INCOME TAX ACT Wholly Amended by Act No. 4803, Dec. 22, 1994 Amended by Act No. 5031, Dec. 29, 1995 Act No. 5108, Dec. 29, 1995 Act No. 5155, Aug. 14, 1996 Act No. 5191, Dec. 30, 1996 Act No. 5193, Dec. 30, 1996 Act No. 5259, Jan. 13, 1997 Act No. 5291, Jan. 13, 1997 Act No. 5374, Aug. 28, 1997 Act No. 5424, Dec. 13, 1997 Act No. 5493, Dec. 31, 1997 Act No. 5503, Jan. 13, 1998 Act No. 5532, Apr. 10, 1998 Act No. 5552, Sep. 16, 1998 Act No. 5559, Sep. 16, 1998 Act No. 5580, Dec. 28, 1998 Act No. 5994, Aug. 31, 1999 Act No. 6051, Dec. 28, 1999 Act No. 6124, Jan. 12, 2000 Act No. 6276, Oct. 23, 2000 Act No. 6292, Dec. 29, 2000 Act No. 6429, Mar. 28, 2001 Act No. 6557, Dec. 31, 2001 Act No. 6781, Dec. 18, 2002 Act No. 6852, Dec. 30, 2002 Act No. 6916, May 29, 2003 Act No. 6958, Jul. 30, 2003 Act No. 7006, Dec. 30, 2003 Act No. 7120, Jan. 29, 2004 Act No. 7289, Dec. 31, 2004 Act No. 7319, Dec. 31, 2004 Act No. 7335, Jan. 14, 2005 Act No. 7528, May 31, 2005 Act No. 7579, Jul. 13, 2005 Act No. 7837, Dec. 31, 2005 Act No. 7873, Mar. 3, 2006 Act No. 7896, Mar. 24, 2006 Act No. 7908, Mar. 24, 2006 Act No. 8144, Dec. 30, 2006 Act No. 8435, May 17, 2007 Act No. 8524, Jul. 19, 2007 Act No. 8531. Jul. 19, 2007 Act No. 8541, Jul. 23, 2007 Act No. 8825, Dec. 31, 2007 Act No. 8852, Feb. 29, 2008 Act No. 8911, Mar. 21, 2008 Act No. 9270, Dec. 26, 2008

(1) Any person who falls under any of the following subparagraphs shall be liable to pay the income tax on his income under this Act:1. A person who holds his domicile in Korea or has held his temporary domicile in Korea for one year or more (hereinafter referred to as a “resident”); and2. A person who is not a resident (hereinafter referred to as a “nonresident”), has any withholding income derived from the Republic of Korea.(2) Any person who falls under any of the following subparagraphs shall be liable to pay the income tax withheld under this Act:1. Resident;2. Nonresident;3. Corporation having its head office or principal office in Korea (hereinafter referred to as a “domestic corporation”);4. Branch or business office in Korea (including any sub-branch and other similar ones; hereinafter the same shall apply) of a corporation having its head office or principal office in a foreign country (hereinafter referred to as a “foreign corporation”); and5. Any other withholding agent as prescribed by this Act.(3) Any unincorporated association, foundation or other organization, which is not an organization considered as a corporation under Article 13 (4) of the Basic Act for National Taxes (hereinafter referred to as an “organization considered as a corporation”), shall be considered as a resident and subject to the application of this Act. <Amended by Act No. 8144, Dec. 30, 2006>(4) The matters concerning the distinction between the domicile and temporary domicile and between the resident and nonresident as referred to in paragraph (1) shall be determined by Presidential Decree.

(1) When calculating the amount of income derived from a joint business under the provisions of Article 43, each relevant resident shall be liable to pay the relevant tax: Provided, That where the income amount of any specially related persons is summing up to the income amount of the major joint business proprietor under the provisons of Article 43 (3) (hereafter referred to as a “major joint business proprietor” in this paragraph) for taxation, the specially related persons shall be jointly liable to pay the tax on the sum of the relevant income amounts with the major joint business proprietor within the extent of the income amount corresponding to his profit-and-loss distribution ratio under the provisions of paragraph (2) of the same Article. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(2) If a tax is levied on the amount of income of a predecessor under Article 44, the inheritor shall be liable to pay the tax.(3) Deleted. <by Act No. 6781, Dec. 18, 2002>(4) Where it is deemed that a donor has directly transferred the property under Article 101 (2), the donor and donee shall be severally and jointly liable to pay a tax on the transfer income. <Newly Inserted by Act No. 6557, Dec. 31, 2001>(5) Any person who has any income which is subject to the withholding under Article 127 and which is not added to the tax base for the global income tax under Article 14 (3) or any other Acts, shall be liable to pay the income tax to be withheld. <Amended by Act No. 5493, Dec. 31, 1997>(6) Income vested to trust property shall be deemed to be vested to a beneficiary (a truster of the trust or his successor, if a beneficiary is not specified or does not exist). <Newly Inserted by Act No. 8825, Dec. 31, 2007>

(1) Income tax shall be imposed on all the incomes of a resident, which are prescribed by this Act: Provided, That as for a foreigner resident whose total period during which he has had his address or place of residence since ten years before the end of the relevant taxable period is five years or less, only his income that has been paid in Korea or has been remitted to Korea shall be taxed in cases of an income accruing outside of Korea from among the taxable incomes.(2) Nonresidents shall be imposed only on the domestic source income under Article 119.(3) In applying paragraphs (1) and (2), the partners under subparagraph 2 of Article 100-14 of the Special Tax Treatment Control Act shall be taxed on the income accruing in excess of the value of equity share as of the allocation date from among the income allocated under Article 100-18 (1) of the same Act and the market price of the asset distributed under Article 100-22 (1) of the same Act.[This Article Wholly Amended by Act No. 9270, Dec. 26, 2008]

(1) The income of a resident shall be classified as follows: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>1. Global income:Income calculated by summing up interest income, dividend income, real estate rental income, business income, earned income, annuity income and miscellaneous income accruing during the corresponding year;2. Retirement income:Income accruing from retirement and lump-sum payment under the National Pension Act or the Public Officials Pension Act, etc. (including lump-sum payments, such as additional payments and allowances, paid in forms other than annuity; hereinafter the same shall apply);3. Transfer income:Income accruing from a transfer of assets; and4. Deleted. <by Act No. 8144, Dec. 30, 2006>(2) In classifying incomes under the provisions of paragraph (1), the income from profit accruing from trust other than collective investment scheme under the provision of Articles 17 (1) 5 (excluding the special account of an insurance company that runs a collective investment business concurrently under Article 251 of the Financial Investment Services and Capital Markets Act) shall be classified according to the substance of income accruing from the property rights which have been transferred to the trustees under the provision of Article 1 (2) of the Trust Act or which have been otherwise disposed of. <Newly Inserted by Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(3) The income of a nonresident shall be classified under the provisions of Article 119. <Amended by Act No. 8144, Dec. 30, 2006>

(1) The income tax shall be levied on the amount of income for one year from January 1 to December 31.(2) If a resident dies, the income tax shall be levied on the amount of income accruing in the period from January 1 to the date of death.(3) If a resident becomes a nonresident due to the moving of the domicile or temporary domicile to a foreign country (hereinafter referred to as “departure from Korea”), the income tax shall be levied on the amount of income accruing from January 1 to the date of departure from Korea.

(1) The payment place of the income tax on a resident shall be the place of his domicile: Provided, That if no such place of domicile exists, it shall be the place of his temporary domicile.(2) The payment place of the income tax on a nonresident shall be the seat of the domestic business place as prescribed in Article 120 (if two or more domestic business places exist, the principal one): Provided, That if no domestic business place exists, it shall be the place where the domestic source income accrues.(3) If the place of tax payment is obscure, it shall be determined under conditions prescribed by Presidential Decree.

(1) The payment place of the income tax withheld from the source shall be as follows: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. If the person who collects the income tax through withholding is a resident, it shall be the seat of his principal place of business: Provided, That if the tax is withheld from a place of business other than the principal one, it shall be the seat of such place of business, and if no place of business exists, it shall be the place of his domicile or temporary domicile;2. If the person who collects the income tax through withholding is a nonresident, it shall be the seat of his principal domestic place of business: Provided, That if he collects the income tax through withholding at a domestic place of business other than his principal domestic place of business, it shall be the seat of such domestic place of business, and if no domestic business place exists, it shall be his place of temporary settlement or his place of sojourn;3. If the person who collects the income tax through withholding is a corporation, it shall be the seat of its head office or principal office;4. Notwithstanding the provisions of subparagraph 3, if the person who collects the income tax through withholding is a corporation, and its branch, business office and other place of business independently manage the accounting affairs on a pay-as-you-go basis, it shall be the seat of such place of business (excluding cases where the seat of such business place is located in a foreign country): Provided, That, in cases prescribed by Presidential Decree, the seat of the head office or principal office of the corporation may be treated as the place of payment of the income tax to be collected through withholding; and5. If the withholding agent prescribed in Articles 156 and 156-3 through 156-5, has no place of tax payment as referred to in subparagraphs 1 through 4, it shall be the place prescribed by Presidential Decree.(2) The place of payment of the income tax collected by the tax association under Article 150, shall be the seat of the relevant tax association.

(1) In cases where an inheritor of a resident or nonresident becomes a person liable to pay the income tax on the predecessor, due to the death of the resident or nonresident, the place of payment of the income tax shall be the place of the locality of domicile or temporary domicile of the predecessor, inheritor or tax manager, which the inheritor or tax manager reports as the place of tax payment to the superintendent of the competent district tax office, under the conditions as prescribed by Presidential Decree.(2) If a nonresident appoints a tax manager, the place of payment of the income tax on the nonresident shall be the seat of his domestic business place or the locality of domicile or temporary domicile of his tax manager, which is reported as a tax payment place to the superintendent of the competent district tax office, under the conditions as prescribed by Presidential Decree.(3) When the report as referred to in paragraph (1) or (2) is made, the reported place shall, thereafter, be considered as the place for tax payment of the resident or nonresident.(4) If there is no report as referred to in paragraph (1) or (2), the place of payment of income tax on the resident or nonresident shall be subject to the provisions of Articles 6 and 7.(5) The place of payment of income tax on a public official who has no address in Korea, shall be such place as prescribed by Presidential Decree.

(1) Notwithstanding the provisions of Articles 6 through 8, the Commissioner of the National Tax Service or the commissioner of the competent regional tax office may designate separately the tax payment place, under the conditions as prescribed by Presidential Decree, in the following cases: <Amended by Act No. 8825, Dec. 31, 2007>1. Where a resident having any real estate rental income or business income, requests as tax payment place in the seat of his business place; and2. In case of a resident other than the resident as referred to in subparagraph 1 or nonresident, if it is deemed that the tax payment place as prescribed in Articles 6 through 8 is unreasonable in view of the income situation of the taxpayer, or inconvenient for making the tax payment.(2) In the event that the tax payment place is designated under paragraph (1), or the request as referred to in subparagraph 1 of the said paragraph is filed but the designation of the tax payment place is not made as requested because it is deemed unreasonable for the convenience of tax administration to designate the seat of business place as the tax payment place, the Commissioner of the National Tax Service or the commissioner of the competent regional tax office shall notify it in writing to the taxpayer, his inheritor, tax manager, or tax association, respectively.(3) If the cause of designation of the tax payment place as referred to in paragraph (1), is extinguished, the Commissioner of the National Tax Service or the commissioner of the competent regional tax office shall revoke the designation of the tax payment place.(4) Even though the designation of the tax payment place as referred to in paragraph (1) is revoked, any return, request, claim, payment, or other Acts on the income tax, made prior to the revocation, shall not be affected.

If the tax payment place as referred to in Articles 6 through 9, is changed, it shall be reported to the superintendent of the competent district tax office in the place where the tax payment is to be paid, within fifteen days after the change takes place, under the conditions as prescribed by Presidential Decree. <Amended by Act No. 8825, Dec. 31, 2007>

The income tax shall be levied by the superintendent of the district tax office or the commissioner of the regional tax office having the jurisdiction over the tax payment place as prescribed in Articles 6 through 10. <Amended by Act No. 8825, Dec. 31, 2007>

Any income tax shall not be levied on the following incomes: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5155, Aug. 14, 1996; Act Nos. 5259 & 5291, Jan. 13, 1997: Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6124, Jan. 12, 2000; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 7873, Mar. 3, 2006; Act No. 7896, Mar. 24, 2006; Act No. 8144, Dec. 30, 2006; Act No. 8524, Jul. 19, 2007; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Profits of the public trust under the provisions of Article 65 of the Trust Act;2. Real estate rental income accruing from using the paddies and dry fields for the production of crops and from the house rent, which is prescribed by Presidential Decree;3. Business income accruing from any side business of the farm household prescribed by Presidential Decree;3-2. Business income accruing from manufacturing traditional liquors prescribed by Presidential Decree;3-3. Business income accruing from the felling or transfer of the growing trees on the forestland having five years or more of afforestation period, which does not exceed six million won in a year. In such cases, necessary matters for calculating afforestation period and tax amount shall be prescribed by Presidential Decree;4. Earned income or retirement income, which falls under any of the following items:(a) Salary received by a soldier on active service, and prescribed by Presidential Decree;(b) Wage received by a person mobilized under law, from the workplace which mobilizes him;(c) Medical care benefits, temporary disability compensation benefits, disability benefits, nursing benefits, survivor’s benefits, survivor’s special benefits, and special disability benefits, funeral expenses received by the beneficiary under the Industrial Accident Compensation Insurance Act, and pay of a compensatory, reparative, or consolatory nature, received by an employee or his bereaved family in connection with any injury, disease or death caused while offering labor services;(d) Medical treatment compensation, temporary disability compensation, injury or disease compensation, lump sum compensation, disability compensation, survivor’s compensation, compensation for missing, compensation for loss of personal belongings, funeral expenses, and funeral service compensation received by an employee, seaman, or his bereaved family under the Labor Standards Act or the Seafarers Act;(e) Unemployment benefits, childcare leave benefits, maternity leave benefits received under the Employment Insurance Act, and childcare leave allowances received under the relevant Acts and subordinate statutes by a public official under the State Public Officials Act or the Local Public Officials Act, or by a person to whom the Pension for Private School Teachers and Staff Act or the Special Post Offices Act applies, and the lump sum refund (limited to that received due to death) or the lump sum for death received under the National Pension Act;(f) Medical treatment expenses, lump sum for medical treatment, disability compensation, death condolence money, death compensation, survivor’s compensation, survivor’s lump sum, lump sum of survivor’s pension, additional money to survivor’s pension, special additional money to survivor’s pension, accident relief money, and accident compensation, or wages received during leave for a physical or mental disability or disease 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;(g) School expenses determined by Presidential Decree;(h) Allowances for the compensation of actual expenses, which are determined by Presidential Decree;(i) Pay received by the person working for a foreign government (including the local government of the foreign country, and the State government of a foreign federal state; hereinafter the same shall apply), or an international organization prescribed by Presidential Decree, who is prescribed by Presidential Decree: Provided, That it is limited to cases where the foreign government does not levy any income tax on the pay received by any public official of Korea who works in that country;(j) Reward benefits and school expenses received under the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State, and annuity received under the Honorable Treatment of Ex-Presidents Act;(k) Allowances received by military personnel and military service officials who are stationed in a foreign country to carry out any operational mission;(l) If military personnel or military service officials who serve in a war, dies in action (including death caused by any war wound; hereinafter the same shall apply), the pay for the year in which death ensues;(m) Wages prescribed by Presidential Decree received for services furnished abroad or in North Korea as provided under the Inter-Korean Exchange and Cooperation Act;(n) Shares borne by the State, local governments, or employers under the National Health Insurance Act, the Employment Insurance Act, the National Pension Act, the Public Officials Pension Act, the Pension for Private School Teachers and Staff Act, the Veterans’ Pension Act, the Guarantee of Workers’ Retirement Benefits Act, the Korea Scientists and Engineers Mutual-Aid Association Act or the Long-Term Care Insurance for the Aged Act;(o) Allowances received by workers prescribed by Presidential Decree who are engaged in any production and related works for the extended work, night work, or holiday work prescribed by Presidential Decree, taking the level of wages, categories of work, etc. into account;(p) Meals or meal expenses determined by Presidential Decree;(q) Wages received by workers from employers in connection with their or their spouses’ childbirth or with upbringing of their children under the age of six, which amount not more than 100,000 won per month; and(r) Remunerations and retirement lump sum money received by the ROK Armed Forces Prisoners of War under the Act on the Repatriation and Treatment of ROK Armed Forces Prisoners of War Detained in North Korea;4-2. Deleted; <by Act No. 7006, Dec. 30, 2003>4-3. Annuity Income falling under any of the following items:(a) Survivor’s pension or disability pension received under the National Pension Act;(b) Survivor’s pension, disability pension, or injury annuity received 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;(c) Various annuities received under the Industrial Accident Compensation Insurance Act; and(d) Pension received by the ROK Armed Forces Prisoners of War under the Act on the Treatment of ROK Armed Forces Prisoners of War Detained in North Korea; and5. Miscellaneous incomes, which fall under any of the following items:(a) Reward benefits and school expenses received under the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State, and the settlement money, recompense money and other money and valuables received under the Act on the Protection and Settlement Support of Residents Escaping from North Korea;(b) Prizes and reward received under the National Security Act;(c) Supplementary prizes received in connection with any decoration as prescribed by the Awards and Decorations Act, and other prizes and supplementary prizes prescribed by Presidential Decree;(d) The following compensations paid to an employee for an outstanding invention related to the employee’s work, which is prescribed by Presidential Decree:(ⅰ) Compensation paid to an employee from his employer, pursuant to Article 15 of the Invention Promotion Act; and(ⅱ) Compensation paid to the faculty or staffs from the industry-academic cooperation, founded in the university they belong to, under the Promotion of Industrial Education and Industry-Academic Cooperation Act, pursuant to Article 32 of the same Act;(e) Settlement money and other money and valuables received by the ROK Armed Forces Prisoners of War under the Act on the Treatment of ROK Armed Forces Prisoners of War Detained in North Korea;(f) Income accruing from the transfer of paintings, writings, and antiques designated as the State-designated heritage under the Cultural Heritage Protection Act; and ≪Enforcement Date: Jan. 1, 2011≫(g) Income accruing from the transfer of paintings, writings, and antiques to museum or galleries. ≪Enforcement Date: Jan. 1, 2011≫

(1) If any income falling under any one of the following subparagraphs is included in the global income amount, the income tax amount shall be calculated by applying the tax rate as prescribed in Article 55 (hereinafter referred to as the “basic tax rate”) to the balance amount after taking the deduction under the provisions of Articles 50, 51, 51-2, 51-3, 51-4 and 52 from the said global income amount (hereinafter referred to as the “global income deduction”), and an amount equivalent to the amount calculated by multiplying the said tax amount by the rate at which the relevant earned income amount or business income amount occupies the global income amount shall be reduced or exempted: <Amended by Act No. 5559, Sep. 16, 1998; Act No. 8144, Dec. 30, 2006>1. Allowances received by a foreigner dispatched to Korea pursuant to any intergovernmental convention, from both or one of the countries concerned;2. Deleted; and <by Act No. 5580, Dec. 28, 1998>3. Income earned by a resident who is not a national of the Republic of Korea and a nonresident (hereafter in this Article referred to as “nonresident, etc.”), from any overseas navigation business of such vessel and aircraft as prescribed by Presidential Decree: Provided, That it shall be limited to a case where the country the nationality of which the nonresident, etc. holds, allows the equal exemption on any vessel and aircraft operated by a national of the Republic of Korea.(2) Deleted. <by Act No. 5031, Dec. 29, 1995>(3) Even though income tax is reduced or exempted pursuant to Acts other than this Act, the income tax calculated by applying mutatis mutandis the provisions of the text of paragraph (1) shall be reduced or exempted, except as provided otherwise by such Acts.

(1) Tax base for a resident’s global income and retirement income shall be calculated separately. <Amended by Act No. 8144, Dec. 30, 2006>(2) Tax base for the global income (hereinafter referred to as the “global income tax base”) shall be the amount obtained by deducting the sum of interest income amount, dividend income amount, real estate rental income amount, business income amount, earned income amount, annuity income amount and miscellaneous income amount that are calculated under the provisions of Articles 16 through 47-2 from a global income. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(3) The income falling under any of the following subparagraphs shall not be added up in calculating the global income tax base as referred to in paragraph (2): <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 7528, May 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Non-taxable income under the Special Tax Treatment Control Act or Article 12;2. Wages of a daily-paid worker prescribed by Presidential Decree;3. Interest and dividend incomes withheld at the tax rates as prescribed in Article 129 (1) 1 (a) or (2), and the excessive refund of the workplace mutual-aid association as prescribed in Article 16 (1) 11;3-2. Interest and dividend incomes received from financial institutions by the organization making a financial transaction with an indication of its title, which does not distribute its profits to the constituting members, from among other organizations than those considered as a corporation;3-3. Incomes subject to separate taxation under the Special Tax Treatment Control Act;4. In cases where the aggregate amount of interest income and dividend income (excluding the dividend income amount under the provisions of Article 17 (1) 6-3) other than those as referred to in subparagraphs 3, 3-2 and 3-3 does not exceed 40 million won (hereinafter referred to as the “standard amount of global taxation on any interest income, etc.”), the income amount to which the provisions of Article 127 apply;5. Miscellaneous incomes prescribed in Articles 21 (1) 1 through 22 which do not exceed three million won and to which the provisions of Article 127 apply (excluding cases where a resident with the relevant income intends to add it up in cases of calculation of the global income tax base; hereinafter referred to as the “miscellaneous incomes subject to separate taxation”): Provided, That the income under subparagraph 7 shall be excluded;5-2. Miscellaneous income amount under Article 21 (1) 25; ≪Enforcement Date: Jan. 1, 2011≫6. Annuity income under Article 20-3 where the gross annuity amount under paragraph (3) of the same Article does not exceed six million won (excluding cases where a resident having such income intends to add it up in calculating the global income tax base; hereinafter referred to as “annuity income subject to separate taxation”); and7. Miscellaneous income amount prescribed by Presidential Decree, such as the prize of lottery under Article 2 of the Lottery Tickets and Lottery Fund Act.(4) Deleted. <by Act No. 7006, Dec. 30, 2003>(5) In computing the standard amount of global taxation on any interest income, etc. pursuant to paragraph (3) 4, the amount that is added pursuant to the proviso to Article 17 (3) shall not be included in the dividend income. <Newly Inserted by Act No. 6292, Dec. 29, 2000>(6) Of the incomes falling under paragraph (3) 3, 3-2, 3-3, and 4, the interest income shall be called as “interest income subject to separate taxation”, and the dividend income, as “dividend income subject to separate taxation”, respectively. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003>(7) Tax base for retirement income (hereinafter referred to as the “retirement income tax base”) shall be the amount obtained by deducting the retirement income amount as prescribed in Article 48 from the retirement income amount as prescribed in Article 22.(8) Deleted. <by Act No. 8144, Dec. 30, 2006>

Except as otherwise provided for in this Act, income tax on a resident’s global income and retirement income shall be calculated as follows: <Amended by Act No. 5155, Aug. 14, 1996; Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. The calculated tax amount on global income and the calculated tax amount on retirement income shall be calculated, respectively, by applying the basic tax rate to each tax base calculated under the provisions of Article 14;2. The final tax amount on global income and the final tax amount on retirement income shall be calculated, respectively, by taking the deduction prescribed in Articles 56 through 59 from each of the tax amounts calculated under the provisions of subparagraph 1 (hereinafter referred to as the “tax credit”). In such cases, when there is any tax credit for dividend income under the provisions of Article 56, the amount obtained by making the tax credit under Articles 56-2 and 57 through 59 for the amount obtained by making a tax credit for dividend income from the calculated tax amount or the amount under the provisions of subparagraph 2 of Article 62, whichever is larger shall be the tax amount, and if there is any tax amount reduced or exempted under the provisions of Article 13, each final tax amount shall be calculated by deducting it; and3. The gross final tax amount on global income and the gross final tax amount on retirement income shall be calculated, respectively, by adding the additional tax prescribed in Article 81 of this Act and Articles 47-2 through 47-5 of the Basic Act for National Taxes to the final tax amounts calculated under the provisions of subparagraph 2.

