of transferring securities in the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Securities, such as stocks that are taxed pursuant to Article 18 (4) 1 and 2 of the Enforcement Decree of the Special Tax Treatment Control Act; and2. Securities (refers to those traded outside the foreign securities markets) in Korean won traded in the foreign countries.(4) Any nonresident who intends to make a report and payment pursuant to Article 126-2 (3) of the Act shall make a report and payment to the superintendent of the tax office of the address of the domestic corporation that issued securities, such as the stocks concerned, etc. by preparing a return of nonresident on income from the transfer of securities as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The term “business income prescribed by Presidential Decree” in Articles 127 (1) 3, 129 (1) 3, 144 (1) and (2), and 164 (1) 3 of the Act means the income earned by providing a service under Article 12 (1) 4and 13 of the Value-Added Tax Act: Provided, That the income falling under any of the following subparagraphs shall be excluded herefrom: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Income amounting to the ratio of the price for medicines calculated as prescribed by Ordinance of the Ministry of Strategy and Finance out of business income earned by providing the service of compounding medicines under subparagraph 4 of Article 29 of the Enforcement Decree of the Value-Added Tax Act; and2. Income earned by providing a service under subparagraph 1 (f) of Article 35 of the Enforcement Decree of the Value-Added Tax Act.(2) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>(3) Persons who are liable to make the withholding of income taxes on revenue of the business income under Article 127 (8) of the Act shall be those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>1. A businessman under Article 28 (1) of the Act;2. A taxpayer of the corporation tax;3. The State, local government or the local governments association;4. A corporation established under the Civil Act and other Acts; and5. An organization deemed as a corporation under Article 13 (4) of the Basic Act for National Taxes.

The term “income from service fees determined by Presidential Decree” in Articles 127 (1) 7, 129 (1) 8, 144 (3) and 164 (1) 7 of the Act means the service fee in cases where the amount of service fees separately entered exceeds 20/100 of the value provided, in such cases where a businessman (including corporations) provides the service falling under one of the following subparagraphs, and enters service fees of a person providing services under subparagraph 1 (f) of Article 35 of the Enforcement Decree of the Value-Added Tax Act, along with such provided value (in cases of a businessmen subject to Article 25 of the Value-Added Tax Act, referring to a consideration for provision; hereafter in this Article, the same shall apply), on the invoice, tax bill, receipt, or sales slip of credit card trade, separately from such provided value (limited to cases where the service fee is not appropriated as his/her own revenue amount): <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20516, Dec. 31, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Service of food or lodging;1-2. Massage clinics, barbershops, sports massage places and other services provided at the places similar thereto;2. Services provided at taxable entertaining places under Article 1 (4) of the Individual Consumption Tax Act; and3. Other services determined by Ordinance of the Ministry of Strategy and Finance.[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) In cases where a financial institution under subparagraph 1 of Article 2 under the Act on Real Name Financial Transactions and Guarantee of Secrecy takes over, trades, mediates stocks or collective investment securities issued by a domestic corporation or stands proxy for the domestic corporation, Article 127 (2) of the Act shall apply as it is deemed that the relevant financial institution and the relevant domestic corporation have relations of proxy or delegation of withholding duty between them.(2) In cases where a trust business operator under the Capital Market and Financial Investment Business Act manages or has the custody of entrusted assets, Article 127 (2) of the Act shall apply as it is deemed that the relevant trust business operator and a person who grants an income belonging to the relevant entrusted assets have relations of proxy or delegation of withholding duty between them.[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]

(1) The withholding agent under Article 127 of the Act shall pay the withheld income tax to the competent tax office in charge of withholding, the Bank of Korea, or a postal service office along with a statement of payment under the National Tax Collection Act, within the deadline under Article 128 of the Act, and submit a report on the status of withholding as determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the national tax information and communications networks) to the superintendent of the competent tax office in charge of withholding. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>(2) A report on the status of withholding under paragraph (1) shall also contain the information on those who are not subject to any tax to be collected through withholding. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997>

(1) The term “person responsible for withholding prescribed by Presidential Decree” in the proviso to Article 128 (1) of the Act means a person responsible for withholding the number of whose regular employees is not more than 20 in the preceding year (excluding a person conducting a financial and insurance business) who has obtained approval for paying semi-annually the withheld amount of tax on the income falling under the subparagraphs of Article 127 (1) of the Act, from the superintendent of the competent tax office in charge of withholding or who has been designated as determined by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 21301, Feb. 4, 2009>(2) The number of regularly employed persons in the immediately preceding year under paragraph (1) shall be the average number of regularly employed persons as of the end of each month from January to December of the immediately preceding year. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(3) A person who intends to obtain approval under paragraph (1) shall file an application with the superintendent of the competent tax office in charge of withholding from the first to the last day of the month immediately preceding the semi-annual period wherein he/she intends to pay the withheld amount of tax semi-annually. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999>(4) The superintendent of the competent tax office in charge of withholding shall, upon receipt of an application under paragraph (3), make a decision on whether an approval is granted in view of the level, etc. of conscientiousness of the report on and payment of the withheld amount of tax by the relevant withholding agent, and notify thereof not later than the end of the month following the semi-annual period whereto belongs the date of application. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>(5) Other matters necessary for the semi-annual payment of withheld amount of tax shall be determined by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>

(1) The term “long-term bonds determined by Presidential Decree” in Article 129 (1) 1 (a) of the Act means bonds, etc. under Article 46 of the Act, which are bonds, etc. the period of which from the issuing date of relevant bonds, etc. to the date agreed upon redeeming in lump-sum all of the principal is ten or more years, and excluding the conditional bonds capable of converting into or exchanging with the stocks, or making na early redemption before the expiration of the said period.(2) A person who intends to obtain an application of separate taxation under Article 129 (1) 1 (a) of the Act shall, not later than the receipt time under Article 45, submit an application for separate taxation on the interest income of long-term bonds as determined by Ordinance of the Ministry of Strategy and Finance to the relevant financial institutions or the payers of interest, etc.: Provided, That where the interest are paid in part over two or more occasions, it shall be deemed to have applied for a separate taxation even if he/she does not submit again the said application to the relevant financial institutions or the payers of interest, etc., and where not intending to obtain an application of separate taxation, he/she shall, not later than the next time of receipt of interest, submit an application for withdrawing separate taxation on the long-term bonds as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Wholly Amended by Presidential Decree No. 18173, Dec. 30, 2003]

(1) The term “real name prescribed by Presidential Decree” in Article 129 (2) of the Act means the real name under subparagraph 4 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy. <Amended by Presidential Decree No. 15604, Dec. 31, 1997; Presidential Decree No. 8705, Feb. 19, 2005>(2) A person whose real name is not confirmed under paragraph (1) shall be deemed a resident under Article 1 of the Act, and shall be subject to Article 129 (2) of the Act.

(1) The term “simplified tax table for earned income prescribed by Presidential Decree” in Article 129 (3) of the Act shall per the attached Table 2.(2) The term “simplified tax table for annuity income prescribed by Presidential Decree” in Article 129 (3) of the Act shall per the attached Table 3.[This Article Wholly Amended by Presidential Decree No. 17032, Dec. 29, 2000]

The term “dates prescribed by Presidential Decree” in Article 131 (2) of the Act means the dates prescribed by the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009>1. Interest and amount of discounted bill notes sold or mediated by financial institutions and the cover notes sold by the financial institutions under Article 3 of the Banking Act (including the financial institutions under Article 61 (2) 2 through 5 of the Enforcement Decree of the Corporation Tax Act; hereafter in this Article referred to as a “bank”) and the mutual savings banks under the Mutual Savings Banks Act, which are traded by the passbook in custody (in cases of cover notes sold by a bank, including notes which are not traded by the passbook in custody): Provided, That it shall be confined in cases where the receiver of such interest and discounted amount have selected to make the tax withholding on the date of discount sale: The date of discount sale;1-2. Income under subparagraph 1 (b) of Article 119 of the Act, in cases of making the tax withholding under Article 156 of the Act: The closing date of return deadline of the tax base (where the return period is prolonged under Article 97 (2) of the Corporation Tax Act, the closing date of such prolonged return period) for the income in the current business year or the taxable period of the foreign corporation paying the relevant income or of the nonresident;1-3. The date when an income distributed pursuant to Article 100-18 (1) of the Special Tax Treatment Control Act has been received: Provided, That when an income has not been received until the date when it comes under three months after the expiration of the taxation period of the relevant partnership enterprise, it shall be the date when it comes under the three months; and2. Other interest income:The dates prescribed by subparagraphs 1 through 5, 7 through 9, 9-2 and 10 of Article 45.

The term “dates prescribed by Presidential Decree” in Article 132 (2) of the Act means the dates prescribed by the following subparagraphs: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Deemed dividend:The date stipulated in subparagraph 4 or 5 of Article 46;2. Dividend disposed of under the Corporation Tax Act:The date stipulated in Article 192 (2) or (3);3. Dividends distributed to joint investment businessmen:The date on which the dividends are received: Provided, That the date shall be one month after the end of the taxable period, if the dividends has not been paid until one month after the end of the taxable period;3-2. The date when an income distributed pursuant to Article 100-18 (1) under the Special Tax Treatment Control Act has been received: Provided, That when an income has not been received until the date when it falls under three months after the expiration of the taxation period of the relevant partnership enterprise, it shall be the date when it falls under the three months; and4. Other dividend income:The date prescribed in the subparagraphs of Article 46.[This Article Wholly Amended by Presidential Decree No. 17032, Dec. 29, 2000]

(1) Dividend income, bonus and miscellaneous income which are disposed of in determining or revising corporate income by the superintendent of the competent tax office or commissioner of the competent regional tax office under the Corporation Tax Act, shall be notified by the superintendent of the competent tax office or commissioner of the competent regional tax office who determines or revises the amount of the corporate income to the relevant corporation by a notice of the amount of income alteration as determined by Ordinance of the Ministry of Strategy and Finance within 15 days from the date of such determination or revision: Provided, That in cases where the location of the relevant corporation is obscure, or where it is impossible to forward such notice, or where the relevant corporation falls under Article 86 (1) 1, 2 and 4 of the National Tax Collection Act, the relevant stockholder and the resident subjected to the disposition of the relevant bonus or miscellaneous income shall be notified thereof. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases of paragraph (1), the relevant dividend income, bonus and other incomes shall be deemed paid or collected on the date of receiving such notice.(3) In filing a return on the corporate income amount, the dividend, bonus and miscellaneous income disposed of under Article 106 of the Enforcement Decree of the Corporation Tax Act, shall be deemed paid by the relevant corporation in the return period of the tax base and amount of tax of the corporation tax. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>(4) The superintendent of the competent tax office or the commissioner of the competent regional tax office shall notify the stockholder concerned and the resident who has been given disposition on the bonus or other income concerned of the fact (the contents of changes in the amount of income shall not be included) that he/she notified in cases where he/she notified the corporation concerned of the notice of changes in amount of income. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>

(1) The receipt for tax withholding under Articles 133, 144, 145, 156 and 201-4 (2) of the Act shall be governed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases where a withholding agent delivers a receipt for tax withholding under paragraph (1), he/she shall confirm the real name of the receiver of relevant income.(3) The term “conditions prescribed by Presidential Decree” in Article 133 (proviso) of the Act means cases falling under any of the following subparagraphs. In such cases, if the total annual amount of interest income and dividend income received, particulars of withheld amount of tax, and the business registration number, trade name or name of the corporation of the withholding agent (hereafter in this Article, referred to as the “business registration number, etc.”) are recorded or notified, it shall be deemed that a receipt for tax withholding is delivered: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999>1. Where the financial institutions enter the details of such payment and the business registration number, etc. of the withholding agent on a passbook or a specification of financial transactions of the person who received interest income or dividend income, and makes a notification thereof; and2. Where the financial institutions notify, upon receipt of an application from the receiver of the interest income or dividend income, him/her of the details of such payment and the business registration number, etc. of the withholding agent by post, via information communications using the electronic data processing system, or via facsimile telegraph.(4) The term “case where it falls below the amount provided by Presidential Decree” in the main body of Article 133 (2) of the Act means cases where the amount of interest income or dividend income accruing in one year by account falls short of one million won. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>

(1) In cases where income tax is collected through withholding under Article 134 (1) of the Act, the tax on earned income shall be collected by withholding on the basis of the amount of tax indicated on a corresponding column in the attached Table 2, the simplified earned income tax table. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000>(2) In cases of paragraph (1), where the withholding agent in the secondary working place makes a tax withholding, the tax rate indicated on a corresponding column shall be applied by considering that there exist only a basic deduction for the relevant principal of employee and a standard deduction. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15138, Aug. 22, 1996; Presidential Decree No. 19890, Feb. 28, 2007>

(1) In applying Article 136 (1) of the Act, the calculation of the period subject to payment of the bonus, etc. and of the amount of tax shall be based on any of the following subparagraphs:1. The bonus, etc. paid in the month, which is not the last month of the period subject to payment, shall be deemed the bonus without any period subject to payment; and2. In cases where the bonuses with mutually different periods subject to payment as stipulated in Article 136 (1) 1 and 2 of the Act are paid in the same month, such amount of tax shall be calculated by applying subparagraph 1 of the same paragraph, after computing the period subject to payment by the following formula: Provided, That if there exist any fractions short of one month in calculating the period subject to payment, it shall be deemed one month: Period subject to payment

=
Aggregate of periods subject to payment of bonuses, etc. paid in same month
Number of bonuses, etc. paid in same month
(2) In applying Article 136 (2) of the Act, the amount of tax to be withheld when paying the bonus, etc. by a disposal of the surplus funds, shall be the amount calculated by applying the basic tax rate to the bonus, etc.(3) Other matters necessary for calculating the amount of tax to be collected on the bonuses, etc. shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Wholly Amended by Presidential Decree No. 15191, Dec. 31, 1996]

(1) The withholding agent who pays the monthly earned income belonging to Class A under Article 134 of the Act, shall prepare and record a book for tax withholding for earned income as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as a “book for tax withholding for earned income”). In such cases, if the book for tax withholding for earned income is placed in such status as is capable of outputting at any time by recording and keeping the said book in computerized tapes or diskettes, it shall be deemed that the book for tax withholding for earned income is kept and recorded. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The withholding agent shall make the amount, as the tax base, which is obtained by making the income deduction under the Act and the Restriction on Special Taxation Act, from the aggregate of earned income by earner which is paid in the current year by the book for tax withholding for earned income, and calculate the computed amount of tax of gross income by applying the basic tax rate. <Amended by Presidential Decree No. 15138, Aug. 22, 1996; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>(3) The withholding agent shall collect, as the income tax, the amount obtained by deducting the amount falling under any of the following subparagraphs from the computed amount of tax on gross income under paragraph (2): Provided, That in cases where the aggregate of the amounts falling under any of the following subparagraphs exceeds the computed amount of tax for gross income, the portion of such excess shall be refunded:1. Amount of tax to be withheld under Article 134 (1) of the Act (excluding the additional amount of tax); and2. Deducted amount of tax under Article 134 (4) of the Act.(4) With respect to worker’s income paid by a person other than a person responsible for withholding by providing labor to a person responsible for withholding (including a refund under Article 38 (1) 16), the relevant person responsible for withholding shall make a year-end adjustment by including the relevant amount in the earned income. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>

(1) In case where an earned income earner who has retired halfway in to the current year is newly employed at another work place, the withholding agent of such new place of work shall have the relevant earned income earner submit the receipts for tax withholding for the earned income at the former work place, and a copy of the book for tax withholding for earned income, and conduct the year-end settlement by applying Article 196 to the aggregate of earned income at the former work place.(2) The provisions of Article 199 (5) shall apply mutatis mutandis to cases of paragraph (1).

