EDUCATION TAX ACT Wholly Amended by Act No. 4279, Dec. 31, 1990 Amended by Act No. 4669, Dec. 31, 1993 Act No. 4796, Dec. 22, 1994 Act No. 4809, Dec. 22, 1994 Act No. 5037, Dec. 29, 1995 Act No. 5581, Dec. 28, 1998 Act No. 5584, Dec. 28, 1998 Act No. 6032, Dec. 3, 1999 Act No. 6050, Dec. 28, 1999 Act No. 6296, Dec. 29, 2000 Act No. 6521, Dec. 15, 2001 Act No. 7011, Dec. 30, 2003 Act No. 7578, Jul. 13, 2005 Act No. 8137, Dec. 30, 2006 Act No. 8829, Dec. 31, 2007

The purpose of this Act is to secure the source of revenue required forexpanding the education budget in order to improve the quality of education.

The definitions of terms as used in this Act shall be the same as are defined in the Basic Act for National Taxes, the Individual Consumption Tax Act, the Transportation Energy Environment Tax Act, and the Liquor Tax Act, except for those terms as defined in this Act. <Amended by Act No. 5037, Dec. 29, 1995; Act No. 6296, Dec. 29, 2000; Act No. 7578, Jul. 13, 2005; Act No. 8137, Dec. 30, 2006; Act No. 8829, Dec. 31, 2007>

Those who are listed in the following subparagraphs shall be liable to pay education tax in accordance with the provisions of this Act: <Amended by Act No. 4669, Dec. 31, 1993; Act No. 4809, Dec. 22, 1994; Act No. 5037, Dec. 29, 1995; Act No. 5584, Dec. 28, 1998; Act No. 6032, Dec. 3, 1999; Act No. 6050, Dec. 28, 1999; Act No. 6296, Dec. 29, 2000; Act No. 7578, Jul. 13, 2005; Act No. 8137, Dec. 30, 2006; Act No. 8829, Dec. 31, 2007>1. Any person listed in the attached Table among those who are engaged in the finance and insurance business in Korea (hereinafter referred to as “finance and insurance businessmen”);2. Taxpayers of individual consumption tax (excluding the tax on goods of Article 1 (2) 4 (a), (b), (e) and (g) of the Individual Consumption Tax Act; hereinafter the same shall apply) under the provisions of the Individual Consumption Tax Act;3. Taxpayers of the transportation energy environment tax under the Transportation Energy Environment Tax Act;4. Taxpayers of liquor tax (excluding the tax on high strength alcohol for liquor making, unrefined rice wine and medicinal wine; hereinafter the same shall apply) under the provisions of the Liquor Tax Act; and5. through 11. Deleted. <by Act No. 6296, Dec. 29, 2000>

The revenue accruing from trust assets in public purpose trust operated by finance and insurance businessmen shall not be subject to the imposition of education tax.

(1) The amount of education tax shall be calculated by multiplying the tax bas listed in each of the following subparagraphs by the pertinent tax rate: Provided, That in case of subparagraph 1, the education tax amount for the revenue accruing in relation to currency sale transactions with redemption options (hereinafter referred to as “swap transactions”) with the Bank of Korea shall not exceed the balance amount of the revenue accruing in relation to the swap transactions after deducting all costs and expenses therefor as prescribed by the Presidential Decree: <Amended by Act No. 4669, Dec. 31, 1993; Act No. 5037, Dec. 29, 1995; Act No. 6050, Dec. 28, 1999; Act No. 6296, Dec. 29, 2000; Act No. 7578, Jul. 13, 2005; Act No. 8137, Dec. 30, 2006; Act No. 8829, Dec. 31, 2007> Item Classification
Tax Base
Tax Rate
1
Revenue amount of the finance and insurance businessmen
5/1,000
2
Individual consumption tax amount payable in accordance with the provisions of the Individual Consumption Tax Act
30/100 (15/100 for goods under Article 1 (2) 4 (c), (d), (f) and (h) of the Individual Consumption Tax Act)
3
Transportation Energy Environment Tax Act amount payable in accordance with the provisions of the Transportation Energy Environment Tax Act
15/100
4
Liquor tax amount payable in accordance with the provisions of the Liquor Tax Act
10/100
(30/100 for the liquor for which the liquor tax rate is 70/100 or over)
5. through 11. Deleted. <by Act No. 6296, Dec. 29, 2000>
<The amended provision of subparagraph 3 shall be valid until January 1, 2010, in accordance with Article 2 of the Addenda which was promulgated on December 29, 1995 by the Act No. 5037: the amended provision of the proviso of subparagraph 2 shall be valid until January 1, 2011, in accordance with Article 2 (1) of the Addenda which was promulgated on December 29, 2000 by the Act No. 6296>(2) The tax rate as listed in subparagraphs of paragraph (1) above may be adjusted within the scope of 30/100 of such tax rate pursuant to the Presidential Decrees as it is deemed necessary to secure educational budget resources or procure the pertinent goods. <Newly Inserted by Act No. 5037, Dec. 29, 1995>(3) The revenue amount becoming the tax base of paragraph (1) 1 above shall mean interest, dividend, commission, guarantee fee, securities sales profit, redemption profit and insurance premium (deducting the amount reserved as liability reserve and contingency reserve and the amounts of reinsurance premium) and other amount as prescribed by the Presidential Decree, and the calculation thereof shall be prescribed by the Presidential Decree.(4) The revenue amount becoming the tax base of paragraph (1) 1 shall be based on the total revenue amount for the respective taxable period under Article 8.(5) Deleted. <by Act No. 6296, Dec. 29, 2000>