(1) The interest income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 6429, Mar. 28, 2001; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Interest and discount amount of any bonds or securities issued by the State or the local government;2. Interest and discount amount of any bonds or securities issued by a domestic corporation;3. Interest and discount amount of deposits (including the installment savings, security deposits, deposits and postal transfer; hereinafter the same shall apply) received in Korea;4. Profits accruing from the credit fraternity or credit installments as prescribed by the Mutual Savings Banks Act;5. Deleted; <by Act No. 8144, Dec. 30, 2006>6. Interest and discount amount of any bonds or securities issued by a domestic branch or business office of a foreign corporation;7. Interest and discount amount of any bonds or securities issued by a foreign corporation;8. Interest of deposits received from abroad;9. Marginal profits from sales of bonds or securities under a repurchase agreement prescribed by Presidential Decree;10. Marginal profits of any insurance of nature of savings prescribed by Presidential Decree;11. Excessive refund of any workplace mutual association prescribed by Presidential Decree;12. Profits accruing from a non-business loan; and13. Incomes similar to those under subparagraphs 1 through 12, which bear a nature of price following any use of money.(2) The interest income amount shall be included in the total gross income amount accruing during the corresponding year.(3) Matters necessary for the interest income as referred to in each subparagraph of paragraph (1) and the scope of interest income amount under the provisions of paragraph (2) shall be determined by Presidential Decree. <Amended by Act No. 7006, Dec. 30, 2003>

(1) The dividend income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Dividends or shares of any profits or surplus received from a domestic corporation, and dividends of the interest during construction as prescribed in Article 463 of the Commercial Act;2. Dividends or shares received from an organization considered as a corporation;3. Fictitious dividends;4. Amounts disposed of as dividend under the Corporation Tax Act;5. Profits accruing from collective investment schemes prescribed by Presidential Decree which are received at home or from abroad;6. Dividends or shares of any profits or surplus received from a foreign corporation, and dividends of the interest during construction as prescribed by the laws of the relevant foreign country, and dividends of similar nature thereto;6-2. Amount regarded as allotted under the provisions of Article 17 of the Act for the Coordination of International Tax Affairs;6-3. Income amount accruing from the joint business referred to in Article 43 that is distributed to the joint investment business proprietors according to the profit-and-loss distribution ratio under the provisions of Article 43 (1); and7. Incomes similar to those under subparagraphs 1 through 6 and 6-2, which bear a nature of profit distribution.(2) The fictitious dividend referred to in paragraph (1) 3 shall mean the amount falling under any of the following subparagraphs, and shall be considered to have been paid to the relevant stockholders, employees and other investors: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6557, Dec. 31, 2001; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Amount of money or value of other property acquired by a stockholder due to a retirement of stocks or reduction of capital, or by an employee or investor due to retirement or withdrawal from a company or reduction of investment, which exceeds the amount disbursed by the stockholder, employee or investor for acquiring the stocks or investment shares;2. Value of the stocks or investment shares acquired by capitalizing he whole or part of the surplus fund of a corporation or the amount of investment: Provided, That this shall not apply to the cases where any amount falling under any of the following items is capitalized:(a) The capital reserve fund under the provisions of Article 459 (1) 1, 1-2, 1-3, 2, 3 and 3-2 of the Commercial Act (excluding the amount of the stocks, etc. issued exceeding the market price of the relevant stocks, etc. in case where the stocks, etc. are issued in a debt-equity swap; excluding the marginal gains accruing from evaluation of corporations undergoing merger or from evaluation of dividing companies under the conditions as prescribed by Presidential Decree; and limited to the gains from the retirement of treasury stocks or treasury shares that are capitalized after two years from the date of retirement in case where the market price under the provisions of Article 52 (2) of the Corporation Tax Act does not exceed the acquisition value at the time of retirement); and(b) Revaluation reserve fund in accordance with the Assets Revaluation Act (excluding the amount equivalent to the revaluation excess of land under Article 13 (1) 1 of the same Act);3. The amount of money or value of other properties acquired by a stockholder, an employee, an investor or a member of a dissolved corporation (including any organization considered as a corporation), as a share of the remaining assets of the dissolved corporation, which exceeds the amount disbursed for acquiring the stocks, investment shares, or capital: Provided, That the same shall not apply to cases of changing structures of a domestic corporation and falling under any of the following items:(a) Where a corporation changes its structures under the Commercial Act;(b) Where a corporation that was established by a special law changes its structure, due to amendment or annulment of such special law, to a corporation under the Commercial Act; and(c) Where a domestic corporation changes its structures as prescribed by Presidential Decree;4. The sum of money and value of stocks or investment shares acquired due to a merger, by a stockholder, employee or investor of a corporation extinguished by the merger, from a corporation continuing to exist after the merger or established newly due to the merger, which exceeds the amount disbursed for acquiring the stocks or investment shares of the corporation extinguished by the merger;5. Where the ratio of stockholding of stockholders other than the relevant corporation is increased due to the capitalization under each item of subparagraph 2 in such status that the corporation retains the treasury stocks or treasury shares, the value of the stocks equivalent to the increased ratio of stockholding; and6. The amount by which the total sum of price of stocks, money, and other asset values (hereinafter referred to as the “price of division”) which are gained by the stockholder of a corporation which is divided when a corporate division occurs (hereinafter referred to as a “divided corporation”) or by the stockholder of an extinguished party of a merger by division, through division from a corporation established as a result of division or from the other party of the merger by division, exceeds the amount disbursed in acquiring the stocks of the divided corporation or the extinguished party of the merger by division (limited to the stocks which are decreased due to their retirement, etc., if the divided corporation continues to exist).(3) The dividend income amount shall be included in the total gross income amount accruing during the corresponding year: Provided, That where the dividends falling under any of the following subparagraphs are excluded from the dividend incomes referred to in paragraph (1) 1 through 4, the amount equivalent to 11/100 (12/100 for a dividend income during January 1, 2009 and December 31, 2010) of the said dividend incomes shall be added up to the total gross income amount accruing during the corresponding year: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Fictitious dividend resulted from capitalizing the marginal profit from retirement of treasury stocks or treasury shares under paragraph (2) 2 (a);2. Fictitious dividend resulting from capitalizing the marginal profit from revaluation of land under paragraph (2) 2 (b);3. Fictitious dividends under the provisions of paragraph (2) 5; and4. Where there is a dividend income from a corporation prescribed by Presidential Decree from among corporations which are subject to a non-taxation, exemption, reduction and exemption, income deduction of the corporation tax to which the minimum tax under Article 132 of the Special Tax Treatment Control Act does not apply (including a non-taxation, exemption, reduction and exemption, or income deduction pursuant to other Acts than the Special Tax Treatment Control Act), the amount which are calculated by multiplying the amount of the dividend income by the rate prescribed by Presidential Decree.(4) In applying the provisions of paragraph (2) 1, 3, 4 and 6, in cases where the amount spent for acquiring stocks or investment shares is not clear, their par value or investment amount shall be considered as the amount spent for their acquisition. <Newly Inserted by Act No. 6292, Dec. 29, 2000>(5) In applying the provisions of paragraph (2), matters necessary for the assessment of the price of stocks or investment shares shall be determined by Presidential Decree. <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999>(6) Matters necessary for the dividend income under the provisions of each subparagraph of paragraph (1) and the scope of dividend income amount under the provisions of paragraph (3) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 7006, Dec. 30, 2003>

(1) The real estate rental income shall be the following incomes accruing during the corresponding year:1. Income accruing from a lease of any real estate or right to the real estate;2. Income accruing from a lease of a factory or mining foundation; and3. Income accruing from a lease of the right to mine by the owner of a mining right, person holding the mining concession right, or subcontractor of mining.(2) The real estate rental income shall be the amount calculated by deducting the necessary expenses disbursed for it, from the total gross income amount accruing during the corresponding year.(3) The term “lease” used in paragraph (1) means to establish a right to lease on a deposit basis or other right to receive consideration for it, and to have another person use anything or right, or benefit from it, by a lease contract or other way, to receive consideration for it.(4) Matters necessary for the scope of the real estate rental income, shall be determined by Presidential Decree.

(1) The business income shall be the following income accruing during the corresponding year: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Incomes accruing from agriculture (excluding cash crops cultivating business; hereinafter the same shall apply) and forestry business;2. Incomes accruing from the fishery business;3. Incomes accruing from the mining business;4. Incomes accruing from the manufacturing industry;5. Incomes accruing from the electricity, gas and water supply businesses;6. Incomes accruing from the construction business (including such sales business of newly constructed houses as prescribed by the Presidential Decree; hereinafter the same shall apply);7. Incomes accruing from the wholesale business and retail business;8. Incomes accruing from the restaurant business and lodging business;9. Incomes accruing from the transportation business and communication business;10. Incomes accruing from the banking business and insurance business;11. Incomes accruing from the real estate business (excluding the incomes accruing from the real estate rental business and the real estate sale business as referred to in subparagraph 12; hereinafter the same shall apply), lease business and enterprise service business;12. Incomes accruing from the real estate sale business prescribed by Presidential Decree;13. Incomes accruing from the educational service business;14. Incomes accruing from the health and social welfare business;15. Incomes accruing from service business related to recreation, culture, or sports, public services, repair services, or private services; and16. Incomes accruing from the domestic service business.(2) Business income shall be the amount calculated by deducting the necessary expenses disbursed for it, from the total gross income amount accruing during the corresponding year.(3) Matters necessary for the scope of business income shall be determined by Presidential Decree.

(1) The earned income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>1. Class A:(a) Salary, pay, remuneration, annual allowance, wage, bonus, allowance, and other benefits of a similar nature, which are received for offering labor;(b) Income received as a bonus by a resolution at the general meetings of stockholders or partners of a corporation, or similar deliberative organs;(c) Amount considered as a bonus under the Corporation Tax Act; and(d) Income received due to a retirement, which is not included in the retirement income; and2. Class B:(a) Pay received from a foreign organization or the United Nations Forces (excluding the United States Armed Forces) stationed in Korea; and(b) Pay received from a nonresident or foreign corporation located overseas (excluding its branch or business office in Korea): Provided, That, in calculating the domestic source income amount accruing from any place of business in Korea of a nonresident as prescribed in Article 120 (1) and (2) and from any place of business in Korea of a foreign corporation as prescribed in Article 94 (1) and (2) of the Corporation Tax Act, that appropriated as necessary expenses or losses shall be excluded.(2) The earned income shall be the amount calculated by deducting the amount as prescribed in Article 47 from the income amounts referred to in subparagraphs of paragraph (1) (excluding non-taxable incomes; hereinafter referred to as “gross pay”). <Amended by Act No. 6292, Dec. 29, 2000>(3) In cases where an employee of a domestic corporation, who has joined an employees’ organization satisfying the requirements determined by Presidential Decree (hereinafter referred to as “employee stockholders’ association”), has acquired any stocks of the corporation through the association and holds the amount of stocks not exceeding that provided for in Presidential Decree (excluding the controlling stockholder of the relevant corporation and the stockholders having any special relationship prescribed by Presidential Decree; hereinafter referred to as “minor stockholders”), any income accruing from the difference between the acquisition value of such stocks and the market value of such stocks, shall not be regarded as an earned income. <Amended by Act No. 6292, Dec. 29, 2000>(4) Matters necessary for the scope of earned incomes shall be determined by Presidential Decree.

(1) The annuity income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Various annuities received under the National Pension Act;2. Various annuities received 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;3. Where the retirement insurance money determined by Presidential Decree is received in the form of annuity, the annuities received by a retiree as the relevant annuity or other similar payments;4. Income received in the form of annuity by participating in the pension savings plan under Article 86-2 of the Special Tax Treatment Control Act (referring to the annuity income computed by the formula under paragraph (3) of the same Article; hereinafter the same shall apply);4-2. Pension received under the Guarantee of Workers’ Retirement Benefits Act or the Korea Scientists and Engineers Mutual-Aid Association Act; and5. Incomes similar to those under subparagraphs 1 through 4 and 4-2, which are paid in the form of annuities as prescribed by Presidential Decree.(2) The annuity income under the provisions of paragraph (1) 1 and 2 shall be the annuity income received based on either the contributions to pension and employer contributions (including the contributions by the State or a local government; hereinafter the same shall apply) paid on or after January 1, 2002, or the offer of labor made on or after January 1, 2002, and the annuity income under the provisions of paragraph (1) 4-2 shall be the annuity income received based on an amount which has been deducted under the provisions of Article 51-3 (1) 3. <Amended by Act No. 8144, Dec. 30, 2006>(3) The annuity income amount shall be the amount calculated by deducting the annuity income amounts referred to in Article 47-2 from the sum of the incomes under subparagraphs of paragraph (1) (excluding incomes that are excluded from annuity income under paragraph (2) and non-taxable income; hereinafter referred to as “gross annuity amount”).(4) The scope of annuity income, calculation methods of annuity income and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 7837, Dec. 31, 2005>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) Miscellaneous incomes shall be the incomes other than interest income, dividend income, real estate rental income, business income, earned income, annuity income, retirement income and transfer income, which are provided for in the following subparagraphs: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003; Act No. 7528, May 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8531, Jul. 19, 2007; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Prize, award, reward, compensation for service, or similar money and valuables;2. Money and other valuables obtained by winning in any lottery, premium or other tickets;3. Financial profits obtained by participating in any act as prescribed by the Act on Special Cases concerning Regulation and Punishment of Speculative Acts, etc.;4. Refunds received by a purchaser of a horse racing ticket prescribed by the Korean Racing Association Act (hereinafter referred to as the “horse racing ticket”), a winner voting ticket prescribed by the Bicycle and Motorboat Racing Act (hereinafter referred to as the “winner voting ticket”), a bullfighting match voting ticket prescribed by the Traditional Bullfighting Match Act (hereinafter referred to as the “bullfight match voting ticket”), and a sports promotion voting ticket prescribed by the National Sports Promotion Act (hereinafter referred to as the “sports promotion voting ticket”);5. Money and other valuables received by a person other than the author, stage performer, phonograph record maker or broadcasting business operator, in consideration of a transfer or use of the copyright or neighboring rights;6. Money and other valuables received in consideration of a transfer, lease or use of any asset or right of the following items:(a) Movie films;(b) Tapes or films for the radio and television broadcast; and(c) Others similar to those referred to in items (a) and (b), which are prescribed by Presidential Decree;7. Money and other valuables received in consideration of the transfer or lease of mining rights, fishing rights, industrial property rights and industrial information, industrial secrets, trademark rights, business rights (including the rights to lease a store prescribed by Presidential Decree), rights incidental to permission to collect earth, sand and rocks, rights to develop and use underground water, and other assets or rights similar thereto;8. Money and other valuables received as rent for a temporary lease of any goods or place;9. Money and other valuables received for establishment or lease of servitude or superficies (including the rights established under the ground or in air space);10. Overdue charge or indemnities caused by a breach or cancellation of a contract;11. In case where any compensation is paid, or any new ownership is acquired, for finding any lost articles or buried property, such compensation or assets;12. Assets the ownership of which is acquired by possessing any ownerless thing;13. Money and other valuables received by a specially related person with a resident, nonresident or corporation prescribed by Presidential Decree from the relevant resident, nonresident or corporation on the reason of such special relation, which are not considered as pay, a dividend or donation but considered as an economy profit: Provided, That where a member of an employee stockholders association has acquired the stocks of the corporation concerned through the association and is a minor stockholder, the income accruing from the difference between the acquisition value and the market value of such stocks shall be excluded;14. Money and other valuables for prize winning or allotment or others corresponding to them (hereinafter referred to as “prize money and other valuables, etc.”) received by participating in acts using slot machines (including video games) and coin-tossing machines and other similar machines and tools (hereinafter referred to as “slot machines, etc.”);15. Incomes received in the capacity of the original author for creative works of literature, academic, fine arts, music, or photography (including the illustrations or cartoons printed in periodicals under the Act on the Freedom of Newspapers, etc. and Guarantee of Their Functions, and translation of Korean creative works or classics into foreign languages or modern Korean) that falls under any of the following items:(a) Manuscript fees;(b) Royalties that are paid for use of copyrighted materials; or(c) Costs received for creative works of fine arts, music, or photography;16. Fee of a brokerage as to any property right;17. Recompense;18. Lump-sum payments received from cancelation of account of mutual aid fund for small corporations or small enterprises prescribed by Presidential Decree;19. Rewards received for temporarily furnishing personal services (excluding those falling under subparagraphs 15 through 17) that fall under any of the following items:(a) Services like lectures, speeches or similar services, made to multiple persons without an employer-employee relation, for which rewards are received;(b) Services like commentation, enlightenment, or screening of performances, etc. on the radio, television broadcasting, etc. for remuneration or other rewards of a similar nature;(c) Services rendered by a lawyer, certified public accountant, tax accountant, architect, surveyor, patent lawyer, or other person having professional knowledge or special expertise using his corresponding knowledge or expertise for remuneration or consideration; and(d) Services, other than those under items (a) through (c), rendered without an employer-employee relation for allowances or other similar costs;20. Income that has been disposed of as miscellaneous income pursuant to Article 67 of the Corporation Tax Act;21. Lump-sum payments for termination of personal pension savings deposits as prescribed by Presidential Decree (including amounts received in the form other than annuity after the maturity of an installment payment contract);22. Gains from exercising after retirement the stock options that have been granted before retirement, or from exercising those granted without an employer-employee relation;23. Bribes;24. Money and other valuables received by means of the acceptance of property through mediation, or the acceptance of property through breach of trust; and25. Income accruing from the transfer of paintings, writings, and antiques prescribed by Presidential Decree. ≪Enforcement Date: Jan. 1, 2011≫(2) Miscellaneous incomes shall be the amount obtained by deducting necessary expenses, from the total gross income amount accruing during the corresponding year.(3) The detailed scope of, calculation method of, and other necessary matters for miscellaneous incomes shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 8144, Dec. 30, 2006>

(1) Retirement income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Class A:(a) Lump sum payments for retirement paid to a person having Class A earned income;(b) Honorable retirement allowances paid to public officials in various services, and teachers and employees of private schools;(c) Lump sum payments from out of retirement insurance as provided for in Presidential Decree that are received by a person having Class A earned income for his retirement;(d) Lump sum return payments or lump sum death payments under the National Pension Act;(e) Lump sum payments 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; and(f) Other lump sum payments similar to those under items (a) through (e), which are provided for in Presidential Decree; and2. Class B:Income paid to a person having any Class B earned income, for his retirement.(2) The retirement income under paragraph (1) 1 (d) and (e) shall be the lump sum payment received based on either contributions to pension or employer contributions made on or after January 1, 2002 or on the offer of labor made on or after January 1, 2002. <Newly Inserted by Act No. 6292, Dec. 29, 2000>(3) Retirement income shall be the amount adding up the incomes as referred to in each subparagraph of paragraph (1).(4) The retirement income as referred to in paragraph (1) (excluding income under subparagraph 1 (d)) shall be limited to the retirement income paid to an employee of a resident, non-resident or corporation for his actual retirement. <Amended by Act No. 6292, Dec. 29, 2000>(5) The converted money of retirement benefits of employees, which is paid to the National Pension Fund by the employers under Article 88 of the National Pension Act, shall be considered to be included in the retirement benefits as prescribed in paragraph (1) 1 (a). In such cases, the converted money of retirement benefits shall be considered to be paid to the relevant employee at the time of his actual retirement. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8541, Jul. 23, 2007>(6) The scope of retirement income, methods of calculation and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 7837, Dec. 31, 2005>

(1) The total of each income of a resident shall be calculated by summing up the amounts received or to be received in the corresponding year.(2) In the case of paragraph (1), if those other than money are received, the income amount shall be calculated by the value at the time of the transaction.(3) In the calculation of the total gross income amount, the matters necessary for the scope, calculation and determination date of the amount received or to be received, shall be determined by Presidential Decree.

(1) If a resident lends any real estate (excluding houses and land appurtenant thereto, which are prescribed by Presidential Decree; hereafter in this Article, the same shall apply) or any right to such real estate, and receives the guarantee money, security money for lease on a deposit basis, or other money of a similar nature, the amount calculated under Presidential Decree shall be counted in the total gross income amount in the calculation of the real estate rental income amount. <Amended by Act No. 6557, Dec. 31, 2001>(2) Even though a resident consumes any inventory assets or trees for his domestic use or pays them to his employees or other persons, the amount equivalent to the value thereof at the time of consumption or payment shall be counted in the total gross income amount in the calculation of the business income amount or miscellaneous income amount in the year to which the consumption date or payment date belongs. <Amended by Act No. 8144, Dec. 30, 2006>

(1) The amount appropriated for other tax amounts, among the income tax amount or resident tax amount that has been refunded or is to be refunded, shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year.(2) The amount appropriated for making up such deficit carried-over as prescribed by the Presidential Decree, among the value of any assets received gratuitously by a resident, and the debt amount reduced by exemption or extinguishment of his obligation, shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year.(3) In calculating the real estate rental income or the business income of a resident, the income amount brought forward from the preceding year shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year. <Amended by Act No. 8144, Dec. 30, 2006>(4) When a resident who engages in the agriculture, forestry, fishery, mining or manufacturing industry, has used the agricultural products, prize, livestock products, forest products, marine products, mining products, earth, sand and rock which were mined, caught, bred, cultivated or collected by him, or has used products manufactured by him, as raw materials or fuel for manufacture of other products produced by him, the amount equivalent to the used portion thereof shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year. <Amended by Act No. 8144, Dec. 30, 2006>(5) If a resident carrying on the construction business, has used the goods produced by him as materials for a construction work contracted by him, the amount equivalent to the used portion shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year.(6) If a resident carrying on the electricity, gas or water supply business, has used the electricity, gas or water produced by him for the power, fuel or water for other business purposes carried on by him, the amount equivalent to the used portion shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year.(7) The individual consumption tax, liquor tax, and transportation energy environment tax paid or to be paid by a resident who is liable to pay such individual consumption tax, liquor tax, and transportation energy environment tax imposed on the amount earned or to be earned as his total gross income amount, shall not be counted in the total gross income amount in the calculation of the income amount accruing during the corresponding year, except for any tax amount to be borne in purchasing, importing or using raw materials, fuel or other goods. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(8) Additional payments on refund of national taxes under Article 52 of the Basic Act for National Taxes, interest on refund under Article 46 of the Local Tax Act, and interest of refund of erroneous payments shall not be counted in the total gross income amount in calculation of the income amount accruing during the corresponding year. <Amended by Act No. 8825, Dec. 31, 2007>(9) The sales tax amount of the value-added tax shall not be counted in the total gross income amount, in calculation of the income amount accruing during the corresponding year.