(1) A person who has an earned income belonging to Class A shall submit a report on the income deduction of the earned income earner to a person responsible for withholding not later than the date on which the earned income for February of the year next to the relevant year (in cases of retirement, not later than the date on which the earned income for the month whereto belongs the date of his/her retirement). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 21301, Feb. 4, 2009>(2) Deleted. <by Presidential Decree No. 15191, Dec. 31, 1996>(3) In submitting a report under paragraph (1), if there exists any person falling under Article 53 (2) of the Act, a status list of cohabiting family members of a temporary withdrawer shall be attached to a report on income deduction of the earned income earner. <Amended by Presidential Decree No. 15191, Dec. 31, 1996>

(1) A person who receives the earned income from two or more employers shall, before he/she receives such earned income, determine his/her primary place of work and secondary work place, and submit a report on the place of work (alteration) as determined by Ordinance of the Ministry of Strategy and Finance, to the withholding agent of the primary work place. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The withholding agent of the primary place of work shall, upon receipt of a report on the place of work (alteration) under paragraph (1), submit such report to the superintendent of the competent tax office in charge of withholding.(3) A person who has filed a report on place of work under paragraph (1) shall receive the receipts for tax withholding for earned income from a person responsible for withholding of the secondary work place, and submit it to a person responsible for withholding of the primary work place, before receiving the wage for February of the year next to the relevant year at the primary work place. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 21301, Feb. 4, 2009>(4) The withholding agent of the primary place of work of the person who has made a report on the place of work under paragraph (1) shall perform the year-end settlement on the aggregate of the earned income at the primary place of work and that at the secondary place of work by applying mutatis mutandis Article 196. In such cases, the withholding agent ofthe secondary place of work who has delivered such receipts may refrain from making the year-end settlement on the relevant earned incomeearner. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>(5) In case where a person who receives earned income from two or more employers has failed to submit a report on the place of work (alteration) under paragraph (1), or to submit the receipts for tax withholding for earned income from the withholding agent of the secondary place of work under paragraph (3), the tax withholding agent of the primary place of work or the secondary place of work shall respectively make the year-end settlement for the earned income earner under Article 196.

(1) The withholding agent paying the earned income shall deliver the receipt for tax withholding for earned income as determined by Ordinance of the Ministry of Strategy and Finance not later than the end of February of the following business year. In such cases, with respect to those who have retired in the middle of the current year, the said receipt shall be delivered for the earned income until the month whereto belongs such retirement date, not later than the end of the month following the payday of wages for the month whereto belongs such retirement date. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The withholding agent of the secondary place of work shall, notwithstanding paragraph (1), deliver without delay the receipt for tax withholding for earned income to the person who intends to obtain his/her year-end settlement at the primary place of work under Article 199.(3) The withholding agent paying the retirement allowances shall deliver the receipt for tax withholding for the retirement allowance as determined by Ordinance of the Ministry of Strategy and Finance, not later than the end of the month following such payday. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In case where the withholding agent makes a refund to the employment income earner as there exists an excessive or wrong payment in the income taxes under withholding which have been already paid by the withholding agent, in making the year-end settlement for the amount of tax of earned income, such refund amount shall be adjusted and refunded out of the income taxes to be paid under withholding by the withholding agent.(2) In cases of paragraph (1), if no income taxes exists to be paid under withholding by the withholding agent, it shall be refunded under the conditions as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The withholding agent for the business income under Article 73 (1) 5 of the Act (in cases of the withholding agent for the business income of persons under Article 137 (1) 2, it shall be limited to cases where the relevant withholding agent makes an application for a year-end settlement to the superintendent of the competent tax office, under the conditions as determined by Ordinance of the Ministry of Strategy and Finance) shall calculate the assessed amount of tax on gross income by applying the basic tax rate thereto, after making a computation of tax base for gross income by a deduction of gross income pursuant to the returned details of the relevant business income earner under Article 201-4 (1), from among the amount of business income in the current year under Article 201-3 of such persons who receive the business income when the said agent pays the business income for January of the year next to the current year under Article 144-2 of the Act (it shall be January 31 if the business income for January is not paid until January 31 or there is no business income for January; hereafter in this Article, the same shall apply) or when he/she pays the business income for the month in which the contract with the relevant businessman is cancelled, and shall make the tax withholding by the balance obtained by deducting the income tax already paid in the current year by withholding, after making a tax deduction from the said assessed amount of tax under this Act and the Special Tax Treatment Control Act. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>(2) In a case of the withholding under paragraph (1) (hereinafter referred to as the “year-end settlement of the amount of business income tax”), if the income tax to be collected exceeds the revenue of business income to be paid, such excessive amount of tax shall be collected when the revenue of business income for the following month is paid: Provided, That if there exists no revenue of business income to be paid in the following month, the whole amount shall be withheld.(3) In a case of paragraph (1), if the income tax already paid under withholding in the current year exceeds such amount as subjected to a amount of tax deduction from the relevant assessed amount of tax on gross income, such excess amount shall be refunded to the relevant business income earner by applying mutatis mutandis Article 201.(4) In case where the withholding agent makes a tax withholding by applying paragraph (1) to the business income earner who has failed to file a return under Article 201-4 (1), only the portion for a businessman himself and the standard deduction from among the basic deductions shall be applied.(5) The provisions of Articles 137 (3) and 138 of the Act shall be applied mutatis mutandis to the year-end settlement for the business income amount of tax on a person who receives the business income from two or more persons under Article 73 (1) 5 of the Act, and who receives business income under Article 73 (1) 5 of the Act due to a new contract concluded in the middle of the current year. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(6) The withholding agent under paragraph (1) shall prepare and record every month a book for tax withholding for business income as determined by Ordinance of the Ministry of Strategy and Finance. In such cases, if the book for tax withholding for business income is placed in such status as is capable of outputting at any time by recording and keeping the said book in the computerized tapes or diskettes, it shall be deemed that the book for tax withholding for business income is kept and recorded. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(7) In case where revenue of business income under Article 73 (1) 5 of the Act is not paid, it shall be deemed paid at the time falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17032, Dec. 29, 2000>1. Where revenue of business income for January through November is not paid by not later than December 31: December 31; and2. Where revenue of business income for December is not paid by not later than January 31 of the following business year: January 31 of the following business year.[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]

(1) The amount of income under Article 144-2 (2) of the Act shall be the amount which is calculated by multiplying the amount of income paid in the current year by the rate as determined by Ordinance of the Ministry of Strategy and Finance in view of the income rate of such income as are calculated under the standard expense rate or the simple expense rate of the relevant business type (hereinafter referred to as “income rate for the business income subject to the year-end settlement”). <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>(2) In applying paragraph (1), if the business period during the relevant taxable period of a businessman is less than one year, the method of calculating amount of income and other necessary matters shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]

(1) In case where the relevant businessman intends to obtain the income deduction under Articles 50 through 52 of the Act in the year-end settlement of the business income amount of tax under Article 201-2, he/she shall, pursuant to Article 167 (1) of the Act, submit a report on the income deduction as determined by Ordinance of the Ministry of Strategy and Finance, along with a certified copy of resident registration card, to the withholding agent who collects the income tax not later than the time of the year-end settlement under Article 201-2 (1). <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The withholding agent under Article 201-2 (1) shall deliver the receipt for tax withholding of the portion of year-end settlement of amount of business income tax, which records the revenue of business income and other necessary matters to the person who receives the relevant revenue of business income not later than the end of the month next to that whereto belongs the date of year-end settlement.(3) Except for the cases where provided specially in this Decree on the year-end settlement of the amount of tax on business income, it shall be governed by the examples of the year-end settlement of the amount of earned income tax.[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]

In case where making a withholding on the income tax under Article 143-2 (1) of the Act, such withholding shall be made on the basis of the amount of tax indicated on the corresponding column of the attached Table 3, the simplified tax table of annuity income.[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The withholding agent who pays a monthly annuity income under Article 143-2 of the Act shall keep and record a book for tax withholding for annuity income as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “book for tax withholding for annuity income”). In such cases, if the book for tax withholding for annuity income is placed in such status as is capable of outputting at any time by recording and keeping the said book in the computerized tapes or diskettes, it shall be deemed that the book for tax withholding for annuity income is kept and recorded. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) The withholding agent who pays the annuity income falling under Article 20-3 (1) 1 and 2 of the Act shall compute the assessed amount of tax on gross income by applying the basic tax rate, by making, as the tax base, the amount obtained by performing the annuity income deduction, basic deduction, additional deduction and standard deduction from the aggregate of annuity income by income earner which have been paid in the current year.(3) The withholding agent shall collect the amount, as the income tax, obtained by deducting the amounts falling under any of the following subparagraphs from the assessed amount of tax on gross income under paragraph (2): Provided, That if the aggregate of the amount falling under any of the following subparagraphs exceeds the assessed amount of tax on gross income, such excessive portions shall be refunded:1. Amount of tax to be withheld under Article 143-2 (1) of the Act (excluding the additional amount of tax); and2. Deduction of the amount of tax paid overseas on the annuity income.[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) A person who receives annuity income falling under Article 20-3 (1) 1 and 2 of the Act shall submit a report on income deduction of annuity income earner to the withholding agent, not later than December 31 of the year concerned (in cases of his/her death, not later than the end of the month after the month to which the date of death belongs). <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(2) In submitting a report under paragraph (1), if there exists any person falling under Article 53 (2) of the Act, a status list of cohabiting family members of a temporary withdrawer shall be attached to a report on income deduction of annuity income earner.(3) The withholding agent who pays annuity income under Article 203 (1) 1 and 2 of the Act may prepare a report on income deduction of annuity income earner and publish it on the information and communications network, and the annuity income earner may submit the report on income deduction of annuity income earner concerned through the information and communications network. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>(4) In cases where the annuity income earner has confirmed that there is no error in the report on income deduction that the withholding agent prepared (including the cases where there are errors and the annuity income earner has corrected the relevant errors), the report on income deduction shall be deemed as a report prepared and submitted firsthand by the annuity income earner concerned. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>(5) When an annuity income earner requests to peruse and correct the report on income deduction of annuity income earner, the withholding agent shall allow it. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

A withholding agent who pays the annuity income under Article 20-3 (1) of the Act shall issue the receipts for withholding of annuity income as determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “receipts for withholding of annuity income”) by not later than the deadline or period of the following subparagraphs: Provided, That such receipts shall be issued to a deceased who died halfway in the year whereto belongs the date of payment on the annuity income until the month whereto belongs the date of such death by not later than the end of the month after next to that whereto belongs the date of such death: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Annuity income under Article 20-3 (1) 1 and 2 of the Act: Not later than the end of February of the year following the year of payment; and2. Annuity income under Article 20-3 (1) 3, 4, 4-2 and 5 of the Act: The point of paying annuity income.[This Article Wholly Amended by Presidential Decree No. 19327, Feb. 9, 2006]

Where the person, who pays the income under Article 20-3 (1) of the Act, concurrently pays interest on the delayed payment while he/she makes a delayed payment for the whole or part of annuity income, the relevant interest shall be withheld at source by deeming it as annuity income. <Amended by Presidential Decree No 19327, Feb. 9, 2006>[This Article Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001]

(1) A person (hereafter in this Article “annuity income earner, etc.”) who has obtained annuity income under Article 20-3 (1) 1, 4 and 4-2 of the Act, miscellaneous income under Article 21 (1) 18 and 21 of the Act or retirement income under Article 42-2 (1) 6 and Article 22 (1) 1 (d) of the Act may request the Commissioner of the National Tax Service for the supply of data on income deduction in the following subparagraphs:1. Amount of income deduction that the beneficiary or employee under Article 40-3 (3) 1 or 4 has actually received;2. Amount of income deduction that the beneficiary or employee under Article 42-2 (3) 1 or 4 has actually received;3. Amount of income deduction that the person holding an account for annuity savings under Article 86-2 (3) or (4) of the Special Tax Treatment Control Act has actually received; and4. Amount of income deduction that the subscriber to a small and medium industry mutual aid association or small and medium business mutual aid association under Article 86-3 (4) of the Special Tax Treatment Control Act has actually received.(2) The Commissioner of the National Tax Service shall supply the data on income deduction concerned to the annuity income earner, etc. who have requested for it pursuant to paragraph (1).(3) The withholding agent of the annuity income, miscellaneous income or retirement income under paragraph (1) may request the Commissioner of the National Tax Service for the supply of data on income deduction with the approval of annuity income earner, etc.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) Miscellaneous amount of income under Article 145 (1) of the Act shall be such amount as obtained by deducting, from the relevant amount paid , the amount verifiable as necessary expenses commensurate with the said amount by the withholding agent, or necessary expenses underArticle 87. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>(2) The term “amount determined by Presidential Decree” in the proviso to Article 145 (2) of the Act means one million won (referring to an amount before deducting necessary expenses). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(3) When the income tax is withheld pursuant to Article 145 (1) of the Act, an income distributed pursuant to Article 100-18 (1) of the Special Tax Treatment Control Act shall be withheld on the date when received: Provided, That when it has not been received by the date when it falls under three months after the expiration of the taxation period of the relevant partnership enterprise, it shall be withheld on the date when it falls under the three months. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>