The tax payment place of education tax imposed on the revenue amount of the banking and insurance businessmen shall be the place where their head or main offices (or the domestic main business establishment when they have their head office or main offices abroad) are located: Provided, That in the case where the banking and insurance businessmen have two or more establishments, the tax payment place may be the location of each business establishment as prescribed by the Presidential Decree. <Amended by Act No. 4669, Dec. 31, 1993>

With respect to the attributable period of the revenue amount of the banking and insurance businessmen, Articles 40 and 43 of the Corporation Tax Act shall apply mutatis mutandis. <Amended by Act No. 5581, Dec. 28, 1998; Act No. 7578, Jul. 13, 2005>

(1) The taxable period of education tax imposed on the revenue amount of the banking and insurance businessmen shall be as follows:1. The first period: January 1 to March 31;2. The second period: April 1 to June 30;3. The third period: July 1 to September 30; and4. The fourth period: October 1 to December 31.(2) The initial taxable period with respect to the person who commences to become a banking and insurance businessman shall be the period from the starting date of business to the closing date of the taxable period in which the said date falls.(3) The taxable period, in the case where the banking and insurance businessman closes down the business operation, shall be the period from the starting date of the taxable period in which the date of closing down falls to the date of closing down the business operation.

(1) The banking and insurance businessman shall file a report stating the tax base and tax amount, etc. of the respective taxable period with the director of the concerned tax office within the period as stipulated in the following subparagraphs, and at the same time shall pay the tax amount thereof to him:1. The first period: by May 31;2. The second period: by August 31;3. The third period: by November 30; and4. The fourth period: by the end of February of the next year.(2) When the taxpayer under subparagraphs 2 through 4 of Article 3 reports and pays the relevant tax in accordance with other relevant tax statutes, he shall report and pay the education tax thereof. <Amended by Act No. 5037, Dec. 29, 1995; Act No. 6296, Dec. 29, 2000>(3) Any necessary matters with respect to the report and payment under paragraphs (1) and (2) shall be prescribed by the Presidential Decrees.

(1) If the person liable to report on the education tax in accordance with Article 9 (1) fails to report, or makes mistakes or omissions in the contents of report, the director of the tax office shall determine or correct the tax base and tax amount thereof, and if any mistakes or omissions are found in the tax base and tax amount that determined or corrected, he shall correct or re-correct them.(2) If the tax amount as reported in accordance with Article 9 (1) is not paid, or not paid in full, and the head of the relevant tax office has determined, corrected or re-corrected the tax amount not yet paid in accordance with paragraph (1), he shall collect the tax amount to be additionally paid without any delay.(3) With respect to the education tax imposed on the amount of individual consumption tax, transportation energy environment tax or liquor tax, the head of the relevant tax office shall impose and collect such education tax pursuant to the procedure of imposition and collection of individual consumption tax, transportation energy environment tax or liquor tax, respectively. <Amended by Act No. 5037, Dec. 29, 1995; Act No. 8137, Dec. 30, 2006; Act No. 8829, Dec. 31, 2007>(4) and (5) Deleted. <by Act No. 6296, Dec. 29, 2000>