(1) The amount to be counted in the necessary expenses in the calculation of the real estate rental income amount, business income amount or miscellaneous income amounts, shall be a sum total of the expenses which correspond to the total gross income amount accruing during the corresponding year and are generally admitted. <Amended by Act No. 5031, Dec. 29, 1995: Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(2) The expenses which correspond to the total gross income amount in the preceding year and is finally determined in the corresponding year shall be counted in the necessary expenses in the corresponding year, except for the amount that has been counted in the necessary expenses in the preceding year.(3) Matters necessary for calculating the necessary expenses, shall be determined by the Presidential Decree.

(1) If a resident having any real estate rental income or business income (hereinafter referred to as the “businessman”) appropriates as necessary expenses the allowance for bad debts with respect to any credit account, outstanding amount and other credits corresponding thereto, such allowance for bad debts shall be counted in the necessary expenses in the calculation of the income amount accruing during the corresponding year within the scope as determined by the Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>(2) The balance of the allowance for bad debts appropriated as necessary expenses under paragraph (1), shall be counted in the total gross income amount in the calculation of the income amount in the following year.(3) Matters necessary for dealing with the allowance for bad debts shall be determined by the Presidential Decree.

(1) If a businessman accounts the allowance of retirement benefits to the retirement benefits of employees as necessary expenses, such allowance of retirement benefits shall be counted in the necessary expenses in the calculation of the income amount accruing during the corresponding year, within such limit as determined by the Presidential Decree.(2) Matters necessary for dealing with the allowance for retirement benefits, shall be determined by the Presidential Decree.

(1) If a resident acquires the same kinds of fixed assets as a substitute for any destroyed assets, with the insurance money received for destruction or damage of the fixed assets, or improves the fixed assets acquired as a substitute or damaged assets, the gain from insurance settlement required for such acquisition or improvement of the fixed assets, may be appropriated as necessary expenses in the calculation of the income amount accruing during the year to which the day he receives the insurance money belongs, under the conditions as prescribed by the Presidential Decree.(2) If it is impossible to acquire or improve the fixed assets under paragraph (1) in the year to which the day he receives the insurance money belongs, the provisions of paragraph (1) shall be applicable mutatis mutandis only to those acquired or improved within two years from the beginning of the year following the corresponding year.(3) Any person who desires to appropriate the gain from insurance settlement as necessary expenses under paragraph (2), shall submit a use plan for the insurance money received to the chief of a tax office having jurisdiction over the place of tax payment, under the conditions as prescribed by the Presidential Decree.(4) If a person who appropriates the insurance gain as necessary expenses under paragraph (2), falls under any of the following subparagraphs, it shall be counted in the total gross income amount in the year when the cause thereof has taken place:1. Where he fails to use the insurance gain within the time limit to acquire or improve the fixed assets as referred to in paragraph (1); and2. Where he discontinues the business within the period as referred to in paragraph (2).

(1) The amount of any subsidy as prescribed by the Act on the Budgeting and Management of Subsidies (hereinafter referred to as “national subsidy”), which a resident receives for the purpose of acquiring or improving any assets for business, and disburses for such purpose, may be appropriated as necessary expenses in the calculation of the income amount accruing during the year to which the day he receives the national subsidy belongs, under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>(2) If it is impossible to acquire or improve the assets for business as referred to in paragraph (1) in the year to which the day he receives the national subsidy belongs, the provisions of paragraph (1) shall apply mutatis mutandis only to those acquired or improved by the end of the year following the corresponding year. In this case, if national subsidies cannot be used within a fixed period due to unavoidable circumstances that are prescribed by Presidential Decree such as delay of approval or authorization on construction works, the last day of the taxation period, to which the day of the circumstance concerned ended belong, shall be the period. <Amended by Act No. 8825, Dec. 31, 2007>(3) Any person who desires to appropriate the national subsidy as necessary expenses under paragraph (2), shall submit the use plan for the national subsidy received to the chief of a tax office having jurisdiction over the place of tax payment, under the conditions as prescribed by the Presidential Decree.(4) If the resident who has appropriated the national subsidy as necessary expenses under paragraph (1) or (2), falls under any of the following subparagraphs, it shall be counted in the total gross income amount in the year when the cause thereof has taken place:1. Where he fails to use the national subsidy for the acquisition or improvement of the assets for business within the time limit as referred to in paragraph (1); and2. Where he discontinues the business within the period as referred to in paragraph (2).

(1) The amount paid or to be paid by a resident in the corresponding year, which falls under any of the following subparagraphs, shall not be counted in the necessary expenses in the calculation of the real estate rental income amount, business income amount, or miscellaneous income amount: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Income tax and resident tax on a proportional basis of income tax;2. Fine and penalty (including the amount equivalent to the fine or penalty by a noticed disposition), and fines for negligence;3. Additional dues and disposition fees for arrears as prescribed by the National Tax Collection Act and other Acts related to taxes;4. Tax amount (including the additional dues) paid or to be paid due to nonperformance of the liability for collection as prescribed by Acts related to taxes;5. Expenses for such domestic affairs as prescribed by the Presidential Decree, and those related thereto;6. Amounts exceeding the depreciation cost of such depreciable assets, appropriated for each year, and calculated under the conditions as prescribed by the Presidential Decree;7. Loss from the difference of valuation on assets other than the assets as prescribed by the Presidential Decree, such as the inventory assets: Provided, That the loss from the difference of valuation between the normal value and the book value of such fixed assets as prescribed by the Presidential Decree, shall be excluded;8. Amount in arrears of the individual consumption tax, liquor tax, or transportation energy environment tax on the products carried out, but not sold: Provided, That in cases where an amount equivalent to such tax amount is added to the value of such products, this shall not apply;9. Purchase tax amount of value-added tax: Provided That, for the value-added tax paid by a person exempted from such tax or others as prescribed by the Presidential Decree, and for the value-added tax paid by a person eligible for simplified taxation, this shall not apply;10. Interest of the amount of a loan, appropriated for such construction funds as prescribed by the Presidential Decree;11. Interest of any loan the creditor of which is obscure;12. Public charges or imposts that are not mandatory under Acts and subordinate statutes or those imposed for non-performance of duties or violation of prohibited or restricted acts under Acts and subordinate statutes;13. Amount of the expenses disbursed in each year, which is deemed not to be connected directly to the businesses, under the conditions as prescribed by the Presidential Decree;14. Prepaid expenses; and15. Compensation for damages to be paid by infringing another person’s right on purpose or by negligence in connection with the business.(2) Where the provisions under paragraph (1) 5, 10, 11 and 13 are applicable at the same time, they shall be applied according to the order provided in the Presidential Decree. <Newly Inserted by Act No. 6292, Dec. 29, 2000>(3) Matters necessary for the non-inclusion in necessary expenses as referred to in paragraph (1), shall be determined by the Presidential Decree.

(1) The amount in excess of the following subparagraphs (hereinafter referred to as “minimum amount to be counted in necessary expenses” in this Article), from among the donation amount prescribed by Presidential Decree in consideration of public interests such as social welfare, culture, arts, education, religion, charity or such (hereinafter referred to as a “designated donation”), and a donation other than such designated donations, shall not be counted in the necessary expenses in the corresponding year in calculation of income amount of a business owners: <Amended by Act No. 8825, Dec. 31, 2007>1. Donation to religious organizations:Minimum amount to be counted in necessary expenses = [Income amount in the corresponding year (income amount before adding the donations pursuant to paragraph (2) and designated donations into necessary expenses) - donation amounts counted in necessary expenses pursuant to paragraph (2), and deficit carried-over (hereafter “statutory donations” in this Article)] × 10/100 + [smaller amount between (income amount in the corresponding year - statutory donations) × 10/100 (5/100, for donations made until December 31, 2009) and all donations made except for to religious organizations; or2. Cases not falling under item 1;Minimum amount to be counted in necessary expenses = (income amount in the corresponding year - statutory donations) × 20/100 (15/100, for donations made until December 31, 2009).(2) The provisions of paragraph (1) shall not be applicable to the donation falling under any of the following subparagraphs: Provided, That where the sum of the donations falling under any of the following subparagraphs exceeds the amount obtained by deducting the deficit carried-over as prescribed in the provisions of Article 45 from the income amount accruing during the corresponding year, the excess amount shall not be counted in necessary expenses in the calculation of the income amount accruing during the corresponding year: <Amended by Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6276, Oct. 23, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 7908, Mar. 24, 2006; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Money and other valuables donated gratuitously to the State or local governments (including local governments associations; hereinafter the same shall apply): Provided, That the money and other valuables to which the Donations Collection and Their Use Act is applicable shall be limited to those received under the provisions of Article 5 (2) of the same Act;2. National defense donation and consolatory money and goods;3. Value of the relief money and goods for sufferers from any natural disaster and other reasons as prescribed by the Presidential Decree, etc.;3-2. Value of a voluntary service that is rendered for the restoration of any special disaster area under the Frame Work Act on the Management of Disasters and Safety. In such case, matters necessary for the method of computation etc. of services shall be prescribed by the Presidential Decree;4. Money or other valuables donated to welfare facilities prescribed by the Presidential Decree, which are available for public use free of charges or at practical charges from among welfare facilities installed under the Social Welfare Services Act;5. Money or other valuables donated to needy neighbors through institutions established to facilitate the formation of relationship between citizens and needy neighbors, which are prescribed by the Presidential Decree;6. Donations paid to the schools, etc. under each of the following items as the facilities expenses, educational expenses, scholarships or research expenses:(a) Private schools under the Private School Act;(b) Non-profit educational foundation (limited to the non-profit juridical foundation established for the purpose of a new construction, extension, expansion of facilities and other improvements of educational environment of private schools);(c) Polytechnic colleges under the Polytechnic College Act;(d) Lifelong educational facilities in the form of a cyber college under the Lifelong Education Act (hereinafter referred to as a “cyber college”);(e) National university-affiliated hospitals under the Act on the Establishment of National University-affiliated Hospitals;(f) Seoul National University Hospital under the Establishment of Seoul National University Hospital Act;(g) Seoul National University Dental Hospital under the Establishment of Seoul National University Dental Hospital Act;(h) Foreign educational institutions under the Special Act on Establishment and Operation of Foreign Educational Institutions in the Free Economic Zones and Jeju International Free City;(i) Industry-academic cooperation groups under the Promotion of Industrial Education and Industry-Academic Cooperation Act; and(j) Korea Advanced Institute of Science and Technology under the Korea Advanced Institute of Science and Technology Act, Gwangju Institute of Science and Technology under the Gwangju Institute of Science and Technology Act and Daegu-kyeongbuk Institute of Science and Technology under the Daegu-kyeongbuk Institute of Science and Technology Act;7. Donations made to the Community Chest of Korea under the Community Chest of Korea Act; and8. Donations made to the Korean National Red Cross under the Organization of the Korean National Red Cross Act.(3) An amount (excluding the amount deducted when a global income tax return is filed under Article 52 (6) and 54 (2)) which is donated in excess of the limit of inclusion of designated donations in necessary expenses and that is not counted in a necessary expense under paragraph (1) may, under the conditions as prescribed by the Presidential Decree, be carried over to each taxable period which ends within three years from the commencement date of a taxable period following the corresponding taxable period and counted in a necessary expense. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6276, Oct. 23, 2000; Act No. 8825, Dec. 31, 2007>(4) Donations made by a business owner falling Article 50 (1) 2 or 3 (b), if paragraphs (1) and (2) are applied (excluding one to whom another resident’s basic deduction is applied) shall be counted in donations made by the business owner. <Newly Inserted by Act No. 8825, Dec. 31, 2007>

(1) Where the amount of entertainment expenses (not including the portion not counted in a necessary expense under paragraph (2)) disbursed by a businessman in the corresponding taxable period, exceeds the sum of the amounts falling under each of the following subparagraphs, it shall not be counted in a necessary expense in the calculation of the income amount accruing during the corresponding taxable period: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999>1. Amount calculated by multiplying twelve million won (eighteen million won in the case of small and medium enterprises determined by the Presidential Decree) by the number of months of the corresponding taxable period, the total of which is divided by 12;2. Deleted; and <by Act No. 5580, Dec. 28, 1998>3. Amount obtained by multiplying the sum of the revenue amount (limited to such revenue amount as determined by the Presidential Decree) accruing from the relevant business during the corresponding taxable period, by the applicable rate prescribed by the following chart: Provided, That with respect to the revenue amount accruing from transactions with persons who are in special relation determined by Presidential Decree, it shall be the amount equivalent to 20/100 of the amount calculated by multiplying such revenue amount by the applicable rate under the following chart: Revenue Amount
Applicable Rate
Under 10 billion won
20/10,000
Over 10 billion won
Under 50 billion won
20 million won + 10/10,000 of the amount exceeding 10 billion won
Over 50 billion won

60 million won + 3/10,000 of the amount exceeding 50 billion won
1. Entertainment expenses disbursed by using any of the following items (hereinafter referred to as “credit cards, etc.”):(a) Credit cards under the Specialized Credit Financial Business Act (including those similar to the credit cards as determined by Presidential Decree); and(b) Cash receipts under Article 126-3 (4) of the Special Tax Treatment Control Act (hereinafter referred to as “cash receipts”); and2. Entertainment expenses disbursed after receiving an account statement under Article 163 of this Act or Article 121 of the Corporation Tax Act or a tax invoice under Article 16 of the Value-Added Tax Act, or after issuing a purchaser-issued tax invoice under Article 126-4 (1) of the Special Tax Treatment Control Act or a withholding receipt prescribed by Presidential Decree.(3) Deleted. <by Act No. 6557, Dec. 31, 2001>(4) The term “entertainment expenses” in paragraphs (1) and (2) means the entertainment expenses, social expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are disbursed by a business proprietor in connection with his business (including the expenses for welfare facilities, as prescribed by Presidential Decree, that are disbursed by a business proprietor to the association or organization formed by employees). <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5580, Dec. 28, 1998; Act No. 6557, Dec. 31, 2001>(5) In applying paragraph (2) 1, the amount disbursed with sales slips, etc, issued in the name of a participating store for credit cards, etc. other than the one that has actually offered the corresponding goods or services shall not be included in the entertainment expenses under the same subparagraph of the same paragraph. <Newly Inserted by Act No. 6292, Dec. 29, 2000>(6) The scope of entertainment expense and matters necessary for preservation of evidence of expenditure, etc. shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 9270, Dec. 26, 2008>

In calculating the miscellaneous income amounts, the amount to be counted in necessary expenses of a resident in the corresponding year shall be as follows: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8531, Jul. 19, 2007>1. In cases of the refund payable to a purchaser of a horse racing ticket, winner voting ticket, bullfighting match voting ticket or sports promotion voting ticket as prescribed in Article 21 (1) 4, the sum of the unit voting amount of the relevant horse racing ticket, winner voting ticket, bullfighting match voting ticket, or sports promotion voting ticket purchased by the winner of such tickets shall be counted in the necessary expenses;1-2. In cases of prize money and valuables, etc. under Article 21 (1) 14, the amounts put into slot machines, etc. at the time of winning such prize money and valuables, etc. shall be counted in the necessary expenses; and2. In cases where the provisions of subparagraphs 1 and 1-2, and Article 27 (3) are not applicable, the sum of the expenses corresponding to the total gross income amount accruing during the corresponding year shall be counted in the necessary expenses.

(1) The year during which the total gross income amount and necessary expenses of a resident in each year, are calculated, shall be the year to which the day such total gross income amount and necessary expenses become definite belongs.(2) The acquisition value of any assets which a resident has acquired by purchase, manufacture, etc., shall be the amount obtained by adding the incidental expenses to the purchasing value or manufacturing cost of such assets.(3) If a resident has, in calculating the income amount of each taxable period, continuously applied the corporate accounting standards or practices which are deemed generally fair and proper as to the year during which the total gross income amount and necessary expenses are calculated or the acquisition or evaluation of any assets and obligation, it shall be subject to such corporate accounting standards or practices except in cases where this Act or the Special Tax Treatment Control Act stipulates otherwise. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(4) Matters necessary for the year during which the total gross income amount and necessary expenses are calculated, as referred to in paragraph (1), and the calculation of the acquisition value or valuation of assets, obligation, etc., as referred to in paragraph (2), shall be determined by the Presidential Decree.

(1) The year for which any dividend, bonus and retirement benefit which a resident receives by the disposal of any surplus, are included, shall be the year to which the day when a general meeting of stockholders or partners of the corporation concerned or a similar deliberative organ corresponding thereto has passed a resolution for such disposal, belongs: Provided, That the year for which the dividend income under the provisions of Article 17 (1) 6-3 is included shall be the year during which the total gross income amount and necessary expenses of the relevant joint business are calculated in accordance with the provisions of Article 39. <Amended by Act No. 8144, Dec. 30, 2006>(2) The year for which the fictitious dividend as prescribed in Article 17 (2) 1, 2 and 5 is included, shall be the year to which the day when a general meeting of stockholders or partners, or similar deliberative organ, decides the writing-off of stocks, reduction of capital, or transfer of surplus to capital or investment, or he retires or withdraws from the corporation, belongs.(3) The year for which the fictitious dividend as prescribed in Article 17 (2) 3, 4, and 6 is included, shall be the year falling under any of the following subparagraphs: <Amended by Act No. 5580, Dec. 28, 1998>1. If a corporation extinguishes by a merger, the year to which the merger registration day belongs;2. If the corporation extinguishes by a dissolution, the year in which the day the value of the remaining property becomes definite, is included; and3. If a corporation undergoing corporate division or the other extinguished party of a corporate merger by division, is extinguished or continues to exist as a result of corporate division, the year to which the date of registration of the corporate division belongs.(4) In determining the income amount of a corporation accruing during the corresponding fiscal year, the year for which any income considered as a bonus paid to officers, stockholders, partners or other investors of the corporation is included, shall be the fiscal year in which the corporation makes a settlement of accounts. In this case, if the calculation of the monthly average amount is made through two years, it shall belong to each year, respectively.

(1) If it is deemed that any act or calculation of a resident having any dividend income (applicable to the dividend income only as referred to in Article 17 (1) 6-3), real estate rental income, business income or miscellaneous incomes reduce unreasonably the burden of tax on such income by a transaction with a person having a special relationship with the resident, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment may calculate the income amount accruing during the corresponding year regardless of such act or calculation of the resident. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 8144, Dec. 30, 2006>(2) The scope of those having the special relationship as referred to in paragraph (1), and other matters necessary for the calculation by wrongful act, shall be determined by the Presidential Decree. <Newly Inserted by Act No. 5031, Dec. 29, 1995>

(1) In the event that an agreement is made with the other country of a treaty concluded by the Republic of Korea to prevent a double taxation (hereinafter referred to as the “tax treaty”) according to the provisions concerning the mutual agreement of the tax treaty, competent authorities agreeing on the amount of a trade made by a resident with a nonresident living abroad or foreign corporation, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment may adjust and calculate the income amount of the resident in each taxable period, in accordance with such agreement.(2) Matters necessary for the application for the adjustment of the resident’s income amount as referred to in paragraph (1), and other adjustment, shall be determined by the Presidential Decree.

(1) In the case of the joint business wherein a business from which the real estate rental income or the business income accrue is jointly run and the profits and losses thereof are shared [including the joint businesses which have joint businessmen who do not participate in management but make investment as prescribed by the Presidential Decree (hereinafter referred to as the “joint investment businessmen”)], the income amount shall be calculated by the joint business places by considering the place where the relevant business is managed (hereinafter referred to as the “joint business place”) as one resident. <Amended by Act No. 8144, Dec. 30, 2006>(2) The amount of income accruing from the joint business under the provisions of paragraph (1) shall be distributed to the respective joint businessmen according to the income distributed, or to be distributed, based on the profit-and-loss distribution ratio agreed among the respective residents running the relevant joint business (including the joint investment businessmen; hereinafter referred to as the “joint businessmen”) (where no agreed profit-and-loss distribution ratio is available, referring to the share ratio; hereinafter referred to as the “profit-and-loss distribution ratio”). <Amended by Act No. 8144, Dec. 30, 2006>(3) If one resident and a person having a special relationship with him, as prescribed by Presidential Decree are included in the joint businessman, and falls under a cause, such as a false determination of the profit-and-loss distribution ratio, as prescribed by Presidential Decree the income amount of the person having such special relationship shall be added up to the income amount of the joint businessman having the larger profit-and-loss distribution ratio (where the profit-and-loss distribution ratios are the same, the person as prescribed by Presidential Decree; hereinafter referred to as the “major joint businessman”), notwithstanding the provisions of paragraph (2). <Amended by Act No. 5191, Dec. 30, 1996; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006><This paragraph was amended by Act No. 8411, Dec. 30, 2006, due to the decision on unconstitutionality made on Apr. 27, 2006 (the previous provision before the amendment made by Act No. 7319, Dec. 31, 2004)>

Any income tax on the income amount of the predecessor that is to be levied on the inheritor, shall be calculated separately from the income tax on the income amount of the inheritor.