(1) A withholding agent who pays the retirement income to a person who has retired twice or more in the same year, may make the settlement of taxes on retirement income under Article 148 of the Act, on the aggregate of the retirement income paid at the former place of work of a relevant retiree and of the retirement income to be paid by him.(2) Where a person, who pays the income under Article 22 (1) 1 (d) and (e) of the Act, first pays only a part of retirement income and pays the remainder in the taxable period thereafter, the retirement income first paid shall be withheld at source in the taxable period for the relevant income, and with respect to the retirement income paid in the taxable period thereafter, the retirement income tax less the already-paid retirement income tax shall be withheld at source, after calculating the amount of retirement income of tax by adding up the first-paid income. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001>(3) Where a person, who pays the income under Article 22 (1) 1 (d) and (e) of the Act, concurrently pays the interest on the delayed payment while he/she makes a delayed payment for the whole or part of retirement income, the relevant interest shall be withheld at source by deeming it a retirement income. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001>(4) Where it falls under any of the following subparagraphs, the employer who has established a defined contribution retirement annuity scheme, etc. or benefit of retirement annuity under Article 16 (1) 1 of the Korea Scientists and Engineers Mutual-Aid Association Act shall notify the retirement annuity business under the Guarantee of Workers’ Retirement Benefits Act or the mutual aid association under the Korea Scientists and Engineers Mutual-Aid Association Act (hereinafter “retirement annuity business operator”) who pays a lump-sum retirement annuity of the notice of worker’s retirement, etc. on which the necessary matters for withholding retirement income such as the date of retirement, service period, etc. are written: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Where a worker retires;1-2. Where an employee withdraws the retirement pension early before maturity; and2. Where income tax is refunded since the retirement benefit amount is transferred or paid under Article 42-2 (5).(5) Where an employer who has established retirement system or defined contribution type retirement annuity scheme, or a retirement annuity business who pays a lump-sum retirement annuity of the defined contribution type retirement annuity, etc. under the Guarantee of Workers’ Retirement Benefits Act (hereafter referred to as the “withholding agent of retirement annuity” in this Article) withholds income tax on the retirement benefit amount transferred or paid in under Article 42-2 (5), the relevant amount of tax shall be adjusted from the income tax to be withheld and paid by the withholding agent of retirement annuity and refunded. In such cases, the retiree shall submit the taxation deferred account report as prescribed by Ordinance of the Ministry of Strategy and Finance on which the date and amount of transfer or payment are written. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(6) In a case of paragraph (5), if the income tax to be refunded by the withholding agent of retirement annuity exceeds the income tax to be withheld and paid in the month of refund, it shall be adjusted from the income tax to be withheld and paid after the following month and refunded: Provided, That if the relevant withholding agent of retirement annuity applies for refund, the superintendent of the competent tax office in charge of withholding shall refund the exceeded amount. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>(7) A person who intends to have income tax refunded under the proviso to paragraph (6) shall submit an application for withholding tax refund to the superintendent of the competent tax office in charge of withholding. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>(8) Where retirement income tax is not withheld from the retiree or the withheld amount of tax is refunded to the retiree under Article 42-2 (5), the withholding agent of retirement annuity shall immediately inform the retirement annuity business who deals with the taxation deferred account (hereinafter referred to as an “institution handling the taxation deferred account”) of the specifications for deferred retirement income tax as prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as the “specifications for deferred retirement income tax”) with the ledger for estimated retirement income withholding attached and submit them to the superintendent of the competent tax office in charge of withholding by not later than the end of February of the year immediately following the year whereto the date of retirement belongs. In such cases, the specifications for deferred retirement income tax may be informed or submitted through information communication network or electronically processed tapes or diskettes, etc. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>(9) A retirement annuity business of defined contribution type retirement annuity, etc. and an institution handling the taxation deferred account which receives the specifications for deferred retirement income tax shall prepare and record the ledger for estimated retirement income withholding prescribed by Ordinance of the Ministry of Strategy and Finance including the current status of payment of retirement benefits and the length of service (hereinafter referred to as the “ledger for estimated retirement income withholding”). In such cases, when the ledger for estimated retirement income withholding is recorded and kept in electronically processed tapes or disks, etc, so that printout is available at any time, it shall be deemed that the ledger for estimated retirement income withholding is prepared and recorded. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008>

(1) A person who intends to organize a tax association under Article 149 of the Act shall obtain approval from the superintendent of the competent tax office through the commissioner of the competent regional tax office in charge of tax association, after satisfying requirements in the following subparagraphs:1. A tax association of persons having the earned income belonging to Class B shall have 50 or more taxpayers to become its members, and obtain the concurrent vote of two thirds or more of such persons: Provided, That where its members fall short of 50 persons owing to regional peculiarities, a tax association may be organized with such persons falling short thereof;2. A tax association of the businessmen under subparagraph 2 of Article 149 of the Act shall have 20 or more taxpayers to become its members;3. Its purpose shall be limited to the management of tax payment under Article 153 of the Act, and the affairs related to the tax payment; and4. Affiliation with and secession from the tax association shall not be compulsory: Provided, That this shall not apply to cases where inflicting damage on other members with regard to a tax payment, for which the articles of incorporation or bylaws of the relevant tax association stipulate otherwise.(2) The term “businessmen prescribed by Presidential Decree” in subparagraph 2 of Article 149 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Distributors of agricultural, livestock, and marine products: Provided, That the person obliged to adopt double-entry bookkeeping shall be excluded;2. Stall keepers; and3. Other businessmen deemed necessary by the Commissioner of the National Tax Service.(3) In case where a tax association falls under any of the following subparagraphs, it shall be dissolved:1. Where not less than one half of the members provide concurrent vote; and2. Where the number of members of the tax association under paragraph (1) 2 falls short of 20, and of the tax association of those having the earned income belonging to Class B short of 50, respectively: Provided, That in cases of paragraph (1) 1 (proviso), this shall not apply.(4) The commissioner of the competent regional tax office may, in cases where a tax association falls under any of the following subparagraphs, order it to be dissolved:1. Where it fails to satisfy any requirement falling under any subparagraph of paragraph (1); and2. Where deemed that there exists any activity impeding the tax administration.(5) Matters necessary for the organization and operation of a tax associations under paragraph (1) shall be determined by the Commissioner of the National Tax Service.

(1) In case where a tax association collects the income tax from its members under Article 150 of the Act, it shall issue the receipt as determined by Ordinance of the Ministry of Strategy and Finance to the relevant members. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) The provisions of Article 185 (1) and (2) shall apply mutatis mutandis to a case where a tax association pays the income tax for each month collected from its members.(3) The term “monthly income of each member of the association calculated under the conditions prescribed by Presidential Decree” in Article 152 (1) of the Act, means the amount obtained by deducting the amount, which is the monthly income multiplied by the simplified expense rate, from the monthly income of each member. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>(4) When a tax association (limited to agricultural, livestock and fisheries associations) pays amount of monthly tax withheld, it shall submit (including submission through the national tax information and communications network) a report on the status of performance of collection by tax association and detailed statement of changes in the members of tax association prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>

(1) In applying Article 153 of the Act, if a tax association intends to become the tax manager for its members, the association shall submit a report on the selection of tax manager as determined by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office of the location of the tax association. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) In cases of paragraph (1), a document carrying the purport that the relevant association members have selected the tax association as their tax manager, and jointly signed by them, shall be attached to the relevant report.

(1) The provisions of Article 185 shall apply mutatis mutandis to the payment of the withheld taxes under Article 156 of the Act: Provided, That the withholding agent has no address, residence, head office, principal office or domestic place of business (including domestic places of business under Article 94 of the Corporation Tax Act) within the country, a tax payment manager under Article 82 of the Basic Act for National Taxes shall be appointed and reported to the superintendent of competent tax office. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>(2) When an amount to be withheld is computed pursuant to Article 156 (1) 3-2 of the Act, in cases where a transferee withholds pursuant to Article 156 (1) of the Act after a transferor reported and paid the income tax pursuant to Article 121 (2) of the Act, the amount to be withheld shall be an amount after deduction of an amount reported and paid by the relevant transferor. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>(3) The term “period prescribed by Presidential Decree” in Article 156 (9) of the Act means the day falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009>1. Case of Article 88 (1) 8 (a) of the Enforcement Decree of the Corporation Tax Act: Where a corporation has been extinguished due to a merger, the date of making a registration of the said merger, and where a corporation is extinguished or continues to exist due to a division or merger through division, the date of making a registration of the said division or merger through division; and2. Case of Article 88 (1) 8 (b) and (c) of the Enforcement Decree of the Corporation Tax Act: The date of determining a retirement of stocks, a decrease of capital or a conversion into capital.(4) Any domestic corporation which has issued the stocks or equity shares shall make a withholding of the income under the provisions of subparagraph 13 (i) of Article 119 of the Act at the time under the provisions of paragraph (2). <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 21301, Feb. 4, 2009>(5) The term “where income tax for the relevant income is already paid or it proves that the relevant income has been exempted from taxation or criteria for taxation has not been reached under the conditions prescribed by Ordinance of the Ministry of Strategy and Finance” means a case where a nonresident submits an application for confirmation of report and payment (tax exemption or unreached taxation criteria) of transfer income tax prescribed by Ordinance of the Ministry of Strategy and Finance to the superintendent of the competent tax office pursuant to Article 6 (2) of the Act with a copy of a register and transaction agreement concerning the relevant real estate attached, and forward the confirmation to the withholding agent. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>

(1) Any nonresident who intends to file an application for non-taxation or exemption under Article 156-2 of the Act shall submit the written application for non-taxation or exemption stipulated by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as the “written application for non-taxation or exemption” in this Article) to the income payer, and the relevant income payer shall submit it to the superintendent of the competent tax office of the place of tax payment of the income payer, by not later than the 9th day of the month following that whereto belongs the date of paying the first income. This shall also apply to cases of any changes in the contents of application for non-taxation or exemption due to the changes in the details of contract after filing an application for non-taxation or exemption. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008>(2) To any written application for non-taxation or exemption under paragraph (1), a resident certificate issued by a competent authority of the country, wherein the relevant nonresident resides, shall be attached: Provided, That with regard to the income under subparagraph 13 (f) and (g) of Article 119 of the Act, it may be substituted by a copy of passport and a certificate of facts on the entry into and departure from the country under Article 88 of the Immigration Control Act (limited to what verifying the facts on the entry into and departure from the country for the preceding one year from the date of entry). <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>(3) Any nonresident may have his/her agent (including the tax payment manager under Article 82 of the Basic Act for National Taxes) file an application for non-taxation or exemption under paragraph (1). <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(4) Where a financial institution makes an acquisition, trade, intermediary or proxy of the bonds, etc. of a nonresident under Article 46 of the Act, the provisions of paragraph (1) shall apply by deeming that there exists the relation of proxy or entrustment between the relevant financial institution and a nonresident.(5) Where an investment trading business operator or an investment intermediary business operator, or a corporation issuing stocks under the Capital Market and Financial Investment Business Act withholds on transfer of securities pursuant to Article 156 (5) of the Act, paragraph (1) shall apply as it is deemed that the investment trading business operator, investment intermediary business operator, or corporation issuing stocks and a non-resident have relations of proxy or delegation between them. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>(6) In cases not subject to paragraphs (4) and (5), where any income payer does not hold an address, residence, head office, principal office or domestic place of business (including the domestic place of business under Article 94 of the Corporation Tax Act), one may file a written application for non-taxation or exemption without submitting to the income payer, and the income recipient may directly submit it to the superintendent of the competent tax office, notwithstanding the provisions of paragraph (1). <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005>(7) With respect to the domestic source income under Article 119 of the Act, which is the income falling under any of the following subparagraphs, a written application for non-taxation or exemption may not be filed, notwithstanding paragraph (1): <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Domestic source income on which the income tax is not levied or exempted under the Act or the Special Tax Treatment Control Act;2. Deleted; and <by Presidential Decree No. 21301, Feb. 4, 2009>3. Other domestic source income as stipulated by Ordinance of the Ministry of Strategy and Finance.[This Article Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001]

(1) Where a person who pays interest, etc. accrued on bonds, etc. to a nonresident governed by Article 156 (1) of the Act, or a person who purchases bonds, etc. from a nonresident before receiving interest, etc. accrued on bonds, etc. applies the tax rates pursuant to the Act, the Special Tax Treatment Control Act or tax treaty (hereafter referred to as the “applicable tax rates” in this Article) on the payment amount, etc. of the interest, etc., he/she shall withhold the amount calculated by applying the following tax rates In such cases, if the applicable tax rate under subparagraph 1 is higher than the tax rate under Article 129 (1) 1 of the Act, and the relevant nonresident fails to prove the holding period of the bonds, etc., the whole amount paid shall be deemed to be the amount equivalent to the interest, etc. for the holding period of the relevant nonresident, and if the applicable tax rate under subparagraph 1 is lower than the tax rate under Article 129 (1) 1 of the Act, and the relevant nonresident fails to prove the holding period of the bonds, etc., the amount equivalent to the interest, etc. for the holding period of the relevant nonresident shall be deemed to be non-existent: <Amended by Presidential Decree No. 21301, Feb. 4, 2009>1. Tax rate applicable to the relevant nonresident concerning the amount equivalent to the interest accrued during the holding period of the relevant nonresident out of the amount paid; and2. Tax rate under Article 129 (1) 1 of the Act concerning the amount from which the amount equivalent to the interest, etc. for the holding period under subparagraph 1 has been subtracted out of the paid amount.(2) When applying paragraph (1), the provisions of Article 190 shall apply mutatis mutandis to the timing of paying interest, etc. on the bonds, etc. of a nonresident, the provisions of Article 102 shall apply mutatis mutandis to the calculation of holding period of bonds, etc., methods of calculating the amount equivalent to the interest, etc, for the holding period and proving the holding period, and the provisions of Article 207 (1) shall apply mutatis mutandis to the payment of withholding tax. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

(1) Any person who intends to obtain prior approval under the proviso to Article 156-4 (1) of the Act shall file an application for prior approval of special cases in tax withholding prescribed by Ordinance of the Ministry of Strategy and Finance with the Commissioner of the National Tax Service with the following documents attached thereto: Provided, That in cases where the details have become different from the first reported details due to change in the details of a contract after having obtained prior approval pursuant to paragraph (2), an application for prior approval shall be filed again: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Resident certificates issued by the counterpart state in a tax treaty (hereafter in this Article referred to as the “contracting state”);2. Method of financing investment funds to obtain the relevant domestic source income;3. Specification of disposal or its plan after receiving the relevant domestic source income; and4. Reports, audit reports, financial statements and attached documents submitted to the tax authority of the contracting state for the last three years (in case three years have not elapsed, the period between the date of establishment and the date of application).(2) When the Commissioner of the National Tax Service receives an application for prior approval under paragraph (1), and in cases any person to receive income under subparagraph 1, 2, 11 or 12 of Article 119 of the Act (hereafter in this Article and Article 207-5, referred to as the “domestic source income”) directly or indirectly is an effective holder of the ownership of the income who owns the right to dispose of the income by burdening legal or economic risks concerning the relevant domestic source income (hereinafter referred to as an “effective owner”) and is a resident of the relevant contracting state, the Commissioner of the National Tax Service may issue a prior approval.(3) When deemed necessary to supplement concerning the contents of the application for prior approval under paragraph (1), the Commissioner of the National Tax Service may request for supplement by determining a period not exceeding 30 days. In such cases, the supplement period shall not be included in the period under paragraph (5).(4) The request for supplement under paragraph (3) shall be in written documents including all the matters of the following subparagraphs:1. Matters to be supplemented;2. Reasons to request for supplement;3. Supplement period; and4. Other necessary matters.(5) The Commissioner of the National Tax Service shall inform whether to approve or not within three months from the date of receiving the application under paragraph (1).(6) Where it is confirmed that the submitted documents are false, the Commissioner of the National Tax Service shall cancel the prior approval.(7) When applying paragraph (1), he/she shall submit documents attached to an application for prior approval of special cases in tax withholding together with their Korean translation: Provided, That in case of recognition by the Commissioner of the National Tax Service, documents prepared in English only may be submitted. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