(1) With respect to a refund of any amount which has been mispaid or overpaid as the education tax on the revenue amount of the finance and insurance businessmen, Articles 51 through 54 of the Basic Act for National Taxes shall apply mutatis mutandis. <Amended by Act No. 7578, Jul. 13, 2005>(2) With respect to a refund of any amount of the mispaid or overpaid portion of the education tax imposed on the amount of individual consumption tax, transportation energy environment tax or liquor tax, and with respect to a refund of any amount of the education tax imposed on the amount of individual consumption tax, transportation energy environment tax or liquor tax which is refundable as a result of a refund of individual consumption tax amount, transportation energy environment tax amount or liquor tax amount in accordance with the provisions of the Individual Consumption Tax Act, the Traffic, Energy and Environment Tax Act or the Liquor Tax Act, Articles 51 through 54 of the Basic Act for National Taxes, Articles 20 and 20-2 of the Individual Consumption Tax Act, Article 17 of the Transportation Energy Environment Tax Act or Articles 34 and 35 of the Liquor Tax Act shall apply mutatis mutandis. <Amended by Act No. 5037, Dec. 29, 1995; Act No. 6296, Dec. 29, 2000; Act No. 6521, Dec. 15, 2001; Act No. 7578, Jul. 13, 2005; Act No. 8137, Dec. 30, 2006; Act No. 8829, Dec. 31, 2007>(3) Deleted. <by Act No. 6296, Dec. 29, 2000>

The amount of the education tax imposed on any tax amount, as the education tax base, which shall not be included in the necessary expenses or loss under the Income Tax Act or the Corporation Tax Act, shall not be included in the necessary expenses or loss in calculating the income amount under the provisions of the Income Tax Act or the Corporation Tax Act. <Amended by Act No. 7578, Jul. 13, 2005>

ADDENDA

This Act shall enter into force on January 1, 1991.

With respect to the education tax imposed on the tax base of special consumption tax amount, this Act shall apply to the sales, discharge, entrance, supply of entertainment, food and drink, or report of importation taking place after the enforcement of this Act.

Subparagraph 3 of Article 3 and Article 5 (1) 3 above shall apply to delivery from warehouse, take-over or report of importation taking place after the enforcement of this Act.

With respect to the education tax imposed on the tax base of registration tax amount, this Act shall apply to registration or record taking place after the enforcement of this Act.

With respect to the education tax imposed on the tax base of pari-mutuel tax amount, this Act shall apply to the ticket sold after the enforcement of this Act.

With respect to the education tax imposed on the tax base of per capita resident tax amount, property tax amount, aggregate land tax amount or automobile tax amount, this Act shall apply to each such tax imposed after the enforcement of this Act.

With respect to the education tax which has been imposed, or should have been imposed in accordance with the former provisions at the time of enforcement of the Act, the former provisions shall apply: Provided, That the amount equivalent to the education tax to be imposed in accordance with the former provisions on the separate taxable interest income and the separate taxable dividend income which are paid after the enforcement of this Act but have occurred on or before December 31, 1990 shall be collected as income tax in accordance with the Income Tax Act.

With respect to the interest of land development bond issued on, or before December 31, 1986 among the profits of the banking and insurance businessmen, the education tax shall not be imposed.

ADDENDA <Act No. 4669, Dec. 31, 1993>(1) (Enforcement Date) This Act shall enter into force on January 1, 1994: Provided, That the amended provisions of subparagraph 3 of Article 3 shall enter into force on January 1, 1995.(2) (Application to Education Tax on Tax Base of Liquor Tax Amount with Regard to Group of “Soju”) With respect to the education tax on the tax base of liquor tax amount with regard to the group of “soju”, this Act shall apply to the delivery from the distillery or the report of importation after the enforcement of the amended provisions of subparagraph 3 of Article 3.(3) (Application as to Tax Payment Place of Banking and Insurance Businessmen) The amended provisions of Article 6 shall apply to the report and payment of tax amount on the revenue accruing after the enforcement of this Act.ADDENDA <Act No. 4796, Dec. 22, 1994>

This Act shall enter into force on January 1, 1995.

The amended provisions of Article 5 (4) of the Education Tax Act in accordance with the provisions of Article 3 (7) of this Addenda shall apply to the tax portion imposed after the enforcement of this Act.

ADDENDA <Act No. 4809, Dec. 22, 1994>

This Act shall enter into force on January 1, 1995. (Proviso Omitted.)

ADDENDA <Act No. 5037, Dec. 29, 1995>

This Act shall enter into force on July 1, 1996.