(1) Any deficient amount (when the necessary expenses accruing during the corresponding year exceed the aggregate revenue amount accruing during the same corresponding year, it refers to such excess amount; hereinafter the same shall apply) resulting from the calculation of any business income amount accruing during the corresponding year based on the books entered and kept by a resident having the business income shall be deducted from his real estate rental income, earned income, annuity income, miscellaneous income, interest income, and dividend income, in that order, in calculating his global income tax base in the corresponding year. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 8144, Dec. 30, 2006>(2) The deficient amount resulting from the calculation of any income amount accruing during the corresponding year based on the books kept and entered by a resident having any real estate rental income, and the deficient amount which results from the calculation of the business income amount and is left after the deduction in the calculation of the global income tax base for the corresponding year under the provisions of paragraph (1) (hereinafter referred to as the “deficit carried-over”), shall be deducted from each relevant income in consecutive order beginning with the deficit carried-over in the year of first occurrence in the calculation of the income amount accruing during the taxable period which is terminated within ten years from the end of the year when the relevant deficit carried-over accrues. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(3) The provisions of paragraph (2) shall not be applicable when an additional assessment on the income amount during the corresponding year is reported (referring to a report not made by the accounting books and evidential documents furnished and recorded pursuant to Articles 160 and 161; hereinafter the same shall apply), or a decision of additional assessment pursuant to the proviso to Article 80 (3) is made: Provided, That the same shall not apply where such report or decision of additional assessment is made due to destruction or loss of accounting books and other evidential documents by a natural disaster or other force majeure. <Amended by Act No. 8825, Dec. 31, 2007>(4) Deleted. <by Act No. 6781, Dec. 18, 2002>(5) If there exists any dividend income or any interest income which is subject to the global taxation under Article 14 in the calculation of the tax amount under Article 62, the portions of the dividend income or the interest income which are subject to the application of the withholding tax rate shall be excluded from the deduction of the deficiency and the deficit carried-over pursuant to the provisions of paragraphs (1) and (2), and the portions of the dividend income or the interest income which are subject to the application of the basic tax rate, a taxpayer may determine whether the deduction is made or not and the amount of deduction within the limit of the amount of his income. <Newly Inserted by Act No. 6051, Dec. 28, 1999>(6) In deducting the deficiency and the deficit carried-over under paragraphs (1) and (2), where any deficiency occurs and there exists any deficit carried-over in the corresponding year, the deficiency for the corresponding year shall be first deducted from the amount of income. <Newly Inserted by Act No. 6557, Dec. 31, 2001>

(1) With respect to any interest, discount amount and profit from collective investment scheme (hereafter referred to as “interest, etc.” in this Article) accruing from the bonds or securities as prescribed for in Article 16 (1) 1, 2, 6 and 7, or from such securities alienable to another person, as prescribed by Presidential Decree (hereafter referred to as “bonds, etc.” in this Article), the income amount shall be calculated deeming that the amount equivalent to interest, etc. for the holding period would be attributed respectively to a resident or nonresident (hereafter referred to as the “resident, etc.” in this Article) who has held such bonds, etc. during the relevant period of the redemption thereof. <Amended by Act No. 9270, Dec. 26, 2008>(2) If a resident, etc. receives the interest, etc. on bonds, etc. (including receipt of stocks from conversion or exchange of convertible or exchangeable bonds; hereinafter the same shall apply) from a corporation issuing them or any other corporation prescribed by Presidential Decree (hereafter referred to as an “issuing corporation, etc.” in this Article), or if a resident, etc., before the receipt of interest, etc. on such bonds, etc., sells them (including cases of changes in the ownership of bonds, etc. or in the rights to receive the interest thereon, such as donation, repayment, and contribution, and cases where their sale is entrusted, mediated or arranged, but excluding cases prescribed by Presidential Decree, such as the sales of repurchase agreements; hereafter the same shall apply in this Article) to the issuing corporation, etc., the tax amount shall be collected pursuant to Articles 127 through 131, 133, 156, 164, and 164-2 by regarding, as the interest income or dividend income under Articles 16 and 17, the amount equivalent to interest, etc. for the period calculated by the methods as stipulated by Presidential Decree (hereafter referred to as “tax withholding period” in this Article), treating the issuing date of such bonds, etc. or the immediately preceding date of tax withholding as the beginning date and the payment date of the interest, etc. or the sale date of the bonds, etc. as the ending date, by having the issuing corporation, etc. as a withholding agent, and by treating the date stipulated by Presidential Decree, such as the payment date of the interest, etc. or the sale date of the bonds, etc., as the time of the tax withholding. <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(3) In calculation of the income amount under paragraphs (1) and (2), if the relevant resident, etc. fails to prove the holding period of such bonds, etc. during the tax withholding period under conditions prescribed by Presidential Decree, the income amount shall be calculated considering that the amount equivalent to interest, etc. for the tax withholding period would be imputed to the relevant resident, etc. <Amended by Act No. 9270, Dec. 26, 2008>(4) Deleted. <by Act No. 8825, Dec. 31, 2007>(5) The method of calculating the holding period of the bonds, etc. and the amount equivalent to interest, etc. for the tax withholding period and the method of proving the holding period under paragraphs (1) through (3) and other matters necessary for tax withholding shall be prescribed by Presidential Decree. <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>[This Article Wholly Amended by Act No. 7319, Dec. 31, 2004]

In cases where any deposit or trust contract is terminated prematurely after the tax base of global income is returned definitely, and the interest income amount for the taxable period which has already elapsed is thereby reduced, the reduced interest income amount may be deducted in calculating the interest income amount, from that included in the global income amount for the taxable period in which the day of premature termination is included: Provided, That the same shall not apply where the rectification of the tax base and tax amount is requested under Article 45-2 of the Basic Act for National Taxes. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 5031, Dec. 29, 1995]

(1) The following amount shall be deducted from the gross pay of a resident with any earned income that has been earned during the corresponding year: <Amended by Act No. 9270, Dec. 26, 2008> <Gross pay>
<Amount to be deducted>
Not more than 5 million won
80/100 of gross pay
More than 5 million won but not more than 15 million won
4 million won ＋ 50/100 of the amount exceeding 5 million won
More than 15 million won but not more than 30 million won
9 million won ＋ 15/100 of the amount exceeding 15 million won
More than 30 million won but not more than 45 million won
11.25 million won ＋ 10/100 of the amount exceeding 30 million won
More than 45 million won

12.75 million won ＋ 5/100 of the amount exceeding 45 million won
(2) Notwithstanding the provisions of paragraph (1), for a daily-paid worker, the amount of deduction shall be one hundred thousand won per day. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 6781, Dec. 18, 2002; Act No. 9270, Dec. 26, 2008>(3) If the sum of wages of a resident having any earned income accruing during the corresponding year is short of the amount of deduction as referred to in paragraph (1) or (2), the sum of his wages shall be the amount of deduction.(4) The deduction as referred to in paragraphs (1) through (3) shall be referred to as “earned income deduction”. <Amended by Act No. 8825, Dec. 31, 2007>(5) In cases under paragraph (1), if a person, other than a daily-paid worker, receives wages from two or more persons, the earned income deductions as referred to in paragraph (1) for the sum of his wages shall be taken from the amount of wages at the principal workplace, under conditions prescribed by Presidential Decree: Provided, That if the wages of the principal workplace are short of the earned income deductions, the earned income deductions for the portion exceeding the wages shall be taken from the wages at the subordinate workplace.(6) The principal workplace as referred to in paragraph (5) shall be one reported under Article 142: Provided, That if no report is made, the workplace where the largest wages are paid shall be the principal workplace.

(1) For a resident having any annuity income, the amount provided for in the following Table shall be deducted from his total annuity income received during the corresponding year: Provided, That in cases where the deducted amount exceeds 9 million won, 9 million won shall be deducted: <Amended by Act No. 7837, Dec. 31, 2005> <Total annuity amount>
<Amount to be deducted>
3.5 million won or less
Total annuity amount
Over 3.5 million won but not
more than 7 million won
3.5 million won + 40/100 of the
amount exceeding 3.5 million won
Over 7 million won but not more
than 14 million won
4.9 million won + 20/100 of the
amount exceeding 7 million won
Over 14 million won

6.3 million won + 10/100 of the
amount exceeding 14 million won
(2) The deduction under paragraph (1) shall be referred to as “annuity income deduction”.[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) For a resident having any retirement income, the following amounts shall be deducted in consecutive order from the retirement benefit amount accruing during the corresponding year (in case of Class A retirement benefits, it includes the honorable retirement allowances and the insurance money for the collective retirement insurance; hereinafter the same shall apply): <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7837, Dec. 31, 2005>1. An amount equivalent to 45/100 of the retirement benefit amount; and2. The following amount determined by the number of service years (it shall be treated as one year if he retires before one year elapses, and in the case of Article 22 (1) 1 (d) and (e), it shall mean the number of years calculated by the method as prescribed by Presidential Decree; hereinafter the same shall apply): <Number of service years>
<Amount to be deducted>

not more than 5 years
300,000 won × number of service years
more than 5 but not more than 10 years
1.5 million won + 500,000 won × (number
of service years － 5 years)
more than 10 but not more than 20 years
4 million won + 800,000 won × (number
of service years － 10 years)
over 20 years
12 million won + 1.2 million won × (number of service years － 20 years)
(2) If the retirement benefit amount accruing during the corresponding year is short of the deduction amount as referred to in each subparagraph of paragraph (1), the retirement benefit amount shall be the deduction amount.(3) The deduction as referred to in paragraphs (1) and (2) shall be referred to as “retirement income deduction”.(4) If a resident having any retirement income has received retirement benefits by retiring two or more times in the corresponding year, the retirement income deductions shall be taken only once from the sum of the retirement benefits accruing during the corresponding year.(5) The provisions of Article 47 (5) shall apply mutatis mutandis to the retirement income deduction as referred to in paragraph (1) 2.

(1) For a resident (limited to a natural person) having any global income, the amount calculated by multiplying the number of family members falling under any of the following subparagraphs, by 1.5 million won per capita a year, shall be deducted from the resident’s global income amount accruing during the corresponding year: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. The relevant resident;2. The spouse of the resident having no annual income, or having the total annual income not exceeding one million won; and3. Any dependent falling under any of the following items, and living together with the resident (including his spouse; hereafter the same shall apply in this subparagraph), and has the total annual income not exceeding one million won: Provided, That if the handicapped persons as prescribed in Article 51 (1) 2 shall not be subject to the age limit:(a) Any lineal ascendant of the resident (in cases where a lineal ascendant has remarried, including the lineal ascendant’s spouse prescribed by Presidential Decree), who is sixty years old or older;(b) Any lineal descendant of a resident prescribed by Presidential Decree or any adoptee prescribed by Presidential Decree, living together with the resident (hereinafter referred to as an “adoptee”), and is twenty years old or younger. In such cases, if the relevant lineal descendant and his spouse, or the adoptee concerned and his spouse both are handicapped persons pursuant to Article 51 (1) 2, the spouse shall be included;(c) Any brother or sister of the resident, who is twenty years old or younger, or sixty years old or older;(d) Any person eligible for assistance prescribed by Presidential Decree under the National Basic Living Security Act; and(e) Any child prescribed by Presidential Decree, who is reared through the foster home system under the Child Welfare Act (hereinafter referred to as a “foster child”).(2) The deduction as referred to in paragraph (1) shall be referred to as “basic deduction”.(3) In cases where a spouse or dependent of a resident falls under the dependent of another resident, the deductions shall be taken from the global income amount of one resident only, under conditions prescribed by Presidential Decree.

(1) If anyone who becomes subject to a basic deduction (hereinafter referred to as a “person subject to a basic deduction”) as prescribed in Article 50 falls under any of the following subparagraphs, the amount stipulated in the respective subparagraph shall be deducted from the resident’s global income amount accruing during the corresponding year, in addition to the basic deduction as prescribed in Article 50: <Amended by Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Where the person is 70 years old or older (hereinafter referred to as a “senior”), one million won per capita a year;2. Where the person is a handicapped person prescribed by Presidential Decree (hereinafter referred to as a “handicapped person”), two million won per capita a year;3. Where the resident is a woman having no spouse and is a head of the family having dependents under the provisions of Article 50 (1) 3, or is a woman having a spouse, five hundred thousand won per capita a year;4. Where the person is a lineal descendant, adoptee or foster child, who is six years old or younger, one million won per capita a year; and5. Where the person is a lineal descendant who was born, or an adoptee who was reported as adopted, in the relevant taxable period, two million won per capita a year.(2) The deduction as referred to in paragraph (1) shall be referred to as “additional deduction”.(3) and (4) Deleted. <by Act No. 5155, Aug. 14, 1996>

(1) In cases where a resident having any earned income or business income (excluding any daily-paid worker) has two children who are subject to a basic deduction, 500 thousand won per year shall be additionally deducted from the resident’s earned income amount or business income amount accruing during the corresponding year, and where the resident has three or more children who are subject to a basic deduction, an amount obtained by adding 500 thousand won and 1 million won per year for each person exceeding the two shall be additionally deducted from the resident’s earned income amount or business income amount accruing during the corresponding year in addition to the basic deduction under the provisions of Article 50, respectively (hereinafter referred to as the “additional deduction for persons with many children”).(2) The basic deduction under the provisions of Article 50, the additional deduction under the provisions of Article 51 and the additional deduction for persons with many children shall be referred to as “personal deductions”.(3) In cases where the aggregate of personal deductions under the provisions of paragraph (2) exceeds the global income amount, such excess amount shall be treated as non-existent.[This Article Wholly Amended by Act No. 8144, Dec. 30, 2006]

(1) Where a resident having any global income has paid insurance premium, etc. that falls under any of the following subparagraphs, the insurance premium, etc. paid during the corresponding year shall be fully deducted from his global income accruing during the corresponding year: <Amended by Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>1. Pension premium, etc. payable under the National Pension Act (excluding the portion paid by employers);2. Contributions or shares payable by an employee 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; and3. Shares to be borne by an employee under the Guarantee of Workers’ Retirement Benefits Act or the Korea Scientists and Engineers Mutual-Aid Association Act: Provided, That in cases where the aggregate of the relevant amount and the savings payment amount under the provisions of Article 86-2 of the Special Tax Treatment Control Act exceed three million won, such excess amount shall be treated as non-existent.(2) The deduction under paragraph (1) shall be referred to as “pension insurance premium deduction”.(3) Where the total amount of pension insurance premium deduction under paragraph (1) exceeds the global income amount, such excess amount shall be treated as non-existent.(4) Deleted. <by Act No. 8144, Dec. 30, 2006>(5) Matters necessary for the calculation method, etc. of the pension insurance premium deduction under the provisions of paragraphs (1) through (3) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) Where a resident having any annuity income has been paid benefits from reverse mortgage-backed retirement pension system that meets the requirements prescribed by Presidential Decree, an amount equivalent to the interest on the loan that corresponds to the benefits for the relevant year shall be deducted from the annuity income amount accruing during the relevant year (hereinafter referred to as the “interest expense deduction for reverse mortgage-backed retirement pension system”). In such cases, where the amount equivalent to the interest to be deducted exceeds two million won, two million won shall be deducted, and where it exceeds the annuity income amount, such excess amount shall be treated as non-existent.(2) The interest expense deduction for reverse mortgage-backed retirement pension system shall apply when the relevant resident applies therefor.(3) Application for the interest expense deduction for reverse mortgage-backed retirement pension system, method to confirm the amount equivalent to interest and other necessary matters shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

(1) The amount falling under any of the following subparagraphs that is paid by a resident having any earned income (excluding daily-paid workers) in the corresponding year, shall be deducted from the earned income amount accruing during the corresponding year: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 5424, Dec. 13, 1997; Act No. 5580, Dec. 28, 1998; Act No. 5994, Aug. 31, 1999; Act No. 6276, Oct. 23, 2000; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 7120, Jan. 29, 2004; Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Premiums borne by an employee under the National Health Insurance Act, the Employment Insurance Act, or the Long-Term Care Insurance for the Aged Act;2. Premiums paid for the insurer under an insurance contract the insured of which is those subject to the basic deduction as prescribed in Article 50 (1), by which the maturity repayment does not exceed the paid-in premiums, and which is prescribed by Presidential Decree. In such cases, if the sum of the premiums exceeds one million won per year, such excess amount shall be treated as non-existent;2-2. Premiums paid for the insurer under an insurance contract that is provided for in Presidential Decree (hereafter referred to as a “guaranty-nature insurance exclusively for handicapped persons” in this Article) among insurance contracts in which a handicapped person subject to the basic deduction under Article 50 (1) is named the insured or beneficiary (limited to those whose the maturity repayment does not exceed the paid-in premiums). In such cases, where the sum of the premiums exceeds one million won a year, such excess amount shall be treated as non-existent;3. The amounts obtained by adding up those falling under each of the following items, which are the medical expenses prescribed by Presidential Decree which have been paid for a person subject to the basic deduction (not subject to any age limit and income limit):(a) Medical expenses paid for the relevant resident, any person who is 65 years old or older as at the end of taxable period and any handicapped person: Provided, That if the amount of medical expenses for those subject to item (b) falls short of the amount calculated by multiplying the total wage amount by 3/100, such deficient amount shall be deducted; and(b) The amount exceeding those calculated by multiplying the total wage amount by 3/100, which are the medical expenses paid for the person subject to the basic deduction with the exclusion of those subject to item (a): Provided, That if the relevant amount exceeds seven million won per year, it shall be seven million won per year;4. The amount calculated by adding up educational expenses paid for the relevant resident and the person subject to the basic deduction (not subject to any age limit), such as school tuition, entrance fees, childcare expenses, lecture fees and other regular payments for school (hereafter referred to as “educational expenses” in this subparagraph). In such cases, educational expenses for elementary and middle school children shall include the charges for school lunch paid to schools that provide school lunch pursuant to the School Meals Act, expenses for textbooks purchased by schools, and after-school charges prescribed by Presidential Decree: Provided, That educational expenses, which are exempted from income tax or donation tax as prescribed by Presidential Decree, shall be deducted:(a) Total educational expenses in the following, which have been paid for spouse, lineal descendent, bother, sister, adoptee or foster child who is subject to basic deduction: Provided, That expenses paid to graduate schools shall be excluded, and the limits shall be nine million won per capita a year, in cases of college students, and three million won per capita a year, in cases of children not-yet-enrolled in elementary schools, and students enrolled in elementary schools, middle schools, or high schools:(ⅰ) Educational expenses paid to schools under the Early Childhood Education Act, the Elementary and Secondary Education Act, the Higher Education Act or other special Acts;(ⅱ) Educational expenses paid to cyber colleges under the Life-long Education Act, and educational expenses paid for educational courses prescribed by Presidential Decree from among the courses under the Act on Recognition of Credits, etc. or the Act on the Acquisition of Academic Degrees through Self-Education (hereafter referred to as “courses to obtain a degree” in this subparagraph);(ⅲ) Educational expenses paid to an overseas educational institute (limited to students prescribed by Presidential Decree, if a resident who pays educational expenses for students enrolled in an overseas educational institute works in Korea); and(ⅳ) Educational expenses paid to childcare centers under the Infant Care Act, private teaching institutes under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons, or sports facilities prescribed by Presidential Decree for children not-yet-enrolled in elementary schools (limited to the amount prescribed by Presidential Decree, in cases of payment to private teaching institutes or sports facilities);(b) Total educational expenses as follows, paid for the relevant resident:(ⅰ) Educational expenses pursuant to item (a) (ⅰ), (ⅱ), and (ⅲ);(ⅱ) Educational expenses paid for educational courses corresponding to one or more semesters of a college (including a cyber college and courses to obtain a degree) or a graduate school, and paid to enroll an hour-based program under Article 36 of the Higher Education Act; and(ⅲ) Lecture fees paid for vocational education conducted by the vocational institutes under Article 2 of the Act on the Development of Occupational Abilities of Workers; and(c) Expenses for special education, prescribed by Presidential Decree, for the handicapped who are subject to basic deduction (no limitation for amount of income), paid to the persons as follows:(ⅰ) Social welfare facilities or non-profit organizations, which are prescribed by Presidential Decree; or(ⅱ) Overseas facilities or organizations similar to those referred to in subitem (i);4-2. and 5. Deleted; and <by Act No. 8825, Dec. 31, 2007>6. Deleted. <by Act No. 6276, Oct. 23, 2000>(2) Where a resident (excluding any daily-paid worker), who is the head of a family prescribed by Presidential Decree (hereafter referred to as a “family” in paragraph (3)) that does not own a house as at the last day of taxable period, and has earned income and a long-term savings accountfor purchasing a house, rented a house smaller than the area prescribed by Presidential Decree (including the land attached to such house; where the area of such attached land exceeds the area computed by region by multiplying the multiple rates set by Presidential Decree by the size of area where the building is constructed, the relevant house shall be excluded; hereafter referred to as a “house of the national housing scale” in this Article), received a loan for house rent prescribed by Presidential Decree from a financial institution prescribed by Presidential Decree, and then made repayment towards the principal and interest, the amount equivalent to 40/100 of the amount of repayments shall be deducted from the amount of earned income accruing during the relevant taxation year. <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(3) Where a resident (excluding any daily-paid worker), who is the head of a family that does not own a house, and has any earned income (referring to a family member who has any earned income where the head of the family is not subject to the deduction pursuant to paragraph (2) of this Article, Article 87 (2) of the Special Tax Treatment Control Act, and this paragraph) redeems the interest on a long-term mortgage loan (including the long-term mortgage loan inherited by acquisition of the house of national housing scale; hereafter referred to as “long-term mortgage loan” in this Article) prescribed by Presidential Decree that he has taken from a financial institution or the National Housing Fund established under the Housing Act to acquire the house of national housing scale with the standard market price under the provisions of Article 99 (1) not exceeding three hundred million won at the time of acquisition after having settled a mortgage on such house, the amount of interest repaid during the corresponding year shall be deducted from the amount of the earned income accruing during the relevant year: Provided, That where the resident, and each member of his household, becomes to own two or more houses on the last day of the taxation period or a term of ownership of two or more houses exceeds three months during the relevant taxation period, the amount of interest repaid during the taxable year whereto the relevant possessing period belongs shall not be deducted from the amount of the earned income. <Newly Inserted by Act No. 6276, Oct. 23, 2000; Act No. 6916, May 29, 2003; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>(4) The income deduction referred to in paragraph (3) shall be based on the standards falling under each of the following subparagraphs: <Newly Inserted by Act No. 6276, Oct. 23, 2000; Act No. 6852, Dec. 30, 2002; Act No. 6916, May 29, 2003; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. For a resident, the provisions of paragraph (3) shall apply to him regardless of whether he actually resides or not in such house: Provided, That where he is not the head of a family, it shall be limited to the case where he actually resides in such house;2. Deleted; <by Act No. 7837, Dec. 31, 2005>3. Where the head of a family who does not have his own house gains a right which is priced at 300 million won or less as prescribed by Presidential Decree and which is a right (hereafter in this subparagraph referred to as the “right to purchase a house”) enabling him to acquire a house of national housing scale which is constructed by obtaining the approval for a project plan under the Housing Act (including any house acquired by any member of a housing association established under the Housing Act and any member of a consolidation project association established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents or any house acquired through such associations; hereafter the same in this subparagraph shall apply), and gets a loan from a financial institution or the National Housing Fund under the Housing Act to acquire the relevant house on condition that the loan shall be converted to a long-term mortgage loan at the time when the construction of said house is completed (including the cases where the borrowing conditions of the relevant loan are changed before the completion of the construction of said house into the conditions that the loan shall be converted to a long-term mortgage loan at the time when the construction of said house is completed), the relevant loan shall be deemed a long-term mortgage loan from the borrowing date thereof (where the borrowing conditions are newly changed, the date of change thereof) to the date of registration for preservation of ownership of the relevant house, and the provisions of paragraph (3) shall apply to the amount of interest redeemed: Provided, That where the resident comes to possess two or more rights to purchase a house, the same shall not apply during the taxation year whereto the relevant possessing period belongs; and4. Where an individual or collective house is financed before their values are publicly notified under Public Notice of Values and Appraisal of Real Estate Act, the value first notified in public under the same Act, after the day such loan was made, shall be deemed the value of the relevant house.(5) In the application of paragraphs (2) and (3), where the total of amounts under paragraphs (2) and (3), and Article 87 (2) of the Special Tax Treatment Control Act exceeds ten million won (fifteen million won in cases the long-term mortgage loan meets the requirements prescribed by Presidential Decree) per year, such excess amount shall be deemed to be nonexistent, and whether a resident is a head of a family or not shall be determined taking circumstances as at the end of the taxable period into account: Provided, That when the total of amounts under paragraph (2) and Article 87 (2) of the Special Tax Treatment Control Act exceeds three million won per year, such excess amount shall be deemed to be non-existent. <Newly Inserted by Act No. 6276, Oct. 23, 2000; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(6) An amount subtracting donations accounted as necessary expenses in the calculation of any business income and real estate rental income from the aggregate of donations falling under the following subparagraphs, which are made by a resident [including a donation made by those who falls under Article 50 (1) 2 and 3 (b) (excluding one to whom the basic deduction of another resident was applied)] during the corresponding year, shall be deducted from the global income amount subject to the comprehensive taxation during the corresponding year (where donations are accounted as necessary expenses in the calculation of any business income and any real estate rental income, the global income amount shall be based after such donations are accounted as such expenses and shall not include any interest income and dividend income subject to the application of withholding tax rates under Article 62). In such cases, where the donation of subparagraph 1 and the donation of subparagraph 2 are made simultaneously, the donation of subparagraph 1 shall be first deducted: <Newly Inserted by Act No. 6276, Oct. 23, 2000; Act No. 8825, Dec. 31, 2007>1. The donations described in Article 34 (2); and2. The designated donations under Article 34 (1). In such cases, the limit of the amount of such designated donations shall be as follows:(a) If such donations were made for religious organizations:Amount limited = [referring to the amount deducting donation amount pursuant to subparagraph 1 from global income (in cases of business income or real estate rental income, the standard shall be income before adding donation amount into necessary expenses, and interest income or dividend income to which the withholding tax rate is applicable pursuant to Article 62 shall be excluded); hereinafter referred to as “income amount”] × 10/100 + [smaller amount between 10/100 of income amount (5/100, for donations made until December 31, 2009) and donations made except for those to religious organizations]; or(b) Cases not falling under item (a):Amount limited = 20/100 of income amount (5/100, for donations made until December 31, 2009)(7) Deleted. <by Act No. 8144, Dec. 30, 2006>(8) In applying the provisions of paragraph (1), if any amount is already paid for an ex-spouse, dependant family member, handicapped person or a person who is 65 years old or older as at the last day of taxable period, who has come not to fall under a person subject to a basic deduction due to such causes as marriage, divorce, separation, employment, etc. before the end of the taxable year, the amount paid until the date on which the relevant causes have occurred shall be deducted from the earned income amount accruing during the relevant year. <Newly Inserted by Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(9) Deleted. <by Act No. 9270, Dec. 26, 2008>(10) The deduction referred to in paragraphs (1) through (8) shall be made when a resident files an application therefor under conditions prescribed by Presidential Decree. Where the amount of such deduction exceeds his global income which is subject to the comprehensive taxation in the corresponding year, such excess amount shall be deemed to be nonexistent: Provided, That in cases of a business proprietor who has any business income or any real estate rental income, when the designated donations are included in the excess amount, he may carry over such designated donations to include in necessary expenses pursuant to the provisions of Article 34 (3). <Newly Inserted by Act No. 6276, Oct. 23, 2000; Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(11) For a resident having any earned income who has not filed the application as referred to in the main sentence of paragraph (10) or a businessman who meets the requirements prescribed by Presidential Decree (hereinafter referred to as a “business proprietor of sincerity”), such as opening, reporting, etc. a business account under the provisions of Article 160-5 (3), one million won per year shall be deducted, and for a resident having no earned income but any global income, six hundred thousand won per year shall be deducted (hereinafter referred to as the “standard deduction”): Provided, That where the global income amount which is subject to the comprehensive taxation in the corresponding year is short of the deductions, said global income amount shall be the deduction amount. <Amended by Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006>(12) The deduction made under paragraphs (1) through (8), (10) and (11) shall be referred to as “special deduction”. <Amended by Act No. 6276, Oct. 23, 2000; Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(13) Other matters necessary for the special deduction referred to in paragraphs (1) through (8), (10) and (11) shall be determined by Presidential Decree. <Amended by Act No. 6276, Oct. 23, 2000; Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(14) In cases where both the provisions of paragraph (1) 2 and 2-2 are applicable simultaneously to the insured under a guaranty-nature insurance exclusively for the handicapped, one of them shall be selected and applied. <Newly Inserted by Act No. 5424, Dec. 13, 1997; Act No. 5994, Aug. 31, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003>