(1) Any person who desires to claim correction under Article 156-4 (2) of the Act shall file a correctional claim for applying special cases in withholding tax prescribed by Ordinance of the Ministry of Strategy and Finance with the superintendent of the competent tax office of the place of tax payment of the withholding agent with the documents under Article 207-4 (1) 1 through 4. In such cases, documentiary evidence shall be submitted along with its translated Korean version, and in any case recognized by the Commissioner of the National Tax Service, only English version may be submitted. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(2) Where any person who received domestic source income for which correctional claim is filed under paragraph (1) is an effective owner of the relevant domestic source income, the superintendent of competent tax office shall make correction.(3) When it is deemed necessary to supplement concerning the contents of correctional claim under paragraph (1), the superintendent of competent tax office may request for supplement by determining a period not exceeding 30 days. In such cases, the supplement period shall not be included in the period under Article 156-4 (3) of the Act.(4) The request for supplement under paragraph (3) shall be in written documents including all the matters of the following subparagraphs:1. Matters to be supplemented;2. Reasons to request for supplement;3. Supplement period; and4. Other necessary matters.[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

The term “interest rate prescribed by Presidential Decree” in Article 158 (1) 1 of the Act means the rate of 3/10,000 per day.[This Article Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005]

(1) The term “nonresident entertainer, etc.” in Article 156-5 of the Act encompass not only the entertainer or athlete concerned who supplies services within the country at a non-taxable foreign entertainment, etc. corporation (hereinafter “non-taxable foreign entertainment, etc. corporation”) but also the manager, coach, illumination engineer, cinematographer and sound engineer who assist the supply of services by the entertainer or athlete within the country and the persons who supply similar services.(2) Where the person who pays remuneration or consideration to a non-taxable foreign entertainment, etc. corporation pays withholding tax collected pursuant to Article 156-5 (1) of the Act, he/she shall submit the documents in the following subparagraphs to the superintendent of competent tax office: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Report of status of performance of withholding prescribed by Ordinance of the Ministry of Strategy and Finance; and2. Contract related to the supply of services between the person who pays remuneration or price to the non-taxable foreign entertainment, etc. corporation concerned and the non-taxable foreign entertainment, etc. corporation concerned.(3) Where a non-taxable foreign entertainment, etc. corporation pays withholding tax collected pursuant to Article 156-5 (2) of the Act, it shall submit the papers in the following subparagraphs to the superintendent of competent tax office in charge of the withholding of the person who has paid remuneration or price to the non-taxable foreign entertainment, etc. corporation: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Detailed statement of payment of income from the supply of services of nonresident entertainer, etc. prescribed by Ordinance of the Ministry of Strategy and Finance; and2. Report of status of performance of withholding prescribed by Ordinance of the Ministry of Strategy and Finance.(4) When a non-taxable foreign entertainment, etc. corporation intends to receive refund pursuant to Article 156-5 (3) of the Act, it shall apply to the superintendent of competent tax office by submitting an application for refund of amount of tax withheld of the non-taxable foreign entertainment, etc. corporation prescribed by Ordinance of the Ministry of Strategy and Finance together with the papers in the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Contract related to the supply of services between the non-taxable foreign entertainment, etc. corporation and the nonresident foreign entertainer, etc.; and2. Papers evidencing remuneration or price paid to the nonresident entertainer, etc.(5) The superintendent of tax office who has received an application for refund pursuant to paragraph (4) shall determine whether to grant refund, and when there is tax refund he/she shall add the amount to the tax refund, which is calculated according to the period between the day after the day when payment of withholding tax was made pursuant to Article 156-5 (1) of the Act and the day when the decision of refund is made, and to the interest rate pursuant to Article 30 (2) of the Enforcement Decree of the Basic Act for National Taxes.(6) When the papers prescribed in the subparagraphs of paragraphs (2), (3) and (4) are submitted, those made out in English shall be submitted with the Korean translation as well: Provided, That the superintendent of tax office acknowledges, only the papers made out in English may be submitted.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

(1) The books under Article 160 (1) of the Act means those of the book-keeping form, which doubly records and computes in full the asset status of business and the fluctuations in the profit and loss transactions.(2) In the cases falling under any of the following subparagraphs, it shall be deemed to have the books under paragraph (1) kept and recorded:1. Where the asset status of business and the fluctuations in the profit and loss transactions are recorded in full, as the slips entered doubly with an average of debit and credit and the evidential documents therefor are completely furnished; and2. Where the books under paragraph (1) or the slips under subparagraph 1 and the evidential documents therefor are kept in the computerized tapes or diskettes.(3) and (4) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>(5) The term “businessman whose business is smaller than the scale determined for each business type” in Article 160 (2) and (3) of the Act means those falling under any of the following subparagraphs: Provided, That the businessmen under Article 147-3 hereof and Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. A businessman commencing a business anew in the current year; and2. A businessman whose aggregate of the revenue amount in the immediately preceding year (including the revenue amount increased by a determination or revision) falls short of the amount under each of the following items:(a) Agriculture, forestry, fishery, mining, wholesale, retail, real estate sales, and other business not falling under items (b) and (c): 300 million won;(b) Manufacturing, lodging service and restaurant, electricity, gas and tap water, construction, transportation, telecommunications, finance and insurance: 150 million won; and(c) Real estate rental, business service, educational service, health and social welfare service, service industry related to entertainment, culture and sports and other public, repair and personal service industry, housekeeping service: 75 million won.(6) Where Article 56-2 of the Act is applicable, a businessman under Article 147-3 hereof and Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act shall be deemed as a person subject to the simple bookkeeping, notwithstanding the proviso to paragraph (5), if he/she falls under any of subparagraphs of paragraph (5) and keeps account books by the double-entry bookkeeping method. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(7) In applying paragraph (5) 2, if one concurrently operates the types of business under items (a) through (c) of the same subparagraph, or has two or more places of business, it shall be governed by the amount of revenue calculated by the following formula: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>Amount of revenue of primary business (referring to the business with the largest amount of revenue; hereafter in this paragraph, the same shall apply) ＋ Amount of revenue of business types other than primary business × (Amount under each item of paragraph (5) 2 against the primary business / Amount under each item of paragraph (5) 2 against the business kinds other than the primary business).(8) Deleted. <by Presidential Decree No. 18173, Dec. 30, 2003>(9) The term “simplified book prescribed by Presidential Decree” in Article 160 (2) of the Act means the books on which the matters falling under the following subparagraphs may be entered, and which are determined by the Commissioner of the National Tax Service: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>1. Matters regarding revenue such as the turnover;2. Matters regarding the payment of expenditures;3. Matters regarding an increase or decrease of the fixed assets; and4. Other matters of reference.(10) In cases where the transaction particulars, etc. of the stocks or investment shares (including preemptive rights) are entered and managed in the books under Article 160 (6) of the Act, they shall be respectively entered by item on the accompanying sheets, and in cases of entry by item, the transfer price and necessary expenses, such as the trade date, trade volume, unit price, acquisition value or transfer value, trade commission, tax on the stock exchange, special tax on the agricultural and fishery villages, shall be entered by item without ommission. <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999>

(1) The term “cases prescribed by Presidential Decree” in the proviso to the part other than the subparagraphs of Article 1602 (2) of the Act means the following cases: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Where an amount per trade of goods or services provided (including the value-added tax) is not more than 30 thousand won:(a) Until December 31, 2007: 50 thousand won;(b) From January 1, 2008 to December 31, 2008: 30 thousand won; and(c) On and after January 1, 2009: 10 thousand won;2. Where a trade counterpart is a businessman located in the area of Eup or Myeon (limited to the businessmen subject to Article 25 of the Value-Added Tax Act), and who is not a credit card merchant under the Specialized Credit Financial Business Act;3. Where any financial or insurance services are received;4. Where any trade is made with a nonresident having no place of business in Korea or a foreign corporation;5. Where any goods or services are directly provided by a farmer or fisherman (referring to persons engaged in the business of crop production, livestock farming, composite agriculture, forestry or fisheries from among the agriculture indicated on the Korea Standard Industrial Classification notified publicly by the Commissioner of National Statistics Office, and corporations shall be excluded);6. Where any goods or services are provided by the State, local governments, or local governments associations;7. Where any goods or services are provided by nonprofit corporations (including foreign nonprofit corporations, and excluding such parts as related to profit-making business);8. Where any services are provided by a business income earner subject to tax withholding under Article 127 (1) 3 of the Act (limited to cases where a tax withholding is made); and9. Other cases determined by Ordinance of the Ministry of Strategy and Finance.(2) The term “credit card as determined by Presidential Decree” in Article 160-2 (2) 3 of the Act means the debit card under the Specialized Credit Financial Business Act, credit cards issued in a foreign country, and the inscribed prepaid card under Article 126-2 (1) 1 of the Special Tax Treatment Control Act, inscribed electronic prepaid payment instruments and inscribed electronic monies under subparagraph 1-2 of the same paragraph. <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>(3) A businessman shall keep and manage the evidential documents related to trade falling under one of subparagraphs of paragraph (1), separately from the evidential documents falling under one of subparagraphs of Article 160-2 (2) of the Act.(4) In cases where the evidential data falling under any of the following subparagraphs are kept, it shall be deemed to accept and keep the credit card sale slips and cash receipts: <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Detailed statement of monthly use of credit card issued by a business (hereafter in this Article “credit card business operator”) falling under any of the following items and detailed statement of monthly use of prepaid card under Article 126-2 (1) of the Special Tax Treatment Control Act:(a) Credit card business under the Specialized Credit Financial Business Act;(b) Electronic financial transaction business under the Electronic Financial Transaction Act;(c) The National Credit Union Federation of Korea under the Credit Unions Act; or(d) The Korea Federation of Savings Banks under the Mutual Savings Banks Act; or2. Information on transaction (limited to cases of meeting the requirements of the subparagraphs of Article 65-7 of the Enforcement Decree of the Basic Act for National Taxes) of credit cards and debit cards which have been transmitted by credit card businesses and are kept in the enterprise resource planning system. and of prepaid cards, cash receipts, inscribed prepaid electronic payment instruments and inscribed electronic monies under Article 126-2 (1) of the Special Tax Treatment Control Act.(5) The data evidencing expenditure which fall under any of the following subparagraphs may not be kept notwithstanding Article 160-2 (1) of the Act: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>1. Cash receipt;2. Credit card sales slip registered with business credit card in the cash receipt homepage of the National Tax Service; or3. Sales slip of cargo trucker’s welfare card.[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The term “records of issuance for each contributor prescribed by Presidential Decree” in the main body of subparagraphs of Article 160-3 (1) of the Act means that the contents of the following subparagraphs are wholly included therein: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Name, resident registration number and address of the donators;2. Amount of donation;3. Date when the donation was made;4. Date when the receipt of donation was issued; and5. Other matters prescribed by Ordinance of the Ministry of Strategy and Finance.(2) The detailed statement of issuance of receipt of donations under Article160-3 (3) of the Act shall be pursuant to the form prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Wholly Amended by Presidential Decree No. 20618, Feb. 22, 2008]

The term “details of issuance by residents prescribed by Presidential Decree” in Article 160-4 (1) of the Act means what has included all details set forth in the following subparagraphs: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>1. Residents’ name, residents registration number and address;2. Amount falling under any of the following items:(a) Payment amount of deposit of objects of income deduction or payment amount of insurance premium;(b) Repaid amount of the principal and interest eligible for income deduction or interest (including the amount equivalent to the interest accrued from mortgage-backed retirement pension under 51-4 of the Act); and(c) Utilized amount of the credit card, debit card and pre-paid card under Article 126-2 of the Special Tax Treatment Control Act subject to income deduction; and3. Other matters as provided by Ordinance of the Ministry of Strategy and Finance.[This Article Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005]

(1) The term “business account as determined by Presidential Decree” in Article 160-5 (1) of the Ace means an account that meets all the following requirements:1. It shall an account opened at a financial institution that falls under any of items of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy (hereafter referred to as a “financial institution” in this Article);2. It shall not be used for any purpose other than business; and3. and 4. Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>(2) The business account for each place of business shall be reported separately to the superintendent of the competent tax office of each place of business. In such cases, a single account may be reported as a business account for two or more places of business.(3) Each place of business may have two or more business accounts.(4) The scope of the transactions for which the business account shall be used in accordance with Article 160-5 (1) 1 of the Act shall include the cases where the payments are settled by any of the following means through intermediation of, entrustment, etc. to, a financial institution: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Remittance or money transfer between accounts;2. Paying and receiving the payment a transaction by a check under Article 1 of the Check Act (limited to a check whose issuer is a businessman);3. Paying and receiving the payment for a transaction by a bill of exchange of a promissory note under Articles 1 and 75 of the Bills of Exchange and Promissory Notes Act; and4. Paying and receiving the payment for a transaction by a credit card, prepaid card (including prepaid electronic payment instrument and electronic money), or debit card (including electronic debit payment instrument) under the Specialized Credit Financial Business Act or the Electronic Financial Transaction Act.(5) The term the “transaction, in which it is difficult to use business account because of business partner’s status, which is prescribed by Presidential Decree” in Article 160-5 (1) 2 of the Act means a transaction made with persons falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>1. Persons who are under intensive management and utilization by a comprehensive credit information collection agency pursuant to Article 17 (2) of the Use and Protection of Credit Information Act due to default on an obligation related to financial transaction;2. Illegal immigrants; or3. Daily employed workers engaged in the construction work pursuant to subparagraph 1 of Article 20, who are not liable to join the national pension pursuant to the National Pension Act (applicable until December 31, 2009).(6) and (7) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>(8) A person subject to the bookkeeping by double-entry shall keep and maintain records of the amount of transactions for which the business account is required to be used during the pertinent taxable period for each place of business, the amount actually used, and the amount not used separately.(9) When the opening, change, or addition of a business account is reported in accordance with Article 160-5 (3) and (4) of the Act, the report on the opening (change or addition) of a business account as prescribed by Ordinance of the Ministry of Strategy and Finance shall be filed with the superintendent of the competent tax office within the pertinent time period. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(10) The Commissioner of the National Tax Service may prescribe further details as may be necessary for the opening and reporting of a business account, the preparation of statement, etc. within the extent required for tax management.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) In cases where the business subject to the reduction and exemption under Article 13 (1) of the Act or other Acts is operated in addition to other business, the common necessary expenses and the common revenue amount of the business subject to the reduction and exemption and other business shall be separately calculated under the conditions as determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>(2) Matters concerning the method of separate calculation of the asset, debts, and profit and loss in performing a separate accounting under Article 161 of the Act shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The term “businessman who is prescribed by Presidential Decree” in Article 162 (1) of the Act means the businessman capable of preparing and issuing the receipt under Article 211 (2) 2 and 3 or Article 79-2 of the Enforcement Decree of the Value-Added Tax Act. <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>(2) The Commissioner of the National Tax Service may, within the scope necessary for safeguarding the tax payment, determine the distribution of cash registers, the manufacturing and distribution of tapes, and other necessary matters.