The amendments to Article 5 (1) 3 shall remain in force until December 31, 2009. <Amended by Act No. 7011, Dec. 30, 2003; Act No. 8137, Dec. 30, 2006>[This Article Wholly Amended by Act No. 6296, Dec. 29, 2000]

The proviso of Article 5 (1) 2 above shall apply to the sales, discharge or report of importation taking place for the first time after the enforcement of this Act.

With respect to the education tax on the tax base of traffic tax amount, this Act shall apply to the discharge or report of importation taking place for the first time after the enforcement of this Act.

With respect to the education tax on the tax base of tobacco consumption tax amount, this Act shall apply to the discharge or importation taking place for the first time after the enforcement of this Act.

ADDENDA <Act No. 5581, Dec. 28, 1998>

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

ADDENDA <Act No. 5584, Dec. 28, 1998>

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

ADDENDA <Act No. 6032, Dec. 3, 1999>

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

ADDENDA <Act No. 6050, Dec. 28, 1999>(1) (Enforcement Date) This Act shall enter into force on January 1, 2000.(2) (Application Example) The amended provisions of Article 5 (1) 4 of this Act shall apply to the portion taken out of a manufactory or report of importation after the enforcement of this Act.(3) (Transitional Measure) Concerning education tax imposed or to be imposed under the previous provisions at the time of the enforcement of this Act shall be dealt with according to the previous example.ADDENDA <Act No. 6296, Dec. 29, 2000>

This Act shall enter into force on January 1, 2001: Provided, That the amendments to subparagraph 2 of Article 3 and Article 5 (1) 2 (proviso) shall enter into force on July 1, 2001.

(1) The amendments to Article 5 (1) 2 (proviso) shall remain in force until December 31, 2010. <Amended by Act No. 7578, Jul. 13, 2005>(2) The Education Tax shall not be levied from January 1, 2011, on the amount of special consumption tax levied on the goods under Article 1 (2) 4 (c), (d), (f) and (h) of the Special Consumption Tax Act. <Amended by Act No. 7578, Jul. 13, 2005>

With respect to the goods falling under the amendments to subparagraph 2 of Article 3 and Article 5 (1) 2 (proviso), it shall be applicable to the portion first brought out from the manufacturing place or first reported on importation after July 1, 2001.

With respect to the education tax levied or to be levied under the previous provisions at the enforcement of this Act, the previous provisions shall apply.

With respect to the education tax on the tax base of registration tax amount under previous subparagraph 5 of Article 3 and Article 5 (1) 5 at the enforcement of this Act, the previous provisions shall apply only to the portion registrated or registered before December 31, 2000.

With respect to the education tax on the tax base of racing and pari-mutuel tax amount under previous subparagraph 6 of Article 3 and Article 5 (1) 6 at the enforcement of this Act, the previous provisions shall apply only to the portion of winner’s suffrage or horse-riding suffrage sold before December 31, 2000.

With respect to the education tax on the tax base of per capita resident tax amount, property tax amount, aggregate land tax amount, and automobile tax amount under previous subparagraphs 7 through 10 of Article 3 and Article 5 (1) 7 through 10 at the enforcement of this Act, the previous provisions shall apply only to the portion whereon the relevant tax amounts are levied before December 31, 2000.

With respect to the education tax on the tax base of tobacco consumption tax amount under previous subparagraph 11 of Article 3 and Article 5 (1) 11 at the enforcement of this Act, the previous provisions shall apply only to the portion of manufactured tobacco first brought out from the manufacturing place or the bonded area or first brought inland before December 31, 2000.

With respect to the revenue amount of the Korea Asset Management Corporation (referring to the Assets Management Corporation on the provisions of previous annexed Table 2) at the enforcement of this Act, the education tax shall be levied only on the portion reverting to before December 31, 2000.

ADDENDA <Act No. 6521, Dec. 15, 2001>

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

ADDENDA <Act No. 7011, Dec. 30, 2003>

This Act shall enter into force on January 1, 2004.

ADDENDUM <Act No. 7578, Jul. 13, 2005>This Act shall enter into force on the date of its promulgation.ADDENDA <Act No. 8137, Dec. 30, 2006>(1) (Enforcement Date) This Act shall enter into force on January 1, 2007.(2) (Transitional Measures concerning Additional Tax) The previous provisions shall govern the additional tax on the education tax to have levied or to be levied under the provisions of the previous Article 11 before the enforcement of this Act.ADDENDA <Act No. 8829, Dec. 31, 2007>

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