(1) Any dependent living together with a resident as prescribed in Article 50 shall be a family member living together with the resident under the resident registration card, and actually living together with the resident at the resident’s domicile or temporary domicile: Provided, That the same shall not apply to any lineal descendant and adoptee. <Amended by Act No. 9270, Dec. 26, 2008>(2) Even though a resident or a family member living together with the resident (excluding a lineal descendant and adoptee) leaves temporarily his original domicile or temporary domicile to enter school or receive any medical treatment for a disease, or under any circumstances of services or business, but falls under such causes as prescribed by Presidential Decree, the family member shall be considered as a person living together with the resident as referred to in paragraph (1). <Amended by Act No. 9270, Dec. 26, 2008>(3) Notwithstanding the provisions of paragraph (1), if a lineal ascendant of a resident (including his spouse) among his dependents is living separately under a residential situation, the lineal ascendant shall be considered as a person living together with the resident as prescribed in Article 50. <Amended by Act No. 9270, Dec. 26, 2008>(4) The determination as to whether a spouse, dependent, handicapped person or senior person is subject to a deduction as prescribed in Articles 50, 51 and 51-2 shall depend upon the situation as at the end of the taxable period of the corresponding year: Provided, That where a person is dead or a handicapped person is healed before the end of the taxable period, such determination shall depend upon the situation on the day preceding the day of death or healing. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 8144, Dec. 30, 2006>(5) Notwithstanding the provisions of the main sentence of paragraph (4), in cases where the applicable age is determined under the provisions of Articles 50 (1) 3, 51 (1) 4 and 51-2, and any person attains the applicable age in the taxable period of the corresponding year, such person shall be considered to be subject to a deduction. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 8144, Dec. 30, 2006>

(1) For a person having only the interest income, dividend income, annuity income, or miscellaneous income subject to separate taxation, the basic deduction, additional deduction, additional deduction for persons with many children, or special deduction shall not be applied. <Amended by Act No. 5155, Aug. 14, 1996; Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007>(2) If a person liable for making the final return on tax base under the provisions of Article 70 (1) or 74 fails to file the documents as prescribed in Article 70 (4) 1, the basic deduction for only the resident himself and the standard deduction shall be allowable: Provided, That where such documents are submitted later regardless of the final tax base return, the same shall not apply. <Amended by Act No. 5155, Aug. 14, 1996; Act No. 5191, Dec. 30, 1996; Act No. 8144, Dec. 30, 2006>(3) In cases where an occasional assessment is determined under Article 82, the basic deduction for only the resident himself shall be allowable.

In cases where the income deduction is allowable under Article 51-3 or 52 (6), or under the Special Tax Treatment Control Act, if any amount is disbursed, paid, invested, contributed, etc. by a person having a special relationship whose income amount is added up to the income amount of the major joint business proprietor for taxation under the provisions of Article 43 (3), such amount shall be deemed an amount disbursed, paid, invested, contributed, etc. by the major joint business proprietor within the extent of the income amount which is added up to the income of the major joint business proprietor for taxation and the income deduction may be available at the time of calculating the global income amount of the major joint business proprietor which is subject to a summing up taxation.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

(1) Income tax on the global income of a resident shall be an amount calculated by applying tax rates in the following subparagraphs to the tax base of global income accruing during the corresponding year (hereinafter referred to as “calculated global income tax amount”): <Amended by Act No. 9270, Dec. 26, 2008>1. Income accruing between January 1, 2009 and December 31, 2009: Tax Base of Global Income
Tax Rates
Not more than 12 million won
6/100 of tax base
More than 12 million won but not more than 46 million won
720,000 won + 16/100 of the
amount exceeding 12 million won
More than 46 million won but not more 88 million won
6.16 million won + 25/100 of the amount exceeding 46 million
Over 88 million won

16.66 million won + 35/100 of the amount exceeding 88 million won
2. Income accruing after January 1, 2010: Tax Base of Global Income
Tax Rates
Not more than 12 million won
6/100 of tax base
More than 12 million won but not more than 46 million won
720,000 won + 15/100 of the
amount exceeding 12 million won
More than 46 million won but not more 88 million won
5.82 million won + 24/100 of the amount exceeding 46 million
Over 88 million won

15.90 million won + 33/100 of the amount exceeding 88 million won
(2) The income tax on any retirement income of a resident shall be the amount calculated by multiplying the amount calculated by applying the tax rate as referred to in paragraph (1) to the amount obtained by dividing the tax base of retirement income accruing during the corresponding year by the number of years of work, by the number of years of work (hereinafter referred to as the “calculated retirement income tax amount”).(3) Deleted. <by Act No. 8144, Dec. 30, 2006>

(1) If any dividend income amount, to which the proviso to Article 17 (3) is applicable, is added to the global income amount of a resident, under the proviso to the same paragraph of the same Article, the amount equivalent to the amount added to the total gross income amount accruing during the corresponding year shall be deducted from the calculated global income tax amount. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999>(2) The deduction made under paragraph (1) shall be referred to as the “tax credit for dividend income”.(3) Deleted. <by Act No. 7006, Dec. 30, 2003>(4) In the application of the provisions of paragraph (1), the dividend income amount which is subject to the tax credit shall be that included in the tax base for global income as prescribed in Article 14 (2), and exceeding the standard amount of global taxation on any interest income, etc. <Amended by Act No. 7006, Dec. 30, 2003>(5) Deleted. <by Act No. 8144, Dec. 30, 2006>(6) Matters necessary for the calculation, etc. of the amount of tax credit for dividend income shall be prescribed by Presidential Decree. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>

(1) If a person subject to simple bookkeeping under the provisions of Article 160 (3) calculates his income amount on the basis of the book kept and entered and submits the documents pursuant to the provisions of Article 70 (4) 3 in filing a final return final return on tax base pursuant to the provisions of Article 70 or 74, an amount equivalent to 10/ 100 [20/100 in case where books are kept by double entry and income amount is calculated in accordance with the books] of the amount calculated by multiplying the calculated global income tax amount by the ratio of the sum of the real estate rental income amount and the business income amount calculated pursuant to the relevant book to the global income amount shall be deducted from the calculated global income tax amount: Provided, That where the amount of tax credit exceeds one million won, one million won shall be deducted. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(2) Cases falling under each of the following subparagraphs shall not be subject to tax credit (hereinafter referred to as the “tax credit for book-keeping”) pursuant to paragraph (1):1. If 20/100 or more of the income amount liable for return on the basis of the entries in the book kept and entered is not returned; and2. If books and supporting documents concerning the tax credit for bookkeeping are not preserved for a period of five years from the final date of the period for a final return final return on tax base: Provided, That if in case of force majeure, the same shall not apply.(3) Matters necessary for the tax credit for bookkeeping shall be determined by Presidential Decree.[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) In cases where any foreign source income is added to the global income or retirement income amount of a resident, if the foreign income tax amount on such foreign source income as determined by the Presidential Decree is paid or payable in a foreign country, the resident may choose any one of the following methods and have it applied: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. By deducting the foreign income tax amount from the calculated global income tax amount or the calculated retirement income tax amount in the corresponding year, within the limit of the amount calculated by multiplying the global income amount or retirement income amount accruing during the corresponding taxable period, calculated under Article 55, by the ratio (the ratio determined by Presidential Decree in cases subject to exemption or reduction of tax pursuant to the Special Tax Treatment Control Act or other Acts) of the foreign source income to the global income amount accruing during the corresponding taxable period (hereafter referred to as “credit limit” in this Article); and2. By including the foreign income tax on the foreign source income paid or payable in a foreign country, in the necessary expenses in the calculation of the income amount accruing during the corresponding year.(2) If any foreign income tax amount paid or payable to a foreign government, in calculating global income amount pursuant to paragraph (1), exceeds the credit limit, such excess amount may be carried forward to the taxable period to be terminated within five years from the taxable period following the corresponding taxable period, and credited within the credit limit for the taxable period to which it is carried forward. <Amended by Act No. 8825, Dec. 31, 2007>(3) The amount equivalent to the tax on the foreign source income of a resident which is exempted or reduced by a country which is a member of the tax treaty, shall be considered as a foreign income tax amount which is eligible for the tax credit or inclusion in the necessary expenses as referred to in paragraph (1), within such limit as determined by the tax treaty.(4) Matters necessary for the tax credit or inclusion in necessary expenses as referred to in paragraph (1), shall be determined by Presidential Decree.

(1) If a business proprietor is expected to have difficulty paying taxes, due to the loss in his assets, by a natural disaster or other accidents (hereinafter referred to as “disasters”), equivalent to 20/100 or more of the total assets as prescribed by Presidential Decree in the corresponding year, the amount calculated in proportion to the loss thereof (the amount shall not exceed the value of the lost asset) shall be multiplied by the income tax amount falling under each of the following subparagraphs (referring to the income tax amount on any real estate rental income or any business income; hereafter the same shall apply in this Article), and then deducted from tax amount. In such cases, the value of assets shall not include the value of land: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. The income tax amount (including any additional dues) to be paid, which was levied or is to be levied as at the date of occurrence of such disaster; and2. The income tax amount for the taxable period such disaster occurred.(2) In cases under paragraph (1), the tax amount from which any tax amount is deducted under Articles 56, 56-2 and 57 shall be the income tax amount to which the provisions of paragraph (1) shall apply. <Amended by Act No. 5580, Dec. 28, 1998>(3) The deduction made under paragraph (1) shall be referred to as “tax credit for casualty losses”.(4) Any person who desires to obtain the tax credit for casualty losses, shall file an application to the chief of the competent tax office, under conditions prescribed by Presidential Decree.(5) The chief of the competent tax office shall, upon receiving the application as referred to in paragraph (4), determine the tax amount to be deducted, and notify it to the applicant.(6) The provisions of paragraph (1) shall be applicable even when no application as referred to in paragraph (4) is made.(7) If there occurs a collective casualty, the provisions of paragraph (1) shall be applicable in proportion to the loss of assets as investigated and determined by the chief of the competent tax office, under conditions prescribed by Presidential Decree.(8) Matters necessary for the tax credit for casualty losses, shall be determined by Presidential Decree.

(1) For a resident having any earned income, the following amounts shall be deducted from the calculated global income tax amount on the earned income: Provided, That in cases where the deducted tax amount exceeds five hundred thousand won, such excess amount shall be treated as non-existent: <Amended by Act No. 5155, Aug. 14, 1996; Act No. 5191, Dec. 30, 1996; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 6958, Jul. 30, 2003> <Calculated global income tax amount on earned income>
<Amount of tax to be deducted>

Not more than 500,000 won
55 percent of the calculated tax
amount
More than 500,000 won

275,000 won + 30/100 of the
amount exceeding 500,000 won
(2) Deleted. <by Act No. 5580, Dec. 28, 1998>(3) In case of collecting withholding taxes under Article 134 (3) from a daily-paid worker’s earned income, the amount equivalent to 55/100 of the calculated tax amount on the earned income concerned shall be deducted from such calculated tax amount. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 7006, Dec. 30, 2003>

(1) In application of the Acts related to taxes, if the provisions concerning the reduction or exemption of the income tax and those concerning the tax credit are applied concurrently, the order of application shall be as follows:1. Reduction or exemption of the income tax on the income amount accruing during the corresponding taxable period;2. Tax credit for which the deduction carried forward is not recognized; and3. Tax credit for which the deduction carried forward is recognized. In this case, if there is a tax credit amount accruing during the corresponding taxable period and the amount not deducted is carried forward from the preceding taxable period at the same time, the amount not deducted and carried forward shall be deducted preferentially.(2) If the sum of the amounts of reduction, exemption and tax credit as referred to in paragraph (1) 1 and 2 exceeds the payable tax amount (excluding the additional tax), such excess amount shall be considered not to exist.(3) In application of the provisions of paragraph (2) to the tax credit for casualty loss pursuant to Article 58, the payable income tax amount shall include the additional tax amount.[This Article Wholly Amended by Act No. 5031, Dec. 29, 1995]

<This Article lost its effect due to the decision of unconstitutionality made by the Constitutional Court on August 29, 2002>

If any interest income and dividend income which are included in the global income tax base of a resident (hereafter in this Article referred to as the “interest income, etc.”) exceeds the standard amount of global taxation on any interest income, etc. as prescribed in Article 14 (3) 4 (hereafter in this Article referred to as the “standard amount of global taxation”), the calculated global income tax amount of the relevant resident shall be the amount falling under any of following subparagraphs, whichever is larger, and if such incomes do not exceed the standard amount of global taxation, the calculated global income tax amount shall be the amount falling under subparagraph 2. In this case, any dividend income under the provisions of Article 17 (1) 6-3 shall not be deemed as the interest income, etc.: <Amended by Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006>1. Amount obtained by adding up the tax amount falling under each of the following items:(a) Tax amount on the amount calculated by adding up the amount of interest income, etc. exceeding the standard amount of global taxation and the global income amount excluding the amount of interest income, etc.; and(b) Tax amount calculated by applying the tax rate referred to in Article 129 (1) 1 (c) to the standard amount of global taxation; and2. Amount obtained by adding up the tax amount falling under each of the following items:(a) Tax amount calculated by applying the tax rate referred to in Article 129 (1) 1 to the interest income, etc.: Provided, That with respect to the income to which Article 127 does not apply, it shall be calculated by applying the tax rate referred to in Article 129 (1) 1 (c); and(b) Calculated tax amount on the global income amount excluding the interest income, etc: Provided, That in case where the relevant tax amount is short of an aggregate amount of the tax amount calculated by applying the tax rate referred to in Article 129 (1) 1 (c) to the dividend income under the provisions of Article 17 (1) 6-3, and the calculated tax amount on the global income amount excluding the interest income, etc. and the dividend income under the provisions of Article 17 (1) 6-3 (hereinafter referred to as the “comparative global income tax amount”), it shall be the comparative global income tax amount.[This Article Wholly Amended by Act No. 7006, Dec. 30, 2003]

The calculated tax amount on any excess refund of the workplace mutual aid association as prescribed in Article 16 (1) 11, shall be the amount calculated by multiplying, by the number of years in which payments are made, the tax amount calculated by applying the basic tax rates as prescribed in Article 55 (1) to the amount obtained by dividing, by the number of years in which payments are made (if it is less than a year, it shall be one year; the same applies hereafter), the amount exceeding the paid-in principal (hereafter in this Article, referred to as “excessive refund of the workplace mutual aid association”) from which the amount falling under the following subparagraphs is successively deducted, from among the refund of competent association which is received from the mutual aid society or association (hereinafter referred to as “workplace mutual aid association”) constituted of employees engaging in the same workplace or occupation, etc.:1. Amount equivalent to 50/100 of the excessive refund of the workplace mutual aid association; and2. The following amount by the number of years in which payments are made: <Number of years in which payments are made>
<Amount of deductions>
5 or less years
300,000 won × number of years in which payments are made
Over 5 years to 10 years
1,500,000 won + 500,000 won × (number
of years in which payments are made － 5
years)
Over 10 years to 20 years
4,000,000 won + 800,000 won × (number of
years in which payments are made － 10
years)
Over 20 years
12,000,000 won + 1,200,000 won × (number
of years in which payments are made － 20
years)
[This Article Wholly Amended by Act No. 5994, Aug. 31, 1999]

(1) The calculated global income tax amount for a resident operating a real estate trading business (hereinafter referred to as a “real estate broker”) whose global income amount contains a marginal profit from trading the housing or land falling under any of Article 104 (1) 2-3 through 2-7 and 3 (hereafter referred to as the “marginal profits from trading housing, etc.” in this Article) shall be the tax amount falling under each of the following subparagraphs, whichever is larger: <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. The calculated global income tax amount under the provisions of Article 55 (1); and2. The total of the tax amounts falling under the following items:(a) Total of the tax amounts calculated by applying the tax rate under the provisions of Article 104 to the marginal profits from trading housing, etc.; and(b) Tax amount calculated by applying the tax rate under the provisions of Article 55 to the tax base which is calculated by deducting the total of the portion of the marginal profits from trading housing, etc. during the relevant year from the global income tax base.(2) Matters necessary for the calculation of the marginal profits from trading housing, etc. by any resident operating a real estate trading business under paragraph (1), and the calculation of other global income tax amount shall be prescribed by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>[This Article Newly Inserted by Act No. 7006, Dec. 30, 2003]