(1) The term “business meeting the conditions prescribed by Presidential Decree” in Article 162-2 (1) of the Act means a business running a type of business serving consumers (hereinafter “type of business serving consumers”) pursuant to Table 3-2 by supplying goods or services to consumers, who fall under any of the following subparagraphs, and who are designated as those subject to membership as a credit card merchant by the superintendent of the competent tax office of the place of business or the commissioner of the competent regional tax office, under the conditions as determined by the Commissioner of the National Tax Service in view of the type and scale of the business: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Businesses whose total amount of income (including the amount of income that increased because of determination or revision) of the immediately previous taxable period was 24 million won or more;2. Businesses pursuant to Article 147-3; or3. Businesses pursuant to Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act.(2) When a person to whom a credit card member store has refused transactions with credit card, or to whom a credit card member store has issued a credit card sales slip with a description different from the truth intends to report the details of such transaction in accordance with Article 162-2 (3) of the Act, the person shall file a report stating the following matters along with accompanying documents or materials that can prove the related facts with the Commissioner of the National Tax Service, the commissioner of the competent regional tax office, or the superintendent of the competent tax office within 15 days after the transactions have been refused or the sales slip has been issued with a description different from the truth: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>1. Name of a reporter;2. Trade name of the credit card merchant; and3. Date, details of the transaction, and amount related to such refusal of transactions with credit card or issuance different from the truth.(3) The superintendent of the competent tax office shall, whenever he/she notifies the relevant credit card merchant of the amount reported for the pertinent taxable period in accordance with the latter part of Article 1622 (4) of the Act, notify it within 2 months after the end of the taxable period. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(4) The Commissioner of the National Tax Service may prescribe necessary matters in further detail concerning those subject to the membership of credit card merchant, the procedure of designating those subject to the membership of credit card merchant, the procedures for reporting and notifying concerning the refusal of transactions with credit card, etc., within the scope necessary for tax management. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]

(1) The term “businessman who meets the requirements determined by Presidential Decree” in Article 162-3 (1) of the Act means a businessman who engages in a type of business serving consumers as set forth in the attached Table 3-2 for supplying goods or a service to consumers and falls under any of the following subparagraphs (hereinafter referred to as a “person subject to the membership of cash receipt merchant”): Provided, That the businessmen who have difficulty in obtaining the membership as a cash receipt merchant, as prescribed by Ordinance of the Ministry of Strategy and Finance, shall be excluded herefrom: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. A businessman whose aggregate amount of revenue for the immediately preceding taxable period (including the amount of revenue increased by determination or rectification; hereafter the same shall apply in this Article) reaches or exceeds 24 million won;2. A businessman under Article 147-3; and3. A businessman under Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act.(2) Where paragraph (1) 1 is applicable, the revenue amount of a businessman who engages in a type of business for consumers and another type of business different from that for consumers simultaneously shall be determined only by the amount of revenue from the type of business for consumers, while the amount of revenue of a businessman who has two or more places of business for the type of business for consumers shall be determined by summing up the amount of revenue from each place of business.(3) Where paragraph (1) 1 is applicable, the revenue amount of a businessman who commenced a new business during the immediately preceding taxable period shall be calculated by multiplying the amount of revenue during the immediately preceding taxable period by the number of months, during which the business has been carried on (the number of days less than one month shall be treated as one month), by 12.(4) The businessman who comes to fall under paragraph (1) 1 shall have a membership as a cash receipt merchant no later than March 31 of the pertinent year.(5) The businessman who is admitted to the membership of cash receipt merchant under paragraph (4) may, if the aggregate of the revenue amount of the cash receipt merchant does not reach 24 million won during a taxable period, opt out of the membership of cash receipt merchant on or after January 1 of the following year. In such cases, such person shall not post a sign of the membership of cash receipt merchant.(6) The amount subject to the issuance of cash receipt shall be one won or more for each transaction. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(7) As to the refusal to issue a cash receipt, the reporting and notifying of the issuance different from the truth, Article 210-2 (2) and (3) shall apply mutatis mutandis. In such cases, the term “credit card sales slip” shall be construed as “cash receipt”, while the term “credit card merchant” shall be construed as “cash receipt merchant”.(8) The Commissioner of the National Tax Service may prescribe the matters necessary for the procedures for the admission of businessmen to the membership of cash receipt merchant, the withdrawal therefrom, the reporting and notifying of the refusal of issuance, etc. within the extent required for tax management.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) In cases where a businessman provides goods or services, he/she shall prepare two account statements stating the matters falling under the following subparagraphs, and deliver any of them to the person receiving the goods or services: <Amended by Presidential Decree No. 15191, Dec. 31, 1996>1. Registration number, name or title of the businessman who provides;2. Registration number, name or title of the person who receives;3. Value of provision;4. Preparation date; and5. Other reference matters.(2) In cases where an operator of a business falling under any of the following subparagraphs provides goods or services, he/she may deliver a receipt, notwithstanding paragraph (1): Provided, That if the businessman receiving goods or services shows his/her certificate of business registration and requests a delivery of account statement under paragraph (1), such account statement shall be delivered: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008>1. Business subject to Article 79-2 (1) and (2) of the Enforcement Decree of the Value-Added Tax Act;2. Business stipulated in Article 79-2 (1) and (2) of the Enforcement Decree of the Value-Added Tax Act, and which is exempted from the value-added tax;3. Business as determined by Ordinance of the Ministry of Strategy and Finance, and which provides the goods or services mainly to consumers who are not businessmen; and4. Where the land and structures are provided.(3) In cases where the businessman subject to Article 25 of the Value-Added Tax Act provides the goods or services on which the value-added tax is levied, he/she shall not deliver an account statement notwithstanding paragraphs (1) and (2) (proviso), but deliver a receipt. <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>(4) With respect to a provision of the goods or services falling under any of the following subparagraphs, any account statement or receipt may be excluded from delivery, notwithstanding paragraphs (1) through (3): <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>1. The goods or services provided by stall keepers, itinerant vendors, or a person who does business by utilizing vending machines;2. The services provided by urban buses from among those under Article 12 (1) 6 of the Value-Added Tax Act;3. The goods or services transacted with a nonresident having no domestic place of business or the foreign corporation; and4. Other goods or services for which a delivery of the tax account statement or receipt is exempted under Articles 57 and 79-2 of the Enforcement Decree of the Value-Added Tax Act.(5) With respect to cases where a businessman receives, under Article 144 of the Act, a delivery of receipt for tax withholding from a person receiving services, it shall be deemed to deliver the account statement under paragraph (1). <Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997>(6) Any businessman may, after reporting to the Commissioner of the National Tax Service, deliver the account statement indicating the mattersto be stated under paragraph (1) 1 through 4, other matters as deemed necessary, and that the account statement has been reported to the Commissioner of the National Tax Service. In such cases, such account statement shall be deemed to be an account statement under paragraph (1). <Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 17456, Dec. 31, 2001>(7) In cases where a businessman transmits an account statement pursuant to the methods listed in each of the following subparagraphs and keeps it, it shall be deemed as having delivered an account statement under paragraph (1): <Amended by Presidential Decree No. 17456, Dec. 31, 2001>1. Where the stated matters falling under each subparagraph of paragraph (1) are transmitted by the information communications network (excluding the transmission by the mode of subparagraph 2), and keeps them in electronic form, such as data processing apparatus, electronic tape or diskette, etc.; and2. Where the stated matters falling under each subparagraph of paragraph (1) are transmitted by the Internet by going through a validating system capable of verifying the identity of account statement preparator and whether or not the said statement has been altered, and keeps them in electronic form, such as data processing apparatus, electronic tape or diskette, etc.(8) Where any businessman executing as proxy the delivering affairs of an account statement under paragraph (7) (hereinafter referred to as the “electronic account statement”) issues and keeps the electronic account statement by methods falling under each subparagraph of paragraph (7) acting for the actual transaction businessman, it shall be deemed that the relevant actual transaction businessman has delivered the account statement under paragraph (1). In such cases, the business registration number of an acting businessman shall be stated in the electronic account statement. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001>(9) Delivering procedures and storage requirements of the electronic account statement other than those stipulated in paragraphs (7) and (8) and other necessary matters shall be set forth by the Commissioner of the National Tax Service. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001>

(1) The businessman shall submit an aggregate table of account statements by seller or purchaser as determined by Ordinance of the Ministry of Strategy and Finance within the term under Article 78 of the Act. In such cases, the aggregate table of account statements by seller or purchaser shall contain those to be deemed to have delivered the account statement under Article 211 (5). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008>(2) The provisions of Articles 16 and 20 of the Value-Added Tax Act and Articles 54 through 59, 66, 66-2, and 67 of the Enforcement Decree of the same Act shall apply mutatis mutandis to the preparation and delivery of the account statement under Article 211 and the submission of the aggregate table of account statements by seller or purchaser under paragraph (1), except for the cases as otherwise provided for in this Decree. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(3) The term “if account statements are delivered under the conditions prescribed by Presidential Decree” in Article 163 (2) (proviso) of the Act, means cases where an account statement is delivered under paragraph (2) in the name of the consignor or the principal. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>(4) Where an account statement is delivered by deeming that a consignee or an agent has provided the goods under the main body of Article 163 (2) of the Act, such fact shall be written in addition on the account statement. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>

(1) The account statement delivered under Article 163 (3) of the Act shall be governed by those determined and publicly announced by the Commissioner of the Korea Customs Service by applying mutatis mutandis the provisions of Article 211 (1).(2) Deleted. <by Presidential Decree No. 19327, Feb. 9, 2006>[This Article Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001]

As to the submission of the aggregate table of tax invoices by seller, etc. under Article 163-2 of the Act, Articles 66 and 66-2 of the Enforcement Decree of the Value-Added Tax Act shall apply mutatis mutandis.[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) The detailed statement of payment under Article 164 (1) of the Act shall be submitted to the superintendent of the competent tax office in charge of tax withholding, the commissioner of the competent regional tax office or the Commissioner of the National Tax Service, pursuant to the payment record as determined by Ordinance of the Ministry of Strategy and Finance by income earner receiving such payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>(2) A person who pays earned income or retirement income in Korea shall submit a detailed statement of payments of earned income or detailed statement of payment of retirement income determined by Ordinance of the Ministry of Strategy and Finance by income earner receiving such payments to the superintendent of the competent tax office in charge of tax withholding, the commissioner of the competent regional tax office or the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>(3) Where falling under any of the following subparagraphs, the detailed statement of payment on the aggregate of amount of income or revenue paid annually to each income earner shall be submitted to the superintendent of competent tax office in charge of the withholding, the commissioner of the competent regional tax office, or the Commissioner of the National Tax Service: <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008>1. Where the National Health Insurance Corporation under the National Health Insurance Act, and the Korea Labor Welfare Corporation under the Industrial Accident Compensation Insurance Act, pay the expenses for medical care benefits, etc. to the medical institutions under the Medical Service Act or the pharmacies under the Pharmaceutical Affairs Act; and2. Where a multi-level marketing distributor pays supporting allowances to a multi-level marketing sellers under the Door to Door Sales, etc. Act.(4) The term “income prescribed by Presidential Decree” in the main body of Article 164 (1) of the Act means the income subject to the provisions of Article 201-2 (7) 2. <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005>(5) The term “worker on daily base” in the proviso to Article 164 (1) of the Act means a worker on a daily base under Article 20. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006>(6) The term “marginal profits from long-term savings insurance” in Article 164 (1) 8 of the Act means the profits from an insurance (excluding those by which one receives insurance benefits because of the decease, illness, injury and other physical wound, or loss or destruction of property of the insured) that does not fall under Article 16 (1) 10 of the Act. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>

(1) The term “income prescribed by Presidential Decree” in the latter part of Article 164 (3) of the Act means income falling under any of the following subparagraphs:1. Earned income paid to a worker on a daily base under Article 213 (5); and2. Earned income paid to a resident under Article 215 (2).(2) The term “method prescribed by Presidential Decree” in the latter part of Article 164 (3) of the Act means submission of all the following matters through the cash receipt issuing device under Article 126-3 ofthe Special Tax Treatment Control Act. In such cases, it is deemed that the detailed statement of payment under Article 164 of the Act is submitted: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Year to which the salary income belongs;2. Resident registration number of the worker on a daily base or the resident;3. Amount of salary income; and4. Income tax (referring to determined amount).[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

(1) The provisions of Article 164 (1) of the Act shall not apply to the income falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. Miscellaneous income exempted from tax under subparagraph 5 of Article 12 of the Act;2. Miscellaneous income falling under Article 21 (1) 2 of the Act whose amount of prize does not exceed 100 thousand won per item;2-2. Income under items (a) through (f), (j), (l), (n), (p) and (r) of subparagraph 4 of Article 12 of the Act;2-3. Income under subparagraphs 2 through 4 and 8 of Article 12; or3. Other income determined by Ordinance of the Ministry of Strategy and Finance.(2) Deleted. <by Presidential Decree No. 19327, Feb. 9, 2006>(3) The term “person falling under a specific business type or less than a specific scale” in Article 164 (4) of the Act means the person number of whose detailed statements of payment submitted in the immediately preceding year falls short of 50 sheets, or number of whose regular employees (referring to the average personnel number under a current status at the end of each month) is not more than 10 persons: Provided, That any person falling under any of the following subparagraphs shall be excluded: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20618, Feb. 22, 2008>1. Finance and insurance businesses on the Korea Standard Industrial Classification list;2. The State, local governments or local governments associations;3. Corporations; and4. Persons subject to bookkeeping by double-entry under the provisions of Article 160 (3) of the Act.

(1) The withholding agent shall, where he/she intends to substitute the submission of a specification for tax withholding and other related documents under Article 164 (6) of the Act for the submission of detailed statement of payments, submit a duplicate of the receipt for such tax withholding to the superintendent of the competent tax office in charge of tax withholding within the term under Article 164 of the Act. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>(2) With respect to the resident whose amount of gross revenue of earned income which is not more than the aggregate of the deduction amount of earned income, the basic deduction amount for the principal and the standard deduction amount, he/she may submit a payment specification of earned income as determined by the Commissioner of the National Tax Service in lieu of the detailed statement of payment under Article 164 of the Act: Provided, That it shall be limited to the resident having no secondary place of work, and it shall be applied to the person who gets employed or retires during the year, on the basis of paid amounts which are converted in year. <Amended by Presidential Decree No. 15138, Aug. 22, 1996; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>(3) With respect to the interest income under Article 16 (1) of the Act or the dividend income under Article 17 (1) of the Act, a payment specification of the interest income or the dividend income as determined by Ordinance of the Ministry of Strategy and Finance may be submitted in lieu of a detailed statement of payment under Article 164 (1) of the Act. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>(4) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>(5) With respect to the businessman whose amount of revenue of business income for which a year-end settlement is performed under Article 144-2 of the Act (referring to the amount of income converted in year) is not more than the aggregate of the basic reduction for the principal and the standard reduction, “a payment specification of business income” as determined by the Commissioner of the National Tax Service may be submitted in lieu of a detailed statement of payment under Article 164 of the Act. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 20618, Feb. 22, 2008>(6) The term “miscellaneous income prescribed by Presidential Decree” in Article 164 (10) of the Act means miscellaneous income under Article 21 (1) 15 (a) and 19 (a) and (b) of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>(7) The Commissioner of the National Tax Service shall, upon receiving a detailed statement of payment of miscellaneous income under paragraph (6), provide the residents with the details of the relevant miscellaneous income through the national tax information network under subparagraph 19 of Article 2 of the Basic Act for National Taxes so that such details can be used by residents for filing a final return on the tax base of gross income. In such cases, the Commissioner of the National Tax Service shall, whenever there is any change in the details due to an error, etc., correct the details and notify the relevant taxpayer thereof. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>

(1) In cases where the natural disasters or other special causes have occurred, the relevant superintendent of the competent tax office in charge of tax withholding, the commissioner of the competent regional tax office, or the Commissioner of the National Tax Service may exempt a submission of detailed statement of payment under Article 164 of the Act or extend its submission deadline pursuant to each of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>1. In cases where the books and other evidential documents are destroyed or lost due to inevitable causes, such as natural disasters, a submission of the detailed statement of payment for the period from the portion in the month preceding that in which such causes have occurred, to the portion in the month preceding that in which the relevant business has been restored to its original conditions (in cases of Article 164 (3) of the Act, the portion for the period as determined by Ordinance of the Ministry of Strategy and Finance), may be exempted; and2. In cases where the books and other evidential documents are seized or detained by the competent authorities, a submission term for the detailed statement of payment for the portion of current month in which the relevant causes have occurred and the portion of preceding month thereof (in cases of Article 164 (3) of the Act, the portion of the period as determined by Ordinance of the Ministry of Strategy and Finance) may be extended by not later than the end of the month following that whereto belongs the date on which the payment record has been brought in such status as capable of being submitted.(2) A person who intends to obtain an exemption or extension of a submission of the detailed statement of payment under paragraph (1), shall apply to the superintendent of the competent tax office in charge of tax withholding, the commissioner of the competent regional tax office or the Commissioner of the National Tax Service within the deadline under Article 164 of the Act. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>

(1) A person who pays domestic source income under Article 119 of the Act to a nonresident shall submit a detailed statement of payment prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as a “detailed statement of payment” in this Article) to the superintendent of the competent tax office in the place of tax payment pursuant to Article 164-2 of the Act: Provided, That it shall not apply to income falling under any of the following subparagraphs: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>1. Domestic source income on which the income tax is not levied or exempted under the Act or the Special Tax Treatment Control Act;2. Income in a substantial relation with the domestic place of business under Article 120 of the Act or reverted to the said place of business (excluding income withheld at source under Article 46 of the Act), which are the domestic source income under subparagraphs 1, 2, 4, 11, 12 and 13 of Article 119 of the Act (excluding income under items (f) and (g) of the said subparagraph);3. Domestic source income under subparagraphs 3 of Article 119 of the Act;4. Domestic source income under subparagraphs 5 and 6 of Article 119 of the Act (excluding the income withheld at source under Article 156 of the Act);5. Income falling under subparagraph 13 (f) and (g) of Article 119 of the Act;6. Domestic source income for which an application for non-taxation or exemption has been filed under Article 156-2 of the Act;7. Income for which an amount of withholding tax is less than one thousand won; and8. Income prescribed by Ordinance of the Ministry of Strategy and Finance as other income deemed that there is no effect in presentation of a detailed statement of payment.(2) Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>(3) Where income tax is withheld at source pursuant to Article 46 or 156 (5) of the Act, the relevant person responsible for withholding shall submit a detailed statement of payment for the amount paid. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 21301, Feb. 4, 2009>(4) The detailed statement of payment with respect to income in subparagraphs 1, 2 and 12 of Article 119 of the Act and in Article 156-5 of the Act may be separately prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>(5) Deleted. <by Presidential Decree No. 19327, Feb. 9, 2006>(6) Articles 213 (2), 215 and 216 shall apply mutatis mutandis to the presentation of a detailed statement of payment for a domestic withholding income, etc. of a non-resident. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 21301, Feb. 4, 2009>[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]

(1) The term “income deduction prescribed by Presidential Decree” in Article 165 (1) of the Act means income deduction on the payment amount falling under any of the following subparagraphs: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008>1. Charges under Article 51-3 (1) 3 of the Act;1-2. Interest expenses for mortgage-backed retirement pension under Article 51-4 of the Act;2. Insurance premiums under Article 52 (1) 2 and 2-2 of the Act;3. Medical expenses under Article 52 (1) 3 of the Act and under Article 122-3 of the Special Tax Treatment Control Act;4. Educational expenses under Article 52 (1) 4 of the Act, which have been paid to an agency falling under any of the following items:(a) Kindergartens under the Early Childhood Education Act;(b) Schools under the Elementary and Secondary Education Act, the Higher Education Act and special Acts;(c) Child care facilities under the Infant Care Act; or(d) Facilities for the development and training of occupational abilities under the Act on the Development of Occupational Abilities of Workers;4-2. Educational expenses under Article 122-3 of the Special Tax Treatment Control Act, which have been paid to an agency in items (a) through (c) of subparagraph 4;5. Amount to repay the principal and interest of loan to rent a house and amount to repay the interest of long-term house mortgage loan under Article 52 (2) and (3) of the Act;6. Amount of private annuity savings deposits under Article 86 of the Special Tax Treatment Control Act;7. Amount of annuity savings deposits under Article 86-2 of the Special Tax Treatment Control Act;7-2. Money paid for mutual aid installments under Article 86-3 of the Special Tax Treatment Control Act;7-3. Money paid for savings to purchase a house under Article 87 (2) of the Special Tax Treatment Control Act; or8. Amount of use of credit card, etc. under Article 126-2 of the Special Tax Treatment Control Act.(2) Any person who issues documentary evidence of income deduction under Article 165 (1) of the Act shall submit documentary evidence of income deduction to an institution in the attached Table 4 (hereafter referred to as a “data concentration institution” in this Article) under the conditions prescribed by the Commissioner of the National Tax Service.(3) A data concentration institution under paragraph (2) shall submit documentary evidence of income deduction to the Commissioner of the National Tax Service under the conditions prescribed by the Commissioner of the National Tax Service.(4) The term “cases prescribed by Presidential Decree” in the proviso to Article 165 (1) of the Act means the cases where any person for whom documentary evidence of income deduction is issued refuses to submit documents concerning the details of his/her medical expenses until a data concentration institution submits documentary evidence of income deduction to the Commissioner of the National Tax Service under paragraph (3).(5) The Commissioner of the National Tax Service may, within the necessary boundary concerning income deduction, prescribe necessary matters concerning guidance such as submission guideline with regard to any person who issues documentary evidence of income deduction.(6) The term "cases where consent has been obtained by methods prescribed by Presidential Decree, such as in writing, etc." in Article 165 (6) of the Act means cases where a person subject to basic deduction under Article 50 of the Act provides information with consent by method falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>1. Consent in writing;2. Consent by electronic document under subparagraph 1 of Article 2 of the Framework Act on Electronic Commerce bearing an authorized digital signature under subparagraph 3 of Article 2 of the Digital Signature Act; and3. Consent pursuant to communications determined by the Commissioner of the National Tax Service as wire and wireless communications by which security and stability on information providers can be secured.[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

A withholding agent who pays interest income or dividend income in Korea shall prepare and record a book for tax withholding for the interest and dividend as determined by Ordinance of the Ministry of Strategy and Finance. In such cases, if the book for tax withholding for the interest and dividend is placed in such status as is capable of outputting at any time, by recording and keeping the said book in the computerized tapes or diskettes, it shall be deemed that the book for tax withholding for the interest and dividend is kept and recorded. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

(1) The Commissioner of the National Tax Service shall, where deemed necessary for the affairs of imposing and collecting the income tax, request the head of the institution in charge of guiding and supervising the affairs of resident registration under the Citizen Registration Act or the head of an agency entrusted with guidance and supervision (hereafter referred to as the “head of the supervisory agency of the affairs concerning the resident registration” in this Article) to furnish, by utilizing the computerized media, the computerized information data on the resident registration. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>(2) Upon receipt of a request under paragraph (1), the head of the supervisory agency of the affairs concerning the resident registration shall furnish the computerized information data on the resident registration unless there exist any inevitable circumstances otherwise.[This Article Wholly Amended by Presidential Decree No. 14860, Jun. 30, 1995]

Where a nonresident makes a final return on the tax base, he/she shall submit a final return on the tax base along with a certified copy of the foreigner’s registration card or other similar documents to the superintendent of the competent tax office.

The inherent code number under Article 168 (5) of the Act shall be assigned by the superintendent of competent tax office of the place of business or the association and foundation other than the organization deemed as a juristic person, or other organizations are located. <Amended by Presidential Decree No. 20618, Feb. 22, 2008>[This Article Wholly Amended by Presidential Decree No. 19327, Feb. 9, 2006]

(1) The Commissioner of the National Tax Service shall grant subsidies to a tax association, within the scope of the amount equivalent to 2/100 through 10/100 of the income amount of tax collected and paid every month by the tax association under Article 150 of the Act, in view of the amount of tax collected and paid by the tax association, the number of its members, peculiarity of the kinds of business, and its operational expenses, etc.(2) A person who intends to obtain the subsidies under paragraph (1) shall file an application therefor with the superintendent of the competent tax office by not later than December 31 of the current year: Provided, That he/she may apply for the portion of December by not later than the end of February of the following year.

If a public official engaged in the taxation affairs performs an investigation on the income tax, and where he/she examines the books, documents, and other articles, he/she shall show the inspector’s certificate determined by Ordinance of the Ministry of Strategy and Finance to the parties concerned. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>

The term “documents prescribed by Presidential Decree” in subparagraph 7 of Article 172 of the Act means documents falling under any of the following subparagraphs:1. Documents concerning refund money paid based on the amount of paid-in deduction in at-work mutual-aid association under Article 26; and2. Documents concerning annuity income paid based on pension contribution or employer charges deposited before December 31, 2001, or based on the provision of work before December 31, 2001 under the Public Officials Pension Act, the Veterans’ Pension Act, the Pension for Private School Teachers and Staff Act or the Special Post Offices Act.[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

(1) The term “services prescribed by Presidential Decree” in Article 173 (1) of the Act means services falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>1. Proxy driving services;2. Parcel delivery services;3. Nursing services;4. Caddie services;5. Dispatch services; and6. Services similar to subparagraphs 1 through 6 directly provided by any person who is engaged in work concerning personal services under the Korea Standard Industry Classification or the Korea Standard Vocation Classification and prescribed by Ordinance of the Ministry of Strategy and Finance.(2) The term “any person prescribed by Presidential Decree such as a person who provides place of business related to provision of service” in Article 173 (1) of the Act means any person falling under any of the following subparagraphs: Provided, That cases where a withholding agent withholds tax under Articles 127 (8) and 184 (3) of the Act shall be excluded: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>1. Golf course business operator;2. Hospital business operator;3. Employment agency business operator; and4. Any person who provides a place of business related to the provision of services to the service provider under each subparagraph of paragraph (1) or any person who intermediates or relays the service.(3) Any person who shall prepare and submit taxation data concerning the revenue or amount of income of a service provider under Article 173 (1) of the Act shall fill in the taxation data submission specifications of the place of business provider, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, personal information of the service provider, period of service provision, price for providing the service, etc. and submit it: Provided, That this shall not apply when it is impossible to identify the price of the services provided. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]

The materials concerning the payment of non-life insurance money under Article 174 of the Act shall be submitted in accordance with the notice of the result of the litigation filed for the claim of damage prescribed in Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]

(1) The term “person prescribed by Presidential Decree” in Article 175 (1) of the Act means a resident whose income deduction of donations or amount of inclusion into necessary expenses is one million won or more.(2) The term the “number of persons equivalent to the rate prescribed by Presidential Decree” in Article 175 (2) of the Act means the number of persons equivalent to 1/1000 of donation deducted persons or persons whose necessary expenses have been included, who are liable for sample survey.(3) The Commissioner of the National Tax Service shall set up a framework plan for sample survey each year and submit it to the Minister of Strategy and Finance by the end of March of each year. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>(4) The sample survey shall be performed by means of an on-site survey, written survey, etc., and the matters necessary for the procedures may be prescribed by Presidential Decree.[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]

ADDENDA

This Decree shall enter into force on January 1, 1996: Provided, That the provisions of Articles 9, 17, 18 (1) 8 and (2), subparagraph 2 of Article 22, Article 38 (1) 8 (proviso), Articles 45 through 101, 117, 127 through 132, 134, 141 through 146, 148 through 150, 153 (4) and (5), 155 (1), (7) through (14), 161, 163 (1), (2), (5) and (6), 164, 165, 166 (1) and (2), 167 (5), 169, 208, 211, 212, 218 and 223 shall enter into force on January 1, 1995; and the provisions of Article 26 shall enter into force on January 1, 1999.

(1) This Decree shall apply to the portion of incomes accruing during the taxable period first commenced after the enforcement of this Decree: Provided, That the provisions of Articles 127 through 129 shall apply to the portion first traded after January 1, 1995.(2) The provisions for the transfer income in this Decree shall apply to the portion first transferred after the enforcement of this Decree, notwithstanding the provisions of paragraph (1).

The provisions of Article 25 shall apply to the income accruing after January 1, 1996, from among the insurance contract first concluded after October 1, 1994.

The provisions of Article 26 shall apply to the refund received by a retirement or secession, after first joining in the workplace mutual aid association after January 1, 1999.

The provisions of Articles 62 through 73 and 89 shall apply to the assets acquired first acquired after the enforcement of this Decree.

In applying Article 53, with respect to the real estate for lease which has been acquired or built prior to December 31, 1990, the amount as determined by the Ordinance of the Prime Minister shall be considered to be the amount equivalent to the construction costs.

(1) With respect to the asset subject to the previous provisions of Article 92 as of the enforcement date of this Decree, the previous provisions shall govern until the depreciation of relevant asset is completed.(2) With respect to the residual value of the asset whose depreciation is completed before December 31, 1993 under the previous provisions of Article 87, a businessman selects a period of over 3 years from among the period of five years beginning from the taxable period which terminates after December 31, 1994, and then includes the equally divided amount in the necessary expenses.(3) With respect to the residual value of the asset whose depreciation is not completed as of January 1, 1994, a businessman selects a period of over 3 years from among the period of five years beginning from the taxable period following that wherein the depreciation on the relevant asset is completed, and then the equally divided amount shall be included in the necessary expenses.