(1) The chief of a tax office having jurisdiction over the place of tax payment shall, by November 30 (by January 14 of the succeeding year in case the partial payment is made under Article 77), collect an amount equivalent to 1/2 of the income tax paid or payable on the global income for the preceding year (hereinafter referred to as “interim prepaid tax base”) from a resident having the global income (excluding those having the income provided for in the Presidential Decree and the person who has started a trade or business anew in the corresponding taxable year among those who were not a business operator as of the beginning date of the corresponding tax year; hereafter the same shall apply in this Article) by treating the same as the payable tax amount and the period ranging from January 1 to June 30 as the interim prepayment period. In this case, the chief of said tax office shall issue a tax notice within the period ranging from November 1 to 15, to the resident liable to pay the tax amount for interim prepayment.(2) If the resident liable to pay the tax amount for interim prepayment notified as provided in paragraph (1) fails to pay the whole or part of it by November 30, it shall be deemed that no tax notice has been issued for the portion of the tax payable in installments pursuant to the provisions of Article 77, and the chief of a tax office having jurisdiction over the place of tax payment shall issue a tax notice for the tax amount payable in installments within the period ranging from December 16 to 31.(3) Where the income tax on the global income of a resident having the global income as of the close of the interim prepayment period (hereinafter referred to as the “estimated amount for interim prepayment”) is less than 30/100 of the standard amount for interim prepayment, he may file a return with the chief of the tax office having jurisdiction over the place of tax payment, treating the estimated amount for interim prepayment as the tax amount for interim prepayment, within the period ranging from November 1 to 30 as provided for in the Presidential Decree.(4) Where a resident having the global income files a return under paragraph (3), the determination of the tax amount for interim prepayment pursuant to paragraph (1) shall be deemed as non-existent.(5) Where a resident, who did not have the standard amount for interim prepayment, comes to earn any global income during the interim prepayment period of the corresponding year, he shall file a return with the chief of the tax office having jurisdiction over the place of tax payment, treating the estimated amount for interim prepayment as the tax amount for interim prepayment, within the period ranging from November 1 to 30 as provided for in the Presidential Decree. <Amended by Act No. 7837, Dec. 31, 2005>(6) The resident who filed a return pursuant to paragraph (3) or (5) shall pay the tax amount for interim prepayment to the tax office having jurisdiction over the place of tax payment, the Bank of Korea (including its agents; hereinafter the same shall apply) or a postal agency by November 30.(7) The standard amount for interim prepayment under paragraph (1) shall be the total sum of the tax amount falling under any the following subparagraphs less the tax amount refundable pursuant to Article 85 (including the amount reflecting a determination based on a correction request, if any, made pursuant to Article 45-2 of the Basic Act for National Taxes): <Amended by Act No. 8144, Dec. 30, 2006>1. The tax amount for interim prepayment during the preceding year;2. The tax amount voluntarily paid by a final return pursuant to Article 76;3. The additional tax amount paid under Article 85 (including the additional dues, if any); and4. The tax amount paid by a return filed after the time limit expires pursuant to Article 45-3 of the Basic Act for National Taxes (including the additional dues, if any) and the additional tax voluntarily paid pursuant to Article 46 of the same Act (including the additional dues, if any).(8) The estimated amount for interim prepayment under paragraph (3) shall be computed according to the order given in the following formulas: <Amended by Act No. 8825, Dec. 31, 2007>1. Global income tax base = (global income for interim prepayment period × 2) - (deficit carried-over - global income deduction);2. Calculated global income tax amount = global income tax base × basic tax rate; and3. Estimated amount for interim prepayment = calculated global income tax amount/2 - (the reduced or exempted tax amount on global income, tax credit amount, calculated tax amount on gains from trading of land, etc. by a provisional return, and tax amount imposed on occasions or collected at source not later than the end of interim prepayment period).(9) The chief of a tax office having jurisdiction over the place of tax payment may either correct or determine the tax amount for interim prepayment where he has found omissions or mistakes in returns filed pursuant to paragraph (3) or (5) or where the person liable to file a return pursuant to paragraph (5) fails to do so. In such cases, the corrected or determined tax amount shall be computed by mutatis mutandis applying the method of computing the estimated amount for interim prepayment under paragraph (8).(10) Where a real estate broker under Article 69 files a provisional return on gains from sale of land or buildings sold during the interim prepayment period and pays the tax on such gains, the tax amount for interim prepayment shall be 1/2 of the standard amount for interim prepayment under paragraph (1) less the amount paid by a provisional return. In this case, if the tax amount on such gains from sale of land, etc. paid by a provisional return exceeds the amount equivalent to 1/2 of the standard amount for interim prepayment, the tax amount for interim prepayment shall be deemed as non-existent.(11) Notwithstanding paragraphs (1) through (5), the chief of a tax office having jurisdiction over the place of tax payment may determine the tax amount for interim prepayment during the corresponding year within the extent not exceeding the amount falling under any of the following subparagraphs under the conditions as prescribed by Presidential Decree, where the Commissioner of National Tax Service recognizes there exist urgent needs for the national treasury because of a serious domestic or overseas trouble, etc.: <Amended by Act No. 8825, Dec. 31, 2007>1. Where interim prepayment is made pursuant to paragraph (1), the standard amount for interim prepayment; and2. Where interim prepayment is made pursuant to paragraphs (3) and (5), twice of the estimated amount for interim prepayment under paragraph (8).[This Article Wholly Amended by Act No. 6292, Dec. 29, 2000]

(1) When any tax association has collected and paid each month the income taxes on its members’ incomes under Article 150 during the interim prepayment period, such incomes shall not be subject to the interim prepayment.(2) and (3) Deleted. <by Act No. 5191, Dec. 30, 1996>

(1) Any real estate broker shall return the gains from trading land or buildings (hereinafter referred to as “land, etc.”) and the tax amount thereon to the chief of a tax office having jurisdiction over the place of tax payment within two months from the end of the month to which the trading date belongs under conditions prescribed by Presidential Decree. The same shall also apply to cases where there exists no gains from trading land, etc. or there occurs any loss on trading. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 8144, Dec. 30, 2006>(2) The return as referred to in paragraph (1) shall be referred to as “provisional return on gains from trading of land, etc.”(3) The calculated tax amount on a real estate broker’s gains accruing from trading of land, etc. shall be the amount calculated by multiplying the amount obtained by deducting the necessary expenses calculated by applying mutatis mutandis the provisions of Article 97, from the value of trade, by the tax rates as prescribed in subparagraphs of Article 104 (1): Provided, That the holding period of land, etc. is less than two years, it shall be an amount obtained by multiplying by the tax rate in Article 104 (1) 1 notwithstanding Article 104 (1) 2 and 2-2. <Amended by Act No. 9270, Dec. 26, 2008>(4) If a real estate broker has voluntarily paid the tax amount on gains from trading of land, etc. by the provisional return pursuant to paragraph (1), the amount equivalent to 10/100 of the returned and paid tax amount on the gains from trading land, etc., shall be deducted from such calculated tax amount (hereinafter referred to as “tax credit for the provisional return on gains from trading of land, etc.”).(5) The provisions of Articles 107 and 114 shall apply mutatis mutandis to the calculation, determination and reassessment of the calculated tax amount on the gains from trading of land, etc. <Amended by Act No. 7837, Dec. 31, 2005>(6) Matters necessary for the calculation of the gains from trading land, etc. and tax amount thereon, and the procedure for the tax payment by a provisional return shall be determined by the Presidential Decree. <Amended by Act No. 5031, Dec. 29, 1995>

(1) Any resident having any global income amount accruing during the corresponding year, shall return the tax base of such global income to the chief of a tax office having jurisdiction over the place of tax payment, from May 1 to May 31 in the year following the corresponding year, under the conditions as prescribed by the Presidential Decree.(2) The provisions of paragraph (1) shall also be applicable in a case where there is no tax base in the corresponding year, or there is any loss.(3) The return as referred to in paragraph (1) shall be referred to as “final return final return on tax base of global income”.(4) The written final return final return on tax base of global income shall be filed with the chief of a tax office having jurisdiction over the place of tax payment together with the documents falling under any of the following subparagraphs. In this case, when any person subject to bookkeeping by double entry under the provisions of Article 160 (3) (hereinafter referred to as the “person subject to bookkeeping by double entry”) has failed to submit the documents under the provision of subparagraph 3, he shall be deemed to have not filed the final return final return on tax base of global income: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Documents as prescribed by the Presidential Decree attesting that he is subject to the personal deduction as prescribed in Article 50, 51 or 51-2, the pension insurance premium deduction as referred to in Article 51-3, the interest expense deduction for reverse mortgage-backed retirement pension system as provided in Article 51-4, and the special deduction under the provisions of Article 52;2. Documents as prescribed by the Presidential Decree, which are necessary for calculating the total gross income amount and the necessary expenses which are the basis of the calculation of the global income amount;3. If any real estate rental income amount or any business income amount is calculated on the basis of the books and supporting documents kept and entered under Articles 160 and 161, the balance sheet and the income statement prepared by applying mutatis mutandis the corporate accounting standards, and the annex thereof, trial balance sheet and the adjusted account statement prepared under the conditions as prescribed by the Presidential Decree: Provided, That if the businessman has kept books under Article 160 (2), the account statement of income amounts by simple book-keeping prescribed by the Presidential Decree;4. If the necessary expenses are calculated under Articles 28 through 32, the specification thereof;5. If a businessman (excluding any small-scale businessman as prescribed by the Presidential Decree) receives documents other than the supporting documents falling under any subparagraph of Article 160-2 (2) after being supplied goods or services from another businessman (including any corporation) in connection with his business, the specification of the reception of receipt (hereinafter referred to as the “specification of reception of receipt”) as prescribed by the Presidential Decree; and6. If any real estate rental income amount or any business income amount is not calculated on the basis of the supporting documents or books kept and entered under Articles 160 and 161, the account statement of estimated income amounts prescribed by the Presidential Decree.(5) If there is any defect or error in the return or other documents filed under paragraph (4), the chief of a tax office having jurisdiction over the place of tax payment may demand the supplement and correction thereof.(6) Deleted. <by Act No. 6781, Dec. 18, 2002>

(1) Any resident having any retirement income amount accruing during the corresponding year, shall return the tax base of such retirement income to the chief of a tax office having jurisdiction over the place of tax payment, from May 1 to May 31 in the year following the corresponding year, under the conditions as prescribed by the Presidential Decree.(2) The provisions of paragraph (1) shall apply even when there is no tax base of retirement income accruing during the corresponding year: Provided, That the cases of a person who has paid the income tax under Articles 146 through 148, this shall not apply. <Amended by Act No. 8825, Dec. 31, 2007>(3) The return as referred to in paragraph (1) shall be referred to as “final return final return on tax base of retirement income”.

(1) Notwithstanding the provisions of Articles 70 and 71, a resident falling under any of the following subparagraphs may not file a final return final return on tax base of the corresponding income: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 6781, Dec. 18, 2002; Act No. 8825, Dec. 31, 2007>1. A resident having only earned income;2. A resident having only retirement income;3. A resident having only annuity income under Article 20-3 (1) 1 and 2;4. Deleted; <by Act No. 6781, Dec. 18, 2002>5. A resident who has only business income prescribed by the Presidential Decree that is subject to withholding taxation pursuant to Article 127;6. A resident having only incomes falling under subparagraphs 1 and 2;7. A resident having only incomes falling under subparagraphs 2 and 3;8. A resident having only incomes falling under subparagraphs 2 and 5;9. A resident having only interest, dividend, annuity and miscellaneous incomes that are subject to separate taxation; and10. A resident having the interest, dividend, annuity and miscellaneous income, which are subject to separate taxation among those falling under subparagraphs 1 through 8.(2) The provisions of paragraph (1) shall not apply to the person, other than a daily-paid worker, who has any earned income, annuity income, retirement income, or income prescribed in paragraph (1) 5 (including persons who have both Class A and B earned incomes at the same time) paid by two or more persons: Provided, That this shall not apply to the person who has paid the income tax by a year-end adjustment as prescribed in Article 137, 138 or 144-2. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 6292, Dec. 29, 2000>(3) The provisions of paragraph (1) shall not apply to a person who has Class B earned income or Class B retirement income: Provided, That this shall not apply to the person who has paid income tax under Article 152 (2) by referring to the practices of the payment of a withholding tax as prescribed in Articles 137 and 138, and who has paid income tax pursuant to withholding tax rate under Article 156-5. <Amended by Act No. 8825, Dec. 31, 2007>(4) The provisions of paragraph (1) shall not apply to the case where a withholding agent under Article 127 fails to withhold an income tax from those having any earned income (excluding day labor wages), annuity income, retirement income, or income under paragraph (1) 5 by the year-end adjustment under Article 137, 138, 143-4, 144-2, or 146.<Newly Inserted by Act No. 6292, Dec. 29, 2000>(5) If there is no additional income accruing after the occasional assessment as prescribed in Article 82, it may be permitted not to make the final return on the tax base.

(1) If a resident dies, his inheritor shall make a return on the resident’s tax base for the taxable period of death within six months of the commencement of the inheritance (in case where the inheritor departs in this period from Korea to move his domicile or temporary domicile to a foreign country, not later than ten days from the date of departure), under the conditions as prescribed by the Presidential Decree.(2) The provisions of paragraph (1) shall apply mutatis mutandis in case where the resident who dies between January 1 and May 31, fails to make the final return on the tax base for the taxable period immediately preceding the taxable period of death.(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis in case where the inheritor dies without making the final return on the tax base in such period.(4) In the event that a resident liable for making the final return on the tax base, departs from Korea to move his domicile or temporary domicile to a foreign country, he shall make the return on the tax base for the taxable period to which the date of departure belongs, not later than ten days from the date of departure.(5) The provisions of paragraph (4) shall apply mutatis mutandis to the final return final return on tax base for the taxable period immediately preceding the taxable period to which the date of departure belongs, if the resident departs from Korea to move his domicile or temporary domicile to a foreign country, between January 1 and May 31.(6) The provisions of Article 70 (4) and (5) shall apply mutatis mutandis to the special cases of making a final return on the tax base under paragraphs (1) through (5). <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 8825, Dec. 31, 2007>

(1) Any resident who desires to have the income tax reduced or exempted under Article 13 (1), shall file an application for it with the chief of a tax office having jurisdiction over the place of tax payment, together with the return as prescribed in Articles 69, 70 or 74, under the conditions as prescribed by Presidential Decree.(2) Any person who desires to have the tax on his earned income reduced or exempted under Article 13 (1) 1, shall apply for it to the chief of a tax office having jurisdiction over the place of tax payment under the conditions as prescribed by Presidential Decree. <Amended by Act No. 5580, Dec. 28, 1998>

(1) Any resident shall pay the amount calculated by deducting the reduced or exempted tax amount and the tax credit amount from the calculated global income tax amount or the calculated retirement income tax amount on the tax base of the corresponding year, to the competent tax office having jurisdiction over the place of tax payment, the Bank of Korea, or a postal agency under the conditions as prescribed by Presidential Decree not later than the time limit for the final return final return on tax base as prescribed in Articles 70, 71 and 74 under the conditions as prescribed by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>(2) The payment as referred to in paragraph (1) shall be referred to as “voluntary payment by final return”.(3) The tax amount falling under any of the following subparagraphs shall, if any, be deducted from the tax amount voluntarily paid by a final return: <Amended by Act No. 6292, Dec. 29, 2000>1. Tax amount for interim prepayment as prescribed in Article 65;2. Tax amount calculated by a provisional return on gains accruing from trading of land, etc. as prescribed in Article 69, or the determined or rectified tax amount thereof (including the tax credit for a provisional return);3. Tax amount assessed occasionally under Article 82;4. Withholding tax amount prescribed in Article 127 (limited to the tax amount of the corresponding resident under Article 46 on the interest corresponding to the holding period in cases of withholding tax on interest income on bonds, etc. under paragraph (1) of the same Article); and5. Tax amount collected by a tax association under Article 150, and the deducted amount.

If the tax amount to be paid by a resident under Article 65, 69 or 76, exceeds ten million won, he may pay a part of such payable tax amount in installments, within two months from the expiration date of the payment term as prescribed by Presidential Decree. <Amended by Act No. 9270, Dec. 26, 2008>

(1) Any business proprietor shall file a report on the present situation of the relevant business place (hereinafter referred to as “report on present situation of business place”) with the chief of a tax office having jurisdiction over the seat of the business place, within thirty-one days after the taxable period is terminated under conditions prescribed by Presidential Decree: Provided, That in cases falling under any of the following subparagraphs, the same shall not apply: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>1. Where the provisions of Article 74 are applied due to the businessman’s death or departure from Korea; and2. Where the businessman as prescribed in Article 2 of the Value-Added Tax Act files a return under Articles 18, 19 or 27 of the said Act.(2) Any businessman who is obliged to file a report on present situation of business place under the provisions of paragraph (1) shall file a written report which includes the matters falling under any of the following subparagraphs: <Newly Inserted by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Personal details of the businessman;2. Records of revenue amount by business types;3. Present condition of the facilities; and4. Other matters as prescribed by Presidential Decree.

The chief of a tax office having jurisdiction over the seat of the business place or the Commissioner of the competent Regional Tax Office may, upon receiving the report on the present situation of the business place as prescribed in Article 78, investigate and confirm the present situation of the business place or order the submission of books, documents, articles, etc. pertaining to it and other necessary matters under the conditions as prescribed by Presidential Decree. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999>

(1) If a resident liable for making a final return on tax base under Articles 70, 71 and 74 has failed to make the relevant final return, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment shall determine the tax base and tax amount of the resident concerned in the corresponding year. <Amended by Act No. 8144, Dec. 30, 2006>(2) If any person who has made a final return final return on tax base under Articles 70, 71 and 74 (in cases of subparagraph 1-2 or 1-3, including any person who has failed to make a final return final return on tax base under the provisions of Article 73) falls under any of the following subparagraphs, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment shall reassess the tax base and the tax amount in the corresponding year: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Where there is any omission or error in the details of return;1-2. Where there is any omission or error in the details of the year-end adjustment under the provisions of Article 137, 138, 143-4, 144-2 or 146, when it is deemed that it is difficult to collect a tax from the withholding agent due to the discontinuance of business, missing, etc. of the withholding agent or that it is difficult for the withholding agent to collect a withholding tax due to the retirement of the income earners;1-3. Where any person, who submitted a report on income deduction for a person having any earned income under Article 140, received the global income deduction by wrongful ways, such as using faulty receipts, as prescribed by Presidential Decree, and a withholding agent is expected to have difficulty in confirming wrongfulness of such deduction;2. Where he fails to submit the whole or part of the summary table of tax bills by seller and buyer as prescribed in Article 163 or the payment records as prescribed in Articles 164 and 164-2; and3. Where it is judged the details of return are not sincere considering the scale of the facilities and the current status of the business, which falls under any of the following items:(a) When a business proprietor who is obliged to use a business account under the provisions of Article 160-5 (1) has failed to do so;(b) When a business proprietor who is obliged to open and report a business account under the provisions of Article 160-5 (3) has failed to do so;(c) When a business which falls under the requirement of subscription for a credit card member store under Article 162-2 of this Act has failed to subscribe for a credit card member store under the Specialized Credit Financial Business Act without justifiable grounds;(d) When a credit card member store, which meets the requirement of subscription for a credit card member store under Article 162-2, has refused a transaction by credit card in violation of paragraph (2) of the same Article without justifiable grounds, or has issued a credit card sales slip differently from the fact;(e) When a business proprietor who is obliged to join as a cash receipt member store under the provisions of Article 162-3 (1) or who is designated as a person subject to the subscription for a cash receipt member store under the provisions of Article 32-2 of the Value-Added Tax Act has failed to join as or subscribe for a cash receipt member store under the provisions of Article 126-3 of the Special Tax Treatment Control Act (hereinafter referred to as a “cash receipt member store”) without justifiable grounds; and(f) When a cash receipt member store has refused to issue a cash receipt without justifiable grounds or has issued it differently from the fact.(3) If the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment determines or reassesses the tax base and tax amount for the corresponding year under paragraphs (1) and (2), it shall be made on the basis of the books and other supporting documents: Provided, That if it is impossible to calculate the income amount by books and other supporting documents, due to reasons prescribed by Presidential Decree, the income amount may be estimated, investigated and determined under conditions prescribed by Presidential Decree.(4) If any omission or error is found after determination or reassessment of the tax base and tax amount, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment shall immediately reassess it.