In applying Article 9 (1) 2, with respect to the sideline income of a farm-house accruing from January 1, 1995 to December 31, 1995, the term “12 million won per annum” in the same provisions shall be considered to be “8 million won per annum”, and shall be applied as such.

The income tax to have been levied or leviable under the previous provisions before the enforcement of this Decree shall be subject to the previous provisions.

In case where other Acts cite the previous provisions of the Enforcement Decree of the Income Tax Act as of January 1, 1996, and there exists a provision in this Decree corresponding to that, the corresponding provisions of this Decree shall be considered to be cited in lieu of the previous provisions.

In case where the provisions entering into force on January 1, 1995 under the proviso of Article 1 of the Addenda are in conflict with the provisions of the Enforcement Decree of the Income Tax Act before the enforcement of this Decree, the previous provisions shall not apply.

ADDENDA <Presidential Decree No. 14682, Jun. 30, 1995>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (Application Examples) The amended provisions of subparagraph 14 of Articles 12 and 17 (2) shall apply to the portion of incomes received in the month whereto belongs the date of promulgation.ADDENDA <Presidential Decree No. 14721, Jul. 6, 1995>

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

ADDENDA <Presidential Decree No. 14860, Dec. 30, 1995>

This Decree shall enter into force on January 1, 1996: Provided, the amended provisions of Article 162 (6) 1 and (7) 1 shall enter into force on January 1, 1997.

This Decree shall apply to the income accrued during the taxable period first commenced after the enforcement of this Decree: Provided, That the amended provisions of Articles 62, 63, 67, 72, 73 (2), 84 (3), 141 (1) and the provisions of Article 17 (1) of the Addenda of this Decree shall apply to the portion for which the report term first arrived after the enforcement of this Decree.

In the calculation of profit and loss on the sales or evaluation of the securities which is not included in the gain of the securities investment trust under the amended provisions of Article 23 (3), with respect to the securities retained as the relevant securities investment trust asset as of the enforcement date of this Decree, it shall be calculated by making the value as of the enforcement date of this Decree calculated by the method under Article 16 of the Enforcement Decree of the Securities Investment Trust Business Act as the acquisition value of such securities.

The amended provisions of Article 25 (2) 2 shall apply to the insurance contract first concluded after the enforcement of this Decree.

The amended provisions of Article 45 shall apply to the portion whose receipt date first arrived after the enforcement of this Decree.

The amended provisions of Article 102 shall apply to the case where the bonds, etc. are first sold or the interest are first received after the enforcement of this Decree.

The amended provisions of Article 109 shall apply to the insurance premium first paid after the enforcement of this Decree.

(1) The amended provisions for the transfer income in this Decree shall apply to the portion first transferred after the enforcement of this Decree.(2) The amended provisions of Articles 153 (4), 155 (1) and (15), 164 (11) and 166 shall apply to the determination of the amount of transfer income after the enforcement of this Decree.(3) The amended provisions of Article 162 (6) 1 and (7) 1 shall apply to the portion first transferred after January 1, 1997.(4) The amended provisions of Article 163 (6) shall apply to the portion first transferred after the enforcement of this Decree: Provided, That with respect to the assets acquired before December 31, 1995, they may be subject to the previous provisions. <Amended by Presidential Decree No. 15191, Dec. 31, 1996>

The amended provisions of Article 187 (2) shall apply to the portion first joined in the long-term savings after the enforcement of this Decree: Provided, That with respect to the savings joined before the enforcement date of this Decree, which satisfies the conditions indicated in the amended provisions of Article 187 (2), it shall apply to the payment of incomes accrued after the enforcement of this Decree.

The amended provisions of subparagraph 1 of Article 190 shall apply to the interest and the discount amount of the notes first sold or mediated after the enforcement of this Decree.

(1) With respect to the bonds, etc. issued before the enforcement of this Decree, the amount equivalent to the interest during the retention period shall be calculated by regarding the issue date of the relevant bonds, etc. (in case of the tax withholding before the enforcement date of this Decree, the date of tax withholding) as the purchase date as prescribed in Article 102 (4).(2) In applying the amended provisions of Article 102 (5), with respect to the bonds issued before December 31, 1995 for which a method of interest calculation is agreed by compound interest mode, but traded by simple interest mode from the issuing date to before December 31, 1995, the amount equivalent to the interest during the retention period may be calculated by the previous simple interest mode not later than the maturity date of the relevant bonds.

In case where the calculation period for interests and discount amounts of the bonds, etc. subject to the tax withholding on the date of discount sales under the previous provisions of subparagraph 1 of Article 190, extends over the period before and after the enforcement of this Decree, the withholding tax amount and the amount equivalent to the interest during the retention period shall be settled in the revenue period as stipulated in Article 45 concerning the relevant notes, etc.

(1) In case where the farmland, which has fallen under the previous provisions of Article 153 (3) as of the enforcement date of this Decree, comes not to satisfy such requirements due to the amended provisions of the same paragraph, the previous provisions shall govern.(2) In applying Article 154 (1) 3, with respect to a house transferred not later than December 31, 1996 as the inevitable causes under the previous provisions have occurred before the enforcement of this Decree, the previous provisions shall govern.

In paying the tax amount withheld under Article 46 (2) of the Act, the tax amount withheld from January 1, 1996 to January 31, 1996 may be paid not later than March 10, 1996.

(1) The amended provisions of Article 55 (6) shall apply to the portion first deposited in the taxable period whereto belongs the enforcement date of this Decree.(2) The deposit money prior to the taxable period whereto belongs the enforcement date of this Decree, which is not refunded as of the enforcement date of this Decree, shall be included in the necessary expenses in the calculation of incomes for the taxable period whereto belongs the enforcement date of this Decree or for the taxable period thereafter.

In applying the amended provisions of Article 84 (4), the use rate of credit card of the small and medium enterprise under Article 83 (1), which has a business place in the area of a Special Metropolitan City or a Metropolitan City, shall be 50/100 not later than December 31, 1996.

ADDENDA <Presidential Decree No. 14988, Apr. 27, 1996>

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

ADDENDA <Presidential Decree No. 14999, May 13, 1996>(1) (Enforcement date) This Decree shall enter into force on the date of its promulgation.(2) (Application Examples to Gain on Savings Insurance) The amended provisions of Article 25 (1) 1 shall apply to the insurance contract first concluded after the enforcement of this Decree.ADDENDA <Presidential Decree No. 15138, Aug. 22, 1996>(1) (Enforcement date) This Decree shall enter into force on the date of its promulgation.(2) (Application Examples to Tax Reduction for Employment Income of Daily Employed Workers) The amended provisions of Article 119 shall apply to the taxes withheld after the enforcement of this Decree.(3) (Application Examples to Transfer of Stocks by Off-Board Registered Corporation) Article 157 (5) shall be applied to the portion first transferred after the enforcement of this Decree: Provided, That the amended provisions of subparagraphs 2 and 3 of the same paragraph of the same Article shall be applied to the portion first transferred after July 1, 1996.(4) (Refund) The superintendent of the district tax office shall, in case where any tax amount to be refunded has occurred due to the final return on tax base under Article 3 of the Addenda of Act No. 5155, refund it within 30 days after the expiry of term for the final return on the tax base.ADDENDA <Presidential Decree No. 15191, Dec. 31, 1996>

This Decree shall enter into force on January 1, 1997: Provided, That the amended provisions of subparagraph 12 of Article 12, Article 77, subparagraph 3-2 of Article 90, and Article 97 (1) shall enter into force on the date of its promulgation, and the amended provisions of Article 184 (1) shall enter into force on July 1, 1997.

This Decree shall apply to the portion of incomes accrued in the taxable period first commenced after the enforcement of this Decree: Provided, That the amended provisions of subparagraph 12 of Article 12, Article 77, subparagraph 3-2 of Article 90, and Article 97 (1) shall apply to the portion of incomes in the taxable period whereto belongs the enforcement date of this Decree; and the amended provisions of Articles 152, Articles 153 (6), 155, 156, 158, 163, 164, 165, 166, 175-2 and 224, and Article 8 (4) of the Addenda of the Presidential Decree No. 14860 shall apply to the portion first transferred after the enforcement of this Decree.

In calculating the profit and loss incurred by the sales or evaluation of the securities which are not included in the gain or dividend of the securities investment trust under the amended provisions of Article 23 (3), with respect to the securities retained as the securities investment trust asset as of the enforcement date of this Decree, it shall be calculated by regarding the value as of the enforcement date of the Decree, which is computed by the method under Article 14 of the Enforcement Decree of the Securities Investment Trust Business Act, as the acquisition value of such securities.

The amended provisions of subparagraph 4 (b) of Article 45 shall apply to the case where the private annuity savings is first terminated or where the income is first paid in the forms other than an annuity, after the enforcement of this Decree.

The amended provisions of subparagraph 2 of Article 90 shall apply to the contract first concluded after the enforcement of this Decree.

The amended provisions of Article 102 (5) shall apply to the exchange bonds first issued after the enforcement of this Decree; and the amended provisions of paragraph (9) of the same Article shall apply to the bonds first sold after the enforcement of this Decree.

The amended provisions of Articles 147, 211 and 212 shall apply to the portion of goods or services which are supplied or received for the first time after the enforcement of this Decree: Provided, That the amended provisions of Article 147 shall apply to the portion of goods or services which are supplied or received for the first time after January 1, 1999 by the intermediate wholesaler under Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products.

The amended provisions of Article 153 (4) shall apply to the determination of transfer income amount after the enforcement of this Decree.

The amended provisions of Article 184 (1) shall apply to the portion of incomes first paid after January 1, 1997.

The amended provisions of Article 187 (2) shall apply to the portion of joining in the long-term savings first after the enforcement of this Decree: Provided, That in case of the savings joined before the enforcement of this Decree, which meets the requirements under the amended provisions of Article 187 (2), this shall apply to the portion of payment of the incomes accrued after the enforcement of this Decree.

In applying the amended provisions of Article 53 (3), the real estate for lease acquired before December 31, 1990 shall be considered to be acquired on December 31, 1990.

In case where the securities are assessed by the valuation at cost or market under the previous provisions of subparagraph 1 (c) of Article 93 as of the enforcement date of this Decree, and there exist any balance in the securities valuation reserves which are appropriated as the necessary expenses, the amount obtained by deducting the balance in the relevant securities valuation reserves from the book value of the relevant securities shall be considered to be the acquisition value of the relevant securities.

The previous provisions of Article 158 (3) 1 shall be applicable to the balance in the exchange rate adjustment account under the previous provisions of Article 158 (3) 1 at the time of the enforcement of this Decree.

The income tax levied or leviable under the previous provisions before the enforcement of this Decree shall be subject to the previous provisions.

ADDENDA <Presidential Decree No. 15486, Sep. 30, 1997>

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

ADDENDA <Presidential Decree No. 15500, Oct. 25, 1997>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (Application Example) The amended provisions of Article 179 (8) shall apply to the portion first transferred after the enforcement of this Decree.ADDENDA <Presidential Decree No. 15565, Dec. 31, 1997>

This Decree shall enter into force on January 1, 1998: Provided, That the amended provisions of Articles 68, 77, 97 and 112 and Article 10 of the Addenda shall enter into force on the date of its promulgation.

This Decree shall apply to the portion of incomes accruing in the taxable period first commenced after the enforcement of this Decree: Provided, That the amended provisions of Articles 68, 77, 97 and 112 shall apply to the portion of taxable period whereto belongs the enforcement date.

The amended provisions concerning the transfer income tax in this Decree shall apply to the portion first transferred after the enforcement of this Decree.

The amended provisions of Article 131 shall apply to the portion first reported after the enforcement of this Decree.

The amended provisions of Article 141 shall apply to the portion first reported after the enforcement of this Decree.

The amended provisions of Article 144 shall apply to the portion first determined or revised after the enforcement of this Decree.

The amended provisions of Articles of 193, 211 and 212 shall apply to the portion first delivered or submitted after the enforcement of this Decree.

Any income tax levied or leviable under the previous provisions prior to the enforcement of this Decree shall be governed by the previous provisions.

Any stocks or investment shares acquired in conformity with the previous provisions of Article 157 (5) 4 prior to the enforcement of this Decree shall be deemed to have been acquired in conformity with the amended provisions of Article 157 (5) 4.

In applying the amended provisions of Article 77, the public imposts falling under the amended provisions of Article 77 from among those under the previous provisions of Article 77 (1) shall not be deemed to be public imposts falling under the amended provisions of Article 77 not later than December 31, 2000.

ADDENDA <Presidential Decree No. 15604, Dec. 31, 1997>

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

ADDENDA <Presidential Decree No. 15747, Apr. 1, 1998>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (Application Example to Savings Insurance) The amended provisions of Article 25 (1) 1 shall apply to the portion of first receiving the insurance money after the enforcement of this Decree: Provided, That the portion of concluding an insurance contract before December 31, 1995 shall be governed by the previous provisions.(3) (Application Example to Transfer Income Tax) The amended provisions of Article 155 (1) shall apply to the portion first transferred after the enforcement of this Decree.ADDENDA <Presidential Decree No. 15967, Dec. 31, 1998>

This Decree shall enter into force on January 1, 1999.

ADDENDA <Presidential Decree No. 15969, Dec. 31, 1998>

This Decree shall enter into force on January 1, 1999: Provided, That the amended provisions of Articles 27 (limited to the part concerning division), 27-2 (limited to the part concerning division), 38 (1) 12 (e), 105 (2), 110-2, and 112 (4) shall enter into force on the date of promulgation, while those of Articles 147-2 and 147-3 shall enter into force on January 1, 2000, and those of Article 212 shall enter into force on July 1, 1999.

This Decree shall apply to the portion of incomes first accrued after the enforcement of this Decree: Provided, That the amended provisions of Articles 27 (limited to the part concerning division), 27-2 (limited to the part concerning division), 38 (1) 12 (e), 105 (2), 110-2 and 112 (4) shall apply from the portion of the taxable period whereto belongs the enforcement date of this Decree, while the amended provisions of Articles 48 and 51 (3) and (5) shall apply from the portion of delivery of commodities, etc. or supply of services for the first time after the enforcement of this Decree, and those of Article 98 shall apply to the portion first traded after the enforcement of this Decree, and those of Article 144 (1) shall apply to the portions first determined or revised after the enforcement of this Decree, and those of Article 148 (4) and (5) shall apply to the portion of first applying for an occasional imposition after the enforcement of this Decree.

The amended provisions of Article 27 (3) shall apply to the portion of receiving fictitious dividends due to the retirement of stocks, etc. for the first time after the enforcement of this Decree.

The amended provision of Articles 38 (1) 7 and 98 (2) 2 (proviso) shall apply to the portion of first receiving the loan of funds after the enforce-ment of this Decree.

(1) The amended provisions of Articles 62 through 73-2 shall apply to the portion of first depreciation after the enforcement of this Decree.(2) The amended provisions concerning financial lease from among Article 62 (3) shall apply to the portion of first receiving a loan after the enforcement of this Decree.