(1) Where any person who is obliged to submit a payment record under the provisions of Article 164 or 164-2 has failed to submit the relevant payment record within the deadline therefor or where the submitted payment record falls under cases of obscurity determined by Presidential Decree, an amount equivalent to 2/100 of the amount paid without the payment record or of the amount paid with the obscure payment record shall be added to the final tax amount: Provided, That where such payment record is submitted within one month after the lapse of the deadline for submission, an amount equivalent to 1/100 of the paid amount shall be added to the final tax amount, and where an additional tax is levied under the provisions of Article 90-2 of the Special Tax Treatment Control Act, the same shall not apply. <Amended by Act No. 8825, Dec. 31, 2007>(2) In the case of applying the provisions of paragraph (1), the application of the additional tax to the portion for which the person who has been paid is obscure shall be limited within one year from the closing date of the period for a final return final return on tax base under the provisions of Articles 70, 71 and 74 of the year to which the payment date under the relevant payment record belongs. <Amended by Act No. 8825, Dec. 31, 2007>(3) When any person subject to bookkeeping by double entry falls under any of the following subparagraphs, an amount equivalent to 1/100 of the supply value amount thereof shall be added to the final tax amount: Provided, That in the case of subparagraphs 2 and 3, when the payment record is submitted within one month after the lapse of the deadline for submission, an amount equivalent to 5/1000 of the supply value shall be added to the final tax amount, and where an additional tax is levied under the provisions of Article 22 (2) through (4) of the Value-Added Tax Act, the same shall not apply:1. When the person has failed to deliver the account statement under the provisions of Article 163 (1) or (2), has failed to enter the whole or part of the entries prescribed by Presidential Decree in the delivered account statement, or has entered them differently from the fact: Provided, That the same shall not apply to the portion to which subparagraph 2 applies;2. When the person has failed to submit a table of total account statement by buyer and seller under Article 163 (5), has failed to enter the whole or part of the matters requiring to be entered into the table, or has entered them differently from the fact: Provided, That the same shall not apply to the value of sale or purchase of the portion which may be verified under Presidential Decree that the entries of the table of total account statement by buyer and seller have been entered by mistake; and3. When the person has failed to submit a table of sum of tax invoices by seller referred to in Article 20 of the Value-Added Tax Act (hereinafter referred to as a “table of sum of tax invoices by seller”) pursuant to the provisions of Article 163-2 (1), has failed to enter the whole or part of the matters requiring to be entered into the table of sum of tax invoice by seller, or has entered them differently from the fact: Provided, That the same shall not apply to the purchase value of the portion which may be verified under Presidential Decree that the entries in the table of sum of tax invoice by seller have been entered by mistake.(4) Where any businessman (excluding any small-scale businessman prescribed by Presidential Decree, or any person whose income amount is estimated under the conditions as determined by Presidential Decree) has been supplied goods or services from another businessman (including any corporation) in relation to his business and has failed to receive a supporting document falling under any subparagraph of Article 160-2 (2), an amount equivalent to 2/100 of the amount for which such supporting document has not been provided (hereinafter referred to the “additional tax on no evidence preparation”) shall be added to the final tax amount: Provided, That the same shall not apply to any case where the provisions of the proviso to Article 160-2 (2) is applied.(5) Where any businessman (excluding any small-scale businessman prescribed by Presidential Decree, or any person whose income amount is estimated under the conditions as determined by Presidential Decree) has failed to submit the specification of reception of receipts referred to in Article 70 (4) 5 within the time limit for a final return final return on tax base or where it is deemed the submitted specification of reception of receipts falls under a case of obscurity as prescribed by Presidential Decree, an amount equivalent to 1/100 of the amount paid without the specification or of the amount paid with the obscure specification (hereinafter referred to as the “additional tax on no submission of specification of reception of receipts”) shall be added to the final tax amount for the relevant taxable period.(6) Where any businessman (only such a businessman as determined by Presidential Decree, who supplies goods or services mainly to consumers other than businessmen shall be applicable) who has failed to report on the present situation of business place under the provisions of Article 78 or has reported an amount to be short of the revenue amount which is required to be reported under the provisions of paragraph (2) of the same Article, an amount equivalent to 5/1000 of such revenue amount which has not been reported or the revenue amount which has been reported to be short of (hereinafter referred to as “additional tax on insincere report on present situation of business place”) shall be added to the final tax amount for the relevant taxable period.(7) Where any business proprietor falls under any of the following subparagraphs in relation to the registration of business proprietor or the report on any joint business place, an amount falling under any of the following subparagraphs (hereinafter referred to as “additional tax on insincere registration of a joint business place”) shall be added to the final tax amount for the relevant taxable period:1. When any joint business proprietor has failed to register as the businessman under the provisions of Article 87 (3) or any person who is not a joint business proprietor has deceitfully registered as a joint businessman; 5/1000 of the total revenue amount of respective taxable periods during which no registration or a deceitful registration has been made; and2. When any joint business proprietor has failed to report under the provisions of Article 87 (4) and (5) or has deceitfully reported, which is a case prescribed by Presidential Decree, 1/1000 of the total revenue amount of respective taxable periods during which no report or a deceitful report has been made.(8) Where any business proprietor (excluding any small-scale business proprietor prescribed by Presidential Decree) has failed to keep and enter the books under the provisions of Articles 160 and 161 or any income amount entered in the books is short of the amount which should have been entered, an amount equivalent to 20/100 of the amount calculated by multiplying the calculated tax amount by the ratio (1, if the relevant ratio is larger than 1; 0, if it is smaller than 0) of the relevant income amount which has not been entered in the books or the relevant income amount being short of the amount which should have been entered to the global income amount (hereinafter referred to as “additional tax on no entry”) shall be added to the final tax amount. <Amended by Act No. 8825, Dec. 31, 2007>(9) Where any business proprietor falls under any of the following subparagraphs, the amount falling under each of the relevant subparagraph (hereinafter referred to as “additional tax on nonuse of business account”) shall be added to the final tax amount for the relevant taxable period: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. When a business proprietor has failed to use a business account and falls under any subparagraph of Article 160-5 (1): An amount equivalent to 2/1000 of the amount for which no business account has been used; or2. When a business proprietor has failed to open and report a business account under the provisions of Article 160-5 (3): Larger amount between the following items:(a) An amount equivalent to 2/1000 of the revenue amount during the period in which a business account has not been opened and reported (referring to the number of days from the day next to the deadline for opening and reporting until the day before the day on which business account was opened and reported; hereafter referred to as “unopened period” in this subparagraph. In such cases, where the unopened period spans two or more taxable periods, the unopened period shall apply to each taxable period) in the taxable period. In such cases, the method of calculating revenue amount during the unopened period shall be pursuant to the following formula; andRevenue amount = Revenue amount of the relevant taxable period × Unopened period / 365 (366 for leap year)(b) An amount equivalent to 2/1000 of the total of transactions pursuant to subparagraphs of Article 160-5 (1).(10) Where any credit card member store, which meets the requirement of subscription for a credit card member store under Article 162-2, has refused a transaction by credit card in violation of paragraph (2) of the same Article or has issued a credit card sales slip differently from the fact, an amount equivalent to 5/100 of the amount of the case which has been refused or of the amount of credit card sales sip which has been made differently from the fact (referring to the difference between the portion that should have been issued and the portion that has been issued in fact), as notified by the chief of the competent tax office under the provisions of the latter part of Article 162-2 (4) (referring to five thousand won where the amount calculated by deals is short of five thousand won; hereinafter referred to as “additional tax for refusal of credit card”) shall be added to the final tax amount for the relevant taxable period. <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(11) Where any business proprietor who is obliged to join as a cash receipt member store under the provisions of Article 162-3 (1) has failed to do so, or where any cash receipt member store has refused to issue a cash receipt or issued it differently from the fact, the amount falling under any of the following subparagraphs (hereinafter referred to as “additional tax on no issuance of cash receipt”) shall be added to the final tax amount for the relevant taxable period: Provided, That the same shall not apply to subparagraph 2, if the amount of a cash receipt is smaller than 5,000 won: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. When the business proprietor has failed to join as a cash receipt member store: An amount equivalent to 5/1000 of the revenue amount (applicable only to the revenue amount of the business type subject to joining as a cash receipt member store) during the period (referring to the number of days from the day next to the deadline for joining under Article 162-3 until the day before the day on which he joined; hereafter referred to as “unjoined period” in this subparagraph. In such cases, where the unjoined period spans two or more taxable periods, the unjoined period shall apply to each taxable period) on which he did not join as a cash receipt member store, In such cases, the method of calculating the revenue amount during the unjoined period shall be pursuant to the following formula; andRevenue amount = Revenue amount of the relevant taxable period × Unjoined period / 365 (366 for leap year)2. When the business proprietor has refused to issue a cash receipt or has issued it differently from the fact: An amount equivalent to 5/100 of the amount by deal for which the issuance of a cash receipt was refused or of the amount by case for which the cash receipt was issued differently from the fact (referring to the difference between the portion that should have been issued and the portion that has been issued in fact) as notified by the chief of the competent tax office under the latter part of Article 162-3 (5) (where the amount calculated by deal is short of five thousand won, it shall be five thousand won).(12) Where any person who issues donation receipts that are required for the inclusion of such donation in necessary expenses or the deduction of such donation from any income amount under the provisions of Articles 34 and 52 (6) of this Act and of Article 73 (1) of the Special Tax Treatment Control Act (hereinafter referred to as a “donation receipt”) has entered any matters different from the fact in the donation receipts or has not drawn up and kept the contents of issuance by donor under the provisions of Article 160-3 (1), the amount falling under the following subparagraphs (hereinafter referred to as “additional tax on insincere donation receipt”) shall be added to the final tax amount, and where additional tax is levied due to a failure to perform the obligation to submit the report under the provisions of Article 78 (3) of the Inheritance Tax and Gift Tax Act or to a failure to draw up and keep a book with respect to the property donated under the provisions of paragraph (5) of the same Article, the provisions of subparagraph 2 shall not apply: <Amended by Act No. 8825, Dec. 31, 2007>1. In cases of a donation receipt:(a) Where the amount of donation was issued differently from the fact: The amount equivalent to 2/100 of the amount (referring to the difference between the amount entered in the receipt and the correct amount to be each recorded); and(b) Other cases than item (a), such as a donor’s personal information was recorded differently form the fact: The amount equivalent to 2/100 of the amount entered in the receipt; and2. In cases of contents of issuance by donor: An amount equivalent to 2/1000 of the amount for which a book has not been drawn up and kept.(13) The provisions of paragraphs (1), (3) through (7), and (9) through (12) shall apply to the cases where there is no calculated tax amount. <Amended by Act No. 8825, Dec. 31, 2007>(14) The additional tax under the provisions of paragraphs (1) and (3) shall be referred to as the “additional tax on insincere report”.[This Article Wholly Amended by Act No. 8144, Dec. 30, 2006]

(1) If a resident falls under any of the following subparagraphs, the chief of a tax office or the commissioner of the competent regional tax office having jurisdiction over the place of taxation may assess the income tax on the resident (hereinafter referred to as “occasional assessment”) at any time during the taxation period: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8825, Dec. 31, 2007>1. Where it is deemed that he might evade any income tax because he is in a state of suspension or discontinuance of business for a long time, without reporting due to business depression other circumstances;2. Where it is deemed that he might evade any tax on a reasonable ground other than that as referred to in subparagraph 1; and3. Deleted. <by Act No. 8825, Dec. 31, 2007>(2) The provisions of paragraph (1) shall apply by deeming the period ranging from the commencement of the business in the corresponding year to the date of the occurrence of the reason as referred to in subparagraph 1 as the occasional assessment period. In this case, if the grounds referred to in subparagraphs of paragraph (1) has occurred before the period of the final return on tax base and a tax payer has not file the report in the preceding taxation period, the preceding taxation period shall be included in occasional assessment period. <Amended by Act No. 8825, Dec. 31, 2007>(3) The provisions of Articles 47-2 and 47-3 of the Basic Act for National Taxes shall not apply to the relevant tax amount and revenue amount in the cases of occasional assessments under the provisions of paragraphs (1) and (2). <Newly Inserted by Act No. 8144, Dec. 30, 2006>(4) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis to those liable for the payment of taxes in an area where the domiciles, temporary domiciles or business places are deemed to be moved frequently, under the conditions as prescribed by the Presidential Decree.(5) In applying paragraph (1) 3, the procedure of applying for occasional assessment and other necessary matters shall be determined by the Presidential Decree. <Newly Inserted by Act No. 5580, Dec. 28, 1998>

When the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment has determined or reassess the tax base and tax amount of a resident under Article 80, he shall notify it in writing to the resident or his inheritor under the conditions as prescribed by the Presidential Decree: Provided, That if the determination or reassessment of the tax base and tax amount is made under Article 42, it shall be notified without delay.

If miscellaneous income falls under any of the following subparagraphs, no income tax shall be imposed on the corresponding income: <Amended by Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006>1. Whenever the sum of the amounts indicated on the faces of horse racing tickets, winner voting tickets, bullfighting match voting tickets or sports promotion voting tickets is not more than 100 thousand won and the refund per unit voting amount under the provisions of Article 21 (1) 4 is not more than one hundred times the unit voting amount;2. Whenever winning prizes, etc. prescribed in Article 21 (1) 14 are less than 5 million won; or3. Whenever the sum of miscellaneous income amounts other than those under subparagraphs 1 and 2 is 50,000 won or less.[This Article Wholly Amended by Act No. 6292, Dec. 29, 2000]

(1) If a resident falls under any of the following subparagraphs, the commissioner of regional tax office having jurisdiction over the place of tax payment shall collect the unpaid portion of income tax within three months have passed since the deadline for the payment: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007>1. Where a person liable to file and pay a tax amount for interim prepayment pursuant to Article 65 (6) fails to pay the whole or part of the same tax amount; or2. Where a person liable to pay the income tax payable for the corresponding year pursuant to Article 76 fails to pay the whole or part of the same tax.(2) If the income tax amount of a resident collected or paid under paragraph (1) of this Article or Article 76 in the corresponding year, is short of the income tax amount determined or reassessed under Article 80 by the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment, the insufficient tax amount shall be collected by the chief of a tax office having jurisdiction over the place of tax payment. The same shall also apply to the tax amount for interim prepayment as prescribed in Article 65.(3) If any withholding agent or any person liable for collecting tax from income at source under the provisions of Articles 156 and 156-3 through 156-5 has failed to pay the tax amount collected or to be collected within the deadline therefor, or has underpaid the tax amount, the chief of a tax office having jurisdiction over the place of tax payment shall collect the amount calculated by adding the additional tax amount as prescribed in Article 158 (1) to the tax amount to be collected from the relevant withholding agent: Provided, That where the withholding agent has not collected tax from income at source falling under any of the following subparagraphs, only the additional tax amount under the provisions of Article 158 (1) shall be levied: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>1. Where the income amount subject to withholding taxation which the withholding agent has failed to withhold, is already counted in the tax base amount returned and paid by a taxpayer; and2. Where the chief of the competent tax office levies or collects the income tax on the income amount that is subject to the withholding taxation but has not been withheld directly from the relevant person liable for tax payment under the provisions of Articles 80 and 114.(4) If the tax amounts paid by an interim prepayment, provisional return and payment of gains from the trading of land, etc., occasional assessment, and withholding taxation, under the provisions of Articles 65, 69, 82, 127 and 150 exceed, respectively, the total sum of the gross final tax amount on the global income and the gross final tax amount on the retirement income under the provisions of subparagraph 3 of Article 15, the chief of a tax office having jurisdiction over the place of tax payment shall refund such excess tax amount or appropriate it for other national taxes, additional dues and disposition fee for arrears. <Amended by Act No. 8144, Dec. 30, 2006>

(1) In case where a deficit carried-over in a taxable period as prescribed in Article 45 (2) occurs in calculating the amount of business income of a resident who operates a small and medium enterprise as prescribed by Presidential Decree, the resident may apply for the refund of the amount calculated under the conditions as prescribed by Presidential Decree (hereinafter referred to as “tax amount by retroactive deduction of deficit”) within the limit of the amount of income tax (referring to the amount of income tax as prescribed by Presidential Decree) levied on the business income of such small and medium enterprise in the immediately preceding taxable period. In this case, the deficit that is retroactively deducted shall be considered as the amount deducted in applying Article 45 (2).(2) A person who intends to receive the refund of tax amount by retroactive deduction of deficit shall apply for the refund to the chief of a tax office having jurisdiction over the place of tax payment under the conditions as prescribed by Presidential Decree within the time limit for a final return on tax base pursuant to Article 70 or 74.(3) If the chief of a tax office having jurisdiction over the place of tax payment receives the application for refund of income tax pursuant to paragraph (2), he shall determine the tax amount to be refunded and shall refund it pursuant to Articles 51 and 52 of the Basic Act for National Taxes without delay. <Amended by Act No. 8144, Dec. 30, 2006>(4) The provisions of paragraphs (1) through (3) shall apply only to the case where the resident concerned returns the tax base and tax amount on the income for the taxable period in which deficit carried-over occurred and for the immediately preceding taxable period within the time limit for a final return of tax base pursuant to Article 70 or 74. <Amended by Act No. 8825, Dec. 31, 2007>(5) Where a deficit carried-over is decreased by reassessing the tax base and tax amount of the income for the taxable period in which the deficit carried-over occurred after refunding the income tax pursuant to paragraph (3), the chief of a tax office having jurisdiction over the place of tax payment shall collect the tax amount equivalent to such deficit decreased from among the tax amount refunded as the income tax for the taxable period in which such deficit carried-over occurred under conditions prescribed by Presidential Decree.(6) The calculation of the tax amount to be refunded by the retroactive deduction of deficit, procedure for application and other necessary matters shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 5191, Dec. 30, 1996]

Any income tax shall not be collected where it falls under any of the following subparagraphs: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6557, Dec. 31, 2001; Act No. 9270, Dec. 26, 2008>1. Where the withholding tax amount as prescribed in Article 127 (excluding paragraph (1) 1 of the said Article) is under 1,000 won;2. Where the tax amount collected by a tax association as prescribed in Article 150 is under 1,000 won;3. Where the withholding tax amount as prescribed in Articles 156 and 156-3 though 156-5 is under 1,000 won; and4. Where the tax amount for interim prepayment as prescribed in Article 65 is under 200,000 won.

(1) The tax amount withheld from the income amount accruing from a joint business place shall be distributed in accordance with the profit-and-loss distribution ratio of the respective joint business proprietors. <Amended by Act No. 8144, Dec. 30, 2006>(2) The additional tax as prescribed in Articles 81 (1) and (3) through (11) and 158 which is related to a joint business place shall be divided according to the profit-and-loss distribution ratio of the respective joint business proprietors. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(3) The provisions of Articles 160 (1) and 168 shall apply to a joint business place by deeming it as a place of business operated by one business proprietor.(4) When any joint business proprietors make the registration of their business as prescribed in Article 168 (1) and (2), they shall file a report with the chief of a tax office having jurisdiction over the seat of a joint business place on the joint business proprietors (including matters concerning whether or not they fall under investment joint business proprietors), agreed profit-and-loss distribution ratio, representative of joint business proprietors, shares and details of investment, and other necessary matters under conditions prescribed by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(5) When any change has occurred to the details of the report under the provisions of paragraph (4), the representative of joint business proprietors shall report the details of change thereof to the chief of a tax office having jurisdiction over the seat of the place of relevant business under conditions prescribed by Presidential Decree. <Newly Inserted by Act No. 8144, Dec. 30, 2006>(6) Matters necessary for return, determination, reassessment, investigation, etc. on the income amount of a joint business place, shall be determined by Presidential Decree.

(1) Notwithstanding Chapter Ⅱ, any resident business proprietors who meet all the following requirements (hereinafter referred to as “sincere small or medium business proprietors”) may calculate the tax base and amount of the global income during the relevant taxable period according to the sincere tax payment method prescribed in this Chapter (hereinafter referred to as “sincere tax payment method”) to file tax return and pay tax: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. The revenue amount shall not exceed the amount prescribed in any of the following items (hereinafter referred to as “standard revenue amount”):(a) Agriculture, forestry, fishery, mining, wholesale, retail, real estate sales, and other businesses that do not fall under item (b) or (c): 600 million won;(b) Manufacturing, lodging or restaurants, electricity, gas or water supply, construction, transportation, telecommunications, and financial or insurance business: 300 million won; and(c) Real estate leasing, business services, educational services, public health and social welfare, services related to entertainment, culture, or sports, and other public services, repair services, private services, and housework services: 150 million won; and2. A business proprietor who falls under any of the following items shall keep the records of transactions sincerely according to the double-entry bookkeeping method (including keeping the records by electronic account books):(a) A business proprietor who has installed equipment for enterprise resource planning system under subparagraph 1 of Article 5-2 of the Special Tax Treatment Control Act, or equipment for point of sale system under subparagraph 11 of Article 2 of the Distribution Industry Development Act (hereinafter referred to as “equipment for point of sale system”);(b) A business proprietor who has a membership of the consolidated computer network for movie tickets under Article 39 of the Promotion of the Motion Pictures and Video Products Act;(c) A business proprietor who pays the price for renting a place of business or using a trademark or receives a fee, etc., based on the quantity sold or revenue amount;(d) A business proprietor who has raw materials, etc. supplied only by specific corporations (referring to three or less corporations; hereafter the same shall apply in this item) or deals with and sells commodities, products, etc. of specific corporations, or a business proprietor who sells his commodities, products, etc. only to specific corporations;(e) A business proprietor who engages in an electronic commerce for which the payments are settled only through the settlement agency as defined in subparagraph 5 (b) of Article 2 of the Specialized Credit Financial Business Act (including the banking account for business on which a report has been submitted to the chief of the tax office having jurisdiction over the place of tax payment);(f) An intermediate wholesaler as defined in subparagraph 9 of Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products;(g) A business proprietor who engages in one of bus transportation businesses in which the revenue amounts are jointly managed and distributed under the control of the head of the competent local government;(h) A business proprietor whose sales entirely depend upon exportation of goods to which the zero tax rate shall apply pursuant to Article 11 (1) 1 of the Value-Added Tax Act;(i) A business proprietor whose payments are settled only through the banking account for business as reported to the chief of the tax office having jurisdiction over the place of tax payment;(j) A business proprietor who provides manpower service subject to withholding taxes pursuant to Article 127 (1) 3; or(k) Any other business proprietor whose transactions can be transparently verified in detail according to the facilities or transaction forms similar to those of the business proprietors specified in items (a) through (j), as specified by Presidential Decree.(2) A sincere small or medium business proprietor who wants to have himself entitled to the application of the sincere tax payment method shall file an application for approval with the chief of the competent tax office, as prescribed by Presidential Decree.(3) If a sincere small or medium business proprietor who has obtained an approval under paragraph (2) does not apply the sincere tax payment method, he shall not be entitled to the application of the sincere tax payment method for the relevant taxable period and three years after the end of the relevant taxable period [or five years if he/she falls under paragraph (4)].(4) If a sincere small or medium business proprietor to whom the sincere tax payment method is applicable fails to meet the requirements under paragraph (1) 2, the chief of the tax office having jurisdiction over his/her place of tax payment shall not apply the sincere tax payment method, as prescribed by Presidential Decree.(5) In applying the provisions of paragraphs (1) through (4), necessary matters concerning the determination and approval on Sincere Small or Medium Business Proprietor, calculation of the revenue amount, grace period in case of exceeding the Standard Revenue Amount, application of electronic account books, etc. shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

(1) The tax base of a Sincere Small or Medium Business Proprietor’s global income shall be the amount calculated by deducting the deductibles for global income from the sum of incomes during the taxable period calculated in accordance with the provisons of Articles 14 through 47-2, except as provided for otherwise in this Chapter. In this case, the Special Tax Treatment Control Act shall not apply.(2) In applying Article 33 (1) 6, the depreciation cost of fixed assets specified by the Presidential Decree, such as buildings for business purpose, for the taxable period of a Sincere Small or Medium Business Proprietor shall be the amount calculated as prescribed by the Presidential Decree, regardless of whether or not the business proprietor has reckoned as a necessary expense, and shall be included as a necessary expense.(3) In applying Article 34 hereof and Articles 73 and 76 of the Special Tax Treatment Control Act, after deducting expenses of a Sincere Small or Medium Business Proprietor during the taxable period, if the sum of donations in each subparagraph exceeds the amount calculated by multiplying the revenue amount for the taxable period by one percent, such an excess amount shall not be included in necessary expenses in calculating the income during the relevant taxable period. In this case, Article 34 (3) shall not apply:1. Designated donations under Article 34 (1); and2. Donations under Article 34 (2) [including donations and political funds unde Articles 73 (1) and 76 of the Special Tax Treatment Control Act].(4) In applying Article 35 (1), if the entertainment expense spent by a Sincere Small or Medium Business Proprietor during the taxable period [excluding the portion not included in necessary expenses pursuant to Article 35 (2)] exceeds 19 million won, such an excess amount shall not be included in necessary expenses for the purpose of calculating the income during the relevant taxable period.(5) In calculating the income of a Sincere Small or Medium Business Proprietor for a taxable period, necessary matters concerning the revenue amount, the year to which necessary expenses are attributable, evaluation of assets and liabilities, inclusion of reserves and allowances in necessary expenses, applicable methods for the cases to which the Sincere Tax Payment Method becomes newly applicable or not applicable, etc. shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

The income tax for the income of a Sincere Small or Medium Business Proprietor for a taxable period shall be the amount calculated by deducting the amount under Articles 87-5 and 87-6 from the amount calculated by applying the provisions of Articles 55 through 64 to the tax base. In this case, the Special Tax Treatment Control Act shall not apply.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

(1) In the case of a Sincere Small or Medium Business Proprietor [that shall be limited to a business proprietor who engages in a type of business specified in Article 7 (1) 1 of the Special Tax Treatment Control Act], the amount equivalent to 25 percent (or 15 percent for a business proprietor whose domicile is in the Seoul metropolitan area) of the income tax calculated for the income during a taxable period shall be deducted from the tax amount.(2) In applying the tax deduction under paragraph (1), necessary matters concerning the methods applicable to the cases where there are any income other than business income and income from leasing of real estate and the cases where there are two or more business types or business places in which a business proprietor engages shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

(1) In case where the revenue amount declared by a Sincere Small or Medium Business Proprietor for the relevant taxable period at the time of reporting the tax base for global income in accordance with Article 70 exceeds 115 percent of the revenue amount during the immediately previous taxable period, the amount calculated according to the following formula shall be deducted from the tax amount calculated for the relevant taxable period:The tax amount calculated for the relevant taxable period × (the amount exceeding 115 percent of the revenue amount for the immediately previous taxable period / the revenue amount for the relevant taxable period).(2) Paragraph (1) shall not apply to the cases where the income for the relevant taxable period does not reach the income for the immediately previous taxable period and where the revenue amount has increased owing to any of the causes or events specified by the Presidential Decree, such as relocation of the business place or change of business type.(3) In the event that a business proprietor, to whom paragraph (1) was applied, files a return understating the revenue amount for the relevant taxable period or overstating necessary expenses and if the understated or overstated amount is 20 percent or more of the revenue amount rectified or necessary expenses rectified, the tax amount already deducted shall be collected additionally.(4) In applying the tax deduction under paragraph (1), necessary matters concerning the calculation method for applying tax deduction to the cases where there is any income other than business income and income from leasing of real estate shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