The amended provisions of Article 89 shall apply to the portion of first acquisition after the enforcement of this Decree.

The amended provisions of Article 132 (3) shall apply to the portion of first accepting the receipts after the enforcement of this Decree.

The amended provisions of Article 211 shall apply to the portion of goods or services first provided or received after the enforcement of this Decree.

The amended provisions of Article 212 (3) and (4) shall apply to the portion of goods first provided after July 1, 1999.

(1) The amended provisions concerning the transfer income in this Decree shall apply to the portion of first transfer after the enforcement of this Decree.(2) In case where a stockholder or an investor and the persons who are the relatives or in other special relationship under Article 20 of the Enforcement Decree of the Basic Act for National Taxes add up the stocks or investment shares transferred by them, within three years retrospectively from the date on which they have transferred the stocks or investment shares, under the amended provisions of Article 157 (6), the period prior to the enforcement date of this Decree shall not be included.

(1) Residents who intend to obtain a refund of excessively paid taxes under Article 8 of the Addenda of Act No. 5580, the Amended Act among Income Tax Act, shall attach the documents capable of verifying that such amount is the retirement allowance received by the worker retired under Article 31 of the Labor Standards Act, at the time of final return on tax base, under the conditions as determined by the Ordinance of the Ministry of Finance and Economy.(2) The superintendent of the district tax office shall, in case where the refundable tax amount occurs by a final return on tax base under paragraph (1), make the refund within 30 days after the expiry of time limit for the final return on tax base.

The amended provisions of Article 183-2 shall apply to the portion of first transfer after the enforcement of this Decree.

In applying the amended provisions of Article 38 (1) 7 and Article 98 (2) 2 (proviso), if there exists a loan made before the enforcement date of this Decree, the previous provisions shall apply to the relevant fund not later than December 31, 2001.

In applying the amended provisions of Articles 48 and 51 (3) and (5), the previous provisions shall apply to the portion of delivery of commodities, etc. or of provision of services before the enforcement date of this Decree.

In applying the amended provisions of Article 58, if the special repair reserves are offset with the costs or counted in the gross income amount under paragraph (4) of the Addenda of Act No. 5532, the Amended Act among the Income Tax Act, the previous provisions of Article 58 shall be applicable.

In applying the amended provisions of Article 97, the balance in the foreign exchange adjustment account as of the enforcement date of this Decree shall be counted into the gross income amount or the necessary expenses under the previous provisions.

(1) A businessman retaining a depreciable asset as of the enforcement date of this Decree shall report on the method of depreciation to be applied to the said asset under the amended provisions of Article 64, not later than the time limit for a final return on tax base in the relevant taxable period, to the superintendent of the district tax office having jurisdiction over the place of tax payment.(2) In case where a businessman liable for a report under paragraph (1) fails to do so, the amended provisions of Article 64 (4) shall apply to the method of depreciation of the said depreciable asset.(3) A businessman retaining the depreciable asset as of the enforcement date of this Decree shall, under the amended provisions of Articles 63 and 63-2, report on the durable years to be applied to the assets falling under the amended provisions of Article 63 (1) 2, not later than the time limit for a final return on tax base in the relevant taxable period, to the superintendent of the district tax office having jurisdiction over the place of tax payment; and where intending to obtain an approval under the amended provisions of Article 63-2 (1), he shall apply not later than the day on which 3 months elapse prior to the expiry of the relevant taxable period, to the commissioner of the regional tax office. In this case, the assets falling under the amended provisions of Article 63 (1) 1 shall be governed by the durable years under the same amended provisions.(4) In case where a businessman liable for a report under paragraph (3) fails to do so, the standard durable years under the amended provisions of Article 63 (1) 2 shall apply to the durable years of such depreciable assets.(5) In applying the amended provisions of Articles 62 through 73-2, the acquisition price of depreciable assets retained as of the enforcement date of this Decree shall be regarded as the acquisition price as of the date of commencing the relevant taxable period.(6) The accumulated depreciation amount by individual property for the depreciable assets retained as of the enforcement date of this Decree shall be governed by one of the following subparagraphs:1. Assets acquired before December 31, 1994: the depreciation reserve by individual property which has been appropriated as of the enforcement date of this Decree; and2. Assets acquired after January 1, 1995: The accumulated depreciation amount by individual property calculated by applying mutatis mutandis the previous provisions of Article 73, by deeming that the individual property has been transferred as of the enforcement date of this Decree: Provided, That if the specification of depreciation adjustment by individual property is prepared and kept, it may be done by the accumulated depreciation amount of the relevant individual property.(7) In case where there exists the denied depreciation amount before the enforcement date of this Decree, from among depreciation costs of depreciable assets retained as of the enforcement date of this Decree, the calculation of the amount, for which a post-approval has not been granted, shall be governed by one of the following subparagraphs:1. In the case of assets acquired before December 31, 1994: the amount calculated by multiplying the denied depreciation amount of each subparagraph of Article 81 (in the case of subparagraph 3 of the same Article: by each property) before the enforcement of Presidential Decree No. 14467, the amended Decree among the Enforcement Decree of the Income Tax Act, by the rate occupied, by the denied depreciation amount of individual property, in the aggregate amount of denied depreciation amount of individual property; and2. In the case of assets acquired after Jan. 1, 1995: the denied depreciation amount by individual property calculated by applying mutatis mutandis the previous provisions of Article 73 by deeming that the individual asset is transferred as of the enforcement date of this Decree: Provided, That if the specification of depreciation adjustment is prepared and kept by each asset, it may be done by the amount calculated by multiplying the denied depreciation amount by same durable year, by the rate occupied, by the denied depreciation amount of individual asset within the same durable years, in the aggregate of the denied depreciation amount of individual asset within the same durable years.(8) With respect to the assets subject to Article 92 before the enforcement of Presidential Decree No. 14467, the amended Decree among the Enforcement Decree of the Income Tax Act, the previous provisions shall govern not later than the completion of the depreciation of the said asset.(9) With respect to the counting in the necessary expenses, etc., for the special depreciation costs of the assets subject to Article 11 of the Addenda of Act No. 4806, the amended Act among the Regulation of Tax Reduction and Exemption Act, as of the enforcement date of this Decree, the amended provisions of previous Article 68 shall govern.Article 18 (Transitional Measures Following Conversion of Taxation of Value-Added Tax on Manpower Service)With respect to the tax withholding in the case of paying the price after January 1, 1999 while receiving before December 31, 1998 a provision of such manpower services as are excluded from the scope of business incomes to be withheld as provided in Article 184 (1), under Article 12 (1) 13 of Act No. 5585, the amended Act among the Value-Added Tax Act and the amended provisions of Article 35 of the Enforcement Decree of the same Act, it shall be governed by the previous examples.

In applying the additional tax on insincere report under Article 81 (7) of the Act, with respect to an intermediary wholesaler under Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, he shall be regarded as a businessman falling under Article 208 (5) not later than December 31, 2001, where the ratio occupied in the gross turnover by the amounts, for which an intermediary wholesaler has issued the account statement by each taxable period ending in the period from January 1, 2002 to December 31, 2010, is not less than the ratios falling under any of the followings, he shall be regarded as a businessman falling under Article 208 (5) during the relevant taxable period, and where the ratio occupied in the gross turnover by the amounts, for which an intermediary wholesaler has issued the account statement by each taxable period ending in the period from January 1, 2002 to December 31, 2010, falls short of the ratios falling under any of the following subparagraphs, the additional tax on insincere report on the account statement shall be imposed by deeming the difference between the amount calculated by applying the ratios falling under any of the following subparagraphs to the gross turnover by each taxable period and the amount for which the account statement is issued, as provision value:1. Intermediary wholesalers of central wholesale markets located in the Seoul Special Metropolitan City under the Act on Distribution and Price Stabilization of Agricultural and Fishery Products: and Taxable Period
Ratio
Jan. 1, 2002 ~ Dec. 31, 2002
10/100
Jan. 1, 2003 ~ Dec. 31, 2003
20/100
Jan. 1, 2004 ~ Dec. 31, 2004
40/100
Jan. 1, 2005 ~ Dec. 31, 2005
40/100
Jan. 1, 2006 ~ Dec. 31, 2006
40/100
Jan. 1, 2007 ~ Dec. 31, 2007
45/100
Jan. 1, 2008 ~ Dec. 31, 2008
50/100
Jan. 1, 2009 ~ Dec. 31, 2009
55/100
Jan. 1, 2010 ~ Dec. 31, 2010
60/100
2. Intermediary wholesalers other than subparagraph 1: Taxable Period
Ratio
Jan. 1, 2002 ~ Dec. 31, 2002
10/100
Jan. 1, 2003 ~ Dec. 31, 2003
20/100
Jan. 1, 2004 ~ Dec. 31, 2004
40/100
Jan. 1, 2005 ~ Dec. 31, 2005
20/100
Jan. 1, 2006 ~ Dec. 31, 2006
20/100
Jan. 1, 2007 ~ Dec. 31, 2007
25/100
Jan. 1, 2008 ~ Dec. 31, 2008
30/100
Jan. 1, 2009 ~ Dec. 31, 2009
35/100
Jan. 1, 20010 ~ Dec. 31, 2010
40/100
[This Article Wholly Amended by Presidential Decree No. 19327, Feb. 9, 2006]

ADDENDA <Presidential Decree No. 16112, Feb. 8, 1999>

This Decree shall enter into force on July 1, 1999.

ADDENDA <Presidential Decree No. 16556, Sep. 18, 1999>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (General Application Example) This Decree shall be applied from the taxable period whereto belongs the date of its enforcement.(3) (Application Example to Transfer Income) The amended provisions pertaining to transfer income in this Decree shall apply to the portion of the first transfer after the enforcement of this Decree.(4) (Transitional Measure on Simplified Tax Rate Table) Excessively collected amount, which is calculated by deducting the aggregate tax amount computed by applying the amended provisions of the attached Table 2, from the aggregate tax amount withheld under the previous attached Table 2 for the relevant taxable period before the enforcement date of this Decree, shall be adjusted from the income tax to be withheld and paid by a withholding agent after the enforcement of this Decree. In this case, in applying the amended provisions of the attached Table 2, the monthly wage amount may be governed by the amount derived from dividing the aggregate wage amount for the relevant taxable period before the enforcement date of this Decree, by the number of continuous service months (the number of days less than a month shall be deemed one month).ADDENDA <Presidential Decree No. 16664, Dec. 31, 1999>

This Decree shall enter into force from January 1, 2000: Provided, That the amended provisions of item (c) of Article 25 (2) and subparagraph 4 of Article 109 shall enter into force from July 1, 2000, and the amended provisions of Articles 25 (1) 1, 53 (1), 187 and 214, and the provisions of Article 8 of the Addenda shall enter into force from January 1, 2001.

This Decree shall be applied from the portion of incomes first accrued after the enforcement of this Decree: Provided, That the amended provisions of Articles 187 and 214 shall be applied from the portion of incomes first accrued and paid after January 1, 2001.

The amended provisions of Article 25 (1) 1 shall be applied from the portion of a first conclusion of an insurance contract after January 1, 2001.

The amended provisions of Article 117 (2) shall be applied from the portion first returned after the enforcement of this Decree.

The amended provisions of Article 179 (9) shall be applied from the portion first transferred after the enforcement of this Decree.

In applying the amended provisions of Article 25 (1) 1, with respect to the portion of insurance contracts concluded before December 31, 2000, the previous provisions shall be applied not later than the expiration date of contract terms of relevant insurances.

(1) The amended provisions pertaining to the transfer income in this Decree shall be applied from the portion first transferred after the enforcement of this Decree.(2) In case where the aggregate of the stocks or investment shares transferred from January 1 to December 31, 1999 by a stockholder or an investor and the persons who are the relatives or in other special relationship under Article 20 of the Enforcement Decree of the Basic Act for National Taxes, and of the stocks or investment shares transferred by them within three years from the relevant date of transfer, comes to fall under the provisions of the previous Article 157 (4) through (6), the previous provisions shall be applied to a levy of the transfer income tax on the stocks or investment shares transferred from January 1 to December 31, 1999.(3) The amended provisions of Article 162 (1) 3 shall be applied from the portion of the earliest date from among the date of first registration for passage of title (including a registration and an entry of a change of holders) after the enforcement of this Decree, the receipt date, the delivery date, or the date of usufruct: Provided, That the previous provisions shall be applied to the portion for which the time of transfer or acquisition has arrived under the previous provisions at the time of enforcement of this Decree.(4) The amended provisions of Articles 163 (6) 2 (b) and 164 (5) shall be applied from the portion of first transfer after January 1, 2001: Provided, That the previous provisions shall be applied to the computation of the necessary expenses for the portion transferred from January 1 to December 31, 2000 among the assets falling under the amended provisions of Article 163 (6) 2 (b).

The provisions of Article 8 of the Addenda shall be applied from the portion of incomes first accrued and paid after January 1, 2001.

ADDENDA <Presidential Decree No. 16762, Mar. 28, 2000>

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

ADDENDA <Presidential Decree No. 16809, May 16, 2000>(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.(2) (Application Example) The amended provisions of Articles 22-2 and 102 (5) shall be applied from the portion of interest incomes of the Government bonds first issued at the open market after the enforcement of this Decree.ADDENDA <Presidential Decree No. 16988, Oct. 23, 2000>

This Decree shall enter into force on the first of the month next to that whereto belongs the date of its promulgation.

The amended provisions of Article 23 (3) shall apply from the portion first accrued and paid after the enforcement of this Decree.

In applying the amended provisions of Article 112 (6), the amended provisions of subparagraph 2 of the same paragraph shall not apply to the housing mortgage loan which has been borrowed prior to the enforcement of this Decree.

(1) The amount paid in the relevant installment savings subscribed (limited to 2.4 million won by taxable period) until December 31, 2005 (where the contract period for relevant installment savings subscribed expires prior to December 31, 2005, until the expiry of relevant contract period) by a person who has subscribed for the installment savings under the Regulations on Housing Supply (hereinafter referred to as the “installment savings subscribed”) prior to the enforcement of this Decree, shall be deemed the amount paid in the savings under Article 52 (2) 1 of the Act: Provided, That where the amount paid after January 1, 2000 at the time of the enforcement of this Decree exceeds 2.4 million won, such amount shall be the limit (where the relevant amount exceeds 4.5 million won, such excessive amount shall be deemed non-existent).(2) Where a person, who has subscribed for the installment savings sub-scribed before the enforcement of this Decree, terminates his installment savings subscribed and subscribes again after the enforcement of this Decree, the provisions of paragraph (1) shall not be applicable.

(1) Where a person who has subscribed for the installment savings before the enforcement of this Decree redeems not later than December 31, 2005 the principal and interest of a loan borrowed from the relevant savings institution in order to lease a house of national housing scale after the enforcement of this Decree, the redemption amount of such principal and interest shall be deemed the redemption amount under Article 52 (2) 2 of the Act.(2) Where a person who has subscribed for the installment savings before the