(1) As to reporting and payment of income tax on a Sincere Small or Medium Business Proprietor’s global income, the provisions of Articles 65 through 77 shall apply, except as provided for otherwise in this Chapter.(2) Article 65 (3) and (5) shall not apply to the interim prepayment by a Sincere Small or Medium Business Proprietor.(3) Necessary matters concerning the documents accompanying the return under Article 70 (4) shall be prescribed by the Presidential Decree.(4) The rectification under Article 80 (2) and (4) shall not be applicable to a Sincere Small or Medium Business Proprietor who has filed the return and made payment in compliance with the Sincere Tax Payment Method: Provided, That the foregoing shall not apply to the cases where it is evident that the return filed is understated in the light of the objectively evidencing materials.(5) In applying the provisions of Articles 80 through 86, necessary matters concerning the determination, rectification, and collection shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8524, Jul. 19, 2007]

(1) For the purpose of Article 4 (1) 3 and this Chapter, the term “transfer” means that any assets are actually transferred for price due to sale, exchange, investment in kind to corporation, etc., regardless of any registration or enrollment concerning such assets. In this case, if a donee takes over any obligation of a donor by an onerous donation (excluding the case falling under the text of Article 47 (3) of the Inheritance Tax and Gift Tax Act), the portion equivalent to the amount of such obligation in the donation amount shall be considered as the actual transfer for price of such assets. <Amended by Act No. 5193, Dec. 30, 1996; Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006>(2) If the category or lot number of land is changed as the result of measures for land substitution under the Urban Development Act and other Acts, or land is designated as land secured by the authorities in recompense for development outlays, it shall not be considered as a transfer as referred to in paragraph (1). <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>

(1) The income tax on any transfer income (hereinafter referred to as “transfer income tax”) shall not be levied on the following incomes: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6781, Dec. 18, 2002; Act No. 7837, Dec. 31, 2005>1. Income accruing from a disposition by an adjudication of bankruptcy;2. Income accruing from an exchange, division, or annexation of farmland falling under such cases as prescribed by the Presidential Decree;3. Income accruing from a transfer of such one house for one household as prescribed by the Presidential Decree (excluding expensive houses whose prices exceed the standard amount as prescribed by the Presidential Decree) and the appurtenant land whose size of area does not exceed that calculated by multiplying the area of land on which the building is fixed by the ratio as determined by region under the Presidential Decree (hereafter in this Article, referred to as the “land appurtenant to the house”); and4. Deleted. <by Act No. 7837, Dec. 31, 2005>(2) Notwithstanding the provisions of paragraph (1), the provisions of paragraph (1) 3 shall not apply to the case where the one household prescribed by the Presidential Decree possesses the house (including the land appurtenant to the house; hereafter in this Article, the same shall apply) and acquires the position of a selected occupant upon the approval of the management disposition under the provisions of Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents [limited to the position that has been acquired by the members of the dwelling project association implementing a housing reconstruction project or a housing redevelopment project under the same Act (including the position that has been acquired from such association member); including the land appurtenant thereto; hereinafter referred to as an “occupation right of an association member”], and transfers the relevant house: Provided, That the same shall not apply to the case where it acquires a house for residing or on other inevitable grounds which are prescribed by the Presidential Decree during the implementation period of the housing reconstruction project or the housing redevelopment project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents. <Newly Inserted by Act No. 7837, Dec. 31, 2005>

If any income amount to be reduced or exempted pursuant to this Act or other Acts, is included in the transfer income amount as prescribed in Article 95, the transfer income tax equivalent to the amount calculated by multiplying the amount, arrived by applying the tax rate prescribed in Article 104 to the tax base of the transfer income prescribed in Article 92 (2), by the ratio of such reduced or exempted income amount less the basic deductions for transfer income under Article 103 (2) to the tax base of the transfer income, shall be exempted. <Amended by Act No. 6292, Dec. 29, 2000>

The provisions concerning the non-taxation of the income tax on any transfer income under this Act or other Acts, shall not apply to the assets transferred without registration under Article 104 (3). <Amended by Act No. 5580, Dec. 28, 1998>

(1) The tax base of a transfer income of any resident (hereinafter referred to as the “tax base of a transfer income”) shall be calculated separately from the tax bases of any global income and any retirement income. <Amended by Act No. 8144, Dec. 30, 2006>(2) The tax base of a transfer income shall be the amount obtained by deducting the basic deductions of transfer income as prescribed in Article 103 from the transfer income amount calculated under Articles 94 through 102 and 118. <Amended by Act No. 8825, Dec. 31, 2007>

Except as otherwise provided for in this Act, the transfer income tax shall be calculated under the following subparagraphs: <Amended by Act No. 6051, Dec. 28, 1999; Act No. 8825, Dec. 31, 2007>1. The calculated tax amount of any transfer income shall be calculated by applying the tax rate as prescribed in Article 104 to the tax base of a transfer income as prescribed in Article 92 (2);2. The final tax amount of any transfer income shall be calculated by deducting the tax amount paid by a provisional return as prescribed in Article 108, from the tax amount calculated under subparagraph 1. In such cases, if any tax amount is reduced or exempted under Article 90, the final tax amount shall be calculated by deducting such amount; and3. The gross final tax amount of transfer income shall be calculated by adding the additional tax pursuant to Article 115 of this Act and Articles 47-2 through 47-5 of the Basic Act for National Taxes to the final tax amount calculated under subparagraph 2.

(1) The transfer income shall be the following incomes accruing during the corresponding year: <Amended by Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>1. Any income accruing from the transfer of land (referring to a lot of land subject to registration of land category in the cadastre under the Cadastral Act) or buildings (including facilities and structures annexed to such buildings);2. Any income accruing from the transfer of the rights to real estate falling under any of the following items:(a) Rights to acquire real estate (including the rights to acquire buildings and land annexed to the buildings under construction when completely built);(b) Superficies; and(c) Deposit-base lease and leasehold title registered in the real estate register;3. Any income accruing from the transfer of stocks or investment shares falling under any of the following items (including preemptive rights; hereafter referred to as “stocks, etc.” in this Chapter):(a) Transfer of stocks, etc. of a listed stock corporation under the Financial Investment Services and Capital Markets Act (hereinafter referred to as a “listed stock corporation”) by its major shareholders prescribed by Presidential Decree considering the ratio of stocks owned, total market value, etc. (hereafter referred to as “major shareholders” in this Chapter) and transfer of stocks, etc. not through the securities market under the same Act (hereinafter referred to as “securities market”);(b) Deleted; and <by Act No. 9270, Dec. 26, 2008>(c) Stocks, etc. of a corporation which is not a listed stock corporation; and4. Any income accruing from the transfer of assets falling under one of the following items (hereafter referred to as “miscellaneous assets” in this Chapter):(a) Goodwill (including what is admitted to have been transferred with an inclusion of good will by the generally-accepted idea while the goodwill has not been separately assessed and profitable benefits derived from obtaining the authorization, permission, license etc. from an administrative agency) which is transferred concurrently with the fixed assets for business (referring to the assets falling under subparagraphs 1 and 2);(b) Rights to use, membership, and other rights, irrespective of their titles, to use installations which are given to a person becoming a member of an organization contracted to be entitled to exclusively use the installations or to use under favorable conditions in comparison with general users (in cases where the rights to exclusively use installations or to use under favorable conditions in comparison with general users are provided by only possessing stocks etc. of the corporation, the relevant stocks, etc., shall be included); and(c) Assets prescribed by Presidential Decree, taking account of the composition of shareholders, current status of holding real estate, or business types, etc. of the corporation which has issued the stock certificates or investment certificates of stocks, etc.(2) Where the provisions of paragraph (1) 3 and 4 are applicable concurrently, the provisions of subparagraph 4 shall be applicable only.[This Article Wholly Amended by Act No. 6292, Dec. 29, 2000]

(1) The transfer income amount shall be the amount calculated by deducting the special long-term holding deduction amount from the amount (hereinafter referred to as “gains from the transfer”) obtained by deducting the necessary expenses as prescribed in Article 97 from the total revenue amount of transfer income as prescribed in Article 94 (hereinafter referred to as “transfer value”).(2) The term “special long-term holding deduction amount” in paragraph (1) means the amount calculated by multiplying gains on transfer of the assets, which are prescribed by Article 94 (1) 1 (excluding the assets subject to the application of the tax rate pursuant to Article 104 (1) 2-3 through 2-8, and subparagraph 3 of the same paragraph, and the assets subject to the application of Article 104 (6)) and have been held for three or more years, by the deduction rate from Table 1 below corresponding to a term of holding: Provided, That in cases of assets falling under one house for one household (including the land annexed thereto) as prescribed by Presidential Decree, it means the amount calculated from multiplying gains on transfer of the relevant assets by the deduction rate classified by the term of holding as prescribed in Table 2 below: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 8911, Mar. 21, 2008; Act No. 9270, Dec. 26, 2008>[Table 1] Term of Holding
Deduction Rate
Longer than 3 years and shorter than 4 years
10/100
Longer than 4 years and shorter than 5 years
12/100
Longer than 5 years and shorter than 6 years
15/100
Longer than 6 years and shorter than 7 years
18/100
Longer than 7 years and shorter than 8 years
21/100
Longer than 8 years and shorter than 9 years
24/100
Longer than 9 years and shorter than 10 years
27/100
Over 10 years
30/100
[Table 2] Term of Holding
Deduction Rate
Longer than 3 years and shorter than 4 years
24/100
Longer than 4 years and shorter than 5 years
32/100
Longer than 5 years and shorter than 6 years
40/100
Longer than 6 years and shorter than 7 years
48/100
Longer than 7 years and shorter than 8 years
56/100
Longer than 8 years and shorter than 9 years
64/100
Longer than 9 years and shorter than 10 years
72/100
Over 10 years
80/100
(3) Notwithstanding the provisions of paragraph (1), the gains from the transfer and the special long-term holding deduction amount of the assets which are the expensive houses (including the land appurtenant thereto) excluded from the object of non-taxation on the transfer income under Article 89 (1) 3, shall be the amount calculated as prescribed by Presidential Decree. <Amended by Act No. 6781, Dec. 18, 2002; Act No. 7837, Dec. 31, 2005>(4) The holding period of the assets as referred to in paragraph (2), shall be from the acquisition date of the assets to their transfer date: Provided, That in cases under Article 97 (4), it shall be calculated from the date when the spouse donating the relevant assets acquires them. <Amended by Act No. 5191, Dec. 30, 1996>(5) Matters necessary for the calculation of the transfer income amount shall be determined by Presidential Decree.

(1) The transfer value of assets as prescribed in each subparagraph of Article 94 (1) shall be the actual transaction value between the transferor and transferee at the time of transfer of the relevant assets (hereafter referred to as “actual transaction value”). <Amended by Act No. 7837, Dec. 31, 2005>(2) Notwithstanding the provisions of paragraph (1), where assets provided for in Article 94 (1) 1 and 2 are transferred not later than December 31, 2006, their transfer value shall be based on the standard market price at the time of the transfer of the relevant assets with the exception of cases falling under any of the following subparagraphs: <Amended by Act No. 7837, Dec. 31, 2005>1. Where the relevant assets meet the standard for expensive houses under the provisions of Article 89 (1) 3 (including the land annexed thereto);2. Where the relevant assets are rights to acquire real estate under the provisions of Article 94 (1) 2 (a);3. Where the relevant assets are transferred without registration under the provisions of Article 104 (3);4. Where one year has not passed after the acquisition of relevant real estates;5. Where the relevant assets are real estates acquired or transferred by unlawful means, such as the preparation of a false contract and the false change of the resident registration, as prescribed by the Presidential Decree;6. Where a transferor files a return on actual transaction values at the time of the transfer or acquisition with the chief of a tax office having jurisdiction over the place of tax payment together with the supporting documents, not later than the time limit of final returns under the provisions of Article 110 (1);7. Where the relevant assets are real estates located within the designated area under the provisions of Article 104-2 (2);8. Where the relevant assets are lands for non-business under the provisions of Article 104-3; and9. Other cases prescribed by Presidential Decree by taking account of types of relevant assets, holding period, number of assets held, scale of transaction, transaction methods, etc.(3) In applying paragraph (1) and each subparagraph of paragraph (2), where a resident transfers assets falling under any subparagraphs of Article 94 (1), the market price shall be deemed as the actual transaction value at the time of transfer: <Amended by Act No. 8825, Dec. 31, 2007>1. The market price as referred to in Article 52 of the same Acts, if assets are transferred to a specially related corporation (including foreign corporations; hereafter referred to as a “specially related person” in this Article) referred to in Article 52 of the Corporation Tax Act, and there exists the amount disposed of as bonus, dividends, etc. for the resident concerned as referred to in Article 67 of the same Act; and2. The market price as referred to in Article 35 of the Inheritance Tax and Gift Tax Act, if assets are transferred to any person except for a specially related person in a higher price than the market price, and there exists the amount of the donated assets of the resident concerned in the same Article.(4) In applying paragraph (2) 4, the standard market price may be applied to the assets which are transferred within one year from the acquisition thereof on inevitable grounds such as expropriation, etc. (including purchase upon agreement) under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor or other Acts under the conditions as prescribed by Presidential Decree. <Newly Inserted by Act No. 6292, Dec. 29, 2000; Act No. 6781, Dec. 18, 2002; Act No. 7837, Dec. 31, 2005>(5) and (6) Deleted. <by Act No. 7837, Dec. 31, 2005>[This Article Wholly Amended by Act No. 6051, Dec. 28, 1999]

(1) The necessary expenses to be deducted from the transfer value in calculating resident’s gains from the transfer, shall be as follows: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6781, Dec. 18, 2002; Act No. 7837, Dec. 31, 2005>1. Acquisition Value:(a) Actual transaction values required for acquisition of assets falling under each subparagraph of Article 94 (1): Provided, That in cases falling under the main sentence other than each subparagraph of Article 96 (2), the standard market price at the time of acquisition of the relevant assets; and(b) In cases under the main sentence of item (a), if the actual transaction values at the time of acquisition are non-confirmable, the values of transaction example, appraisal values or conversion values as prescribed by Presidential Decree;2. Capital expenses, etc. prescribed by Presidential Decree;3. Deleted; and <by Act No. 6292, Dec. 29, 2000>4. Transfer expenses, etc. prescribed by Presidential Decree.(2) If any depreciation cost accruing during the holding period of any transferred asset is counted or to be counted in the necessary expenses, in calculating the real estate rental income amount or the business income amount of each year, the amount obtained by deducting such cost from the amount referred to in paragraph (1) shall be the acquisition value. <Amended by Act No. 8144, Dec. 30, 2006>(3) The calculation of necessary expense for transfer income under the provisions of paragraphs (1) and (2) shall be based on the following subparagraphs: <Amended by Act No. 6051, Dec. 28, 1999; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Where acquisition value is based on the actual transaction value, necessary expenses shall be an amount obtained by adding the amount under paragraph (1) 2 and 4 to the amount in the following items (where it falls under paragraph (2), the amount prescribed in the same paragraph):(a) Where it is based on the main sentence of paragraph (1) 1 (a), the relevant actual transaction value;(b) Where actual transaction value at the time of acquisition is calculated as prescribed in paragraph (1) 1 (b) and Article 114 (7) based on the conversion value, and where the acquisition value of an asset (including assets inherited or donated) acquired before the date (hereafter referred to as “fictitious acquisition date” in this Article) on which it is deemed to have been acquired under Article 8 of the Addenda of Act No. 4803, the amendment to the Income Tax Act, is based on the total amount obtained by adding the actual transaction value at the time of acquisition and the amount obtained by multiplying the aforementioned value by the rate of increase of producer price during the period of possession from the acquisition date until the day before the fictitious acquisition date, the relevant total amount; and(c) Where it is based on the main sentence of the main body of paragraph (7), the relevant actual transaction value; and2. In cases other than subparagraph 1, necessary expense shall be an amount obtained by adding the amount by assets as prescribed by Presidential Decree to the amount under the proviso to paragraph (1) 1 (a), item (b) of the same subparagraph (excluding cases where subparagraph 1 (b) is applicable), paragraph (7) (excluding cases where subparagraph 1 (c) is applicable) or Article 114 (7) (excluding cases where subparagraph 1 (b) is applicable).(4) In cases where a resident calculates gains from the transfer of assets pursuant to Article 94 (1) 1 donated by his spouse (including cases where a marriage relationship has terminated at the time of transfer; hereafter the same shall apply in this paragraph), lineal ascendant or descendant, or other assets prescribed by Presidential Decree within five years retroactively to the day of transfer, the necessary expenses deducted from the transfer income shall be calculated under paragraph (3), but the acquisition value shall be the amount prescribed in any item of paragraph (1) 1 at the time of acquisition by such spouse, lineal ascendant or descendant. In such cases, the amount equivalent to the donation tax paid or payable by a resident on the assets donated shall be included in the necessary expenses, notwithstanding paragraph (3). <Newly Inserted by Act No. 5191, Dec. 30, 1996; Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(5) Matters necessary for the calculation of necessary expenses, such as the scope of the actual transaction value necessary for the acquisition and the calculation of the amount equivalent to the donation tax, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 5191, Dec. 30, 1996>(6) The number of years as prescribed in paragraph (4) shall be based on the period of ownership on the register. <Newly Inserted by Act No. 5191, Dec. 30, 1996>(7) In applying the main sentence of paragraph (1) 1 (a), where a resident, who has transferred the assets as referred to in Article 94 (1) 1 and 2, has been found to confirm the actual transaction value according to the method determined by Presidential Decree at the time of acquisition of the relevant assets, its value shall be deemed the actual transaction value at the time of acquisition by the relevant resident: Provided, That the same shall not apply to cases falling under any of the following subparagraphs: <Newly Inserted by Act No. 6051, Dec. 28, 1999; Act No. 6781, Dec. 18, 2002; Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>1. Where the transaction value of the preceding owner’s relevant asset is corrected or changed pursuant to Article 114; and2. Where the preceding owner’s relevant asset is exempted from transfer income tax, and the asset was confirmed to be transferred in a higher price than the actual transfer value.

In calculating gains from the transfer of any assets, the time of transfer and acquisition shall be determined by Presidential Decree.

(1) The standard market price as prescribed in Article 96 (2), proviso of Article 97 (1) 1 (a), Articles 100 and 114 (7) shall be as follows: <Amended by Act No. 5108, Dec. 29, 1995; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003; Act No. 7335, Jan. 14, 2005; Act No. 7579, Jul. 13, 2005; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006>1. Land or buildings prescribed in Article 94 (1) 1:(a) Land:The publicly notified individual land value under the Public Notice of Values and Appraisal of Real Estate Act (hereinafter referred to as “publicly notified individual land value”): Provided, That the value of the land without any publicly notified individual land value, shall be the amount appraised by the chief of a tax office having jurisdiction over the place of tax payment, by such method as determined by Presidential Decree, taking into consideration the publicly notified individual land value of any similar land in the vicinity, and the value of the land within the area, as prescribed by Presidential Decree, in which the value of land increases rapidly, shall be the amount evaluated by the magnification method;(b) Buildings:The value of a building (excluding the one falling under the provisions of items (c) and (d)) calculated and notified publicly once or more each year by the Commissioner of the National Tax Service in consideration of the new construction price, structure, use, location, the year of new construction, etc.;(c) Officetel and commercial buildings (referring to the officetels and commercial buildings (including the land appurtenant thereto) which are owned under partitioned-ownership and whose land is shared under co-ownership and which are prescribed by the Presidential Decree taking the usage, size of area, number of partitioned units into account):The value of land and building computed and publicized en bloc once or more per year by the Commissioner of the National Tax Service taking into account the kind, size, transaction situation, location of buildings; and(d) House:The value of any individual house or any collective house under the Public Notice of Values and Appraisal of Real Estate Act: Provided, That where the value of any collective house is determined and publicized by the Commissioner of the National Tax Service under the proviso of Article 17 (1) of the same Act, the relevant value shall be the standard market price for the collective house, and where the value of any individual house or any collective house has not been determined under the same Act, the value of such house shall be appraised by such methods as prescribed by the Presidential Decree taking into account the value of the similar individual house or similar collective house in the vicinity;2. Rights to real estates as prescribed in Article 94 (1) 2:(a) For rights to acquire real estates:Value evaluated by such method as prescribed by the Presidential Decree, taking into consideration the kind, scale, transactional situation, etc. of the transferred asset; and(b) For superficies, deposit-base lease, and registered real estate leasehold title:Value evaluated by such method as prescribed by the Presidential Decree, taking into consideration the remaining period, nature, content, transactional situation, etc. of the rights;3. Stocks, etc. under Article 94 (1) 3 (a):Value evaluated by mutatis mutandis applying Article 63 (1) 1 (a) of the Inheritance Tax and Gift Tax Act. For this purpose, “two months before or after the evaluation base date, respectively” under the same item shall be deemed “one month before the transfer date or the acquisition date”;4. Stocks, etc. prescribed by the Presidential Decree among those under Article 94 (1) 3 (b):Value evaluated by mutatis mutandis applying Article 63 (1) 1 (b) of the Inheritance Tax and Gift Tax Act. For this purpose, “two months before or after the evaluation base date, respectively” under item (a) of the same subparagraph shall be deemed “one month before the transfer date or the acquisition date”;5. Stocks, etc. not falling under subparagraph 4 but falling under Article 94 (1) 3 (b), and stocks, etc. under Article 94 (1) 3 (c):Value evaluated by mutatis mutandis applying Article 63 (1) 1 (c) of the Inheritance Tax and Gift Tax Act. In this case, the time of evaluation and the amount of evaluation shall be determined by the Presidential Decree. If the standard market price at the time of acquisition is unknown due to the loss of books, etc., the face valueshall be the standard market price at the time of acquisition;6. Preemptive rights, etc. under Article 94 (1) 3:Value evaluated by such method as prescribed by the Presidential Decree, taking into consideration the kind, scale, transactional situation, etc. of the transferred assets; and7. Miscellaneous assets under Article 94 (1) 4:Value evaluated by such method as prescribed by the Presidential Decree, taking into consideration the kind, scale, transactional situation, etc. of the transferred asset.(2) The term “magnification method” used in the proviso of paragraph (1) 1 (a) means a method of evaluation on the basis of the amount calculated by multiplying the publicly notified individual land value at the time of transfer or acquisition, by such magnification factor as determined by the Presidential Decree.(3) Matters necessary for the calculation of the standard market price, such as the standard market price at the time of transfer of any assets whose standard market price has not changed from the time of acquisition to the time of transfer, the standard market price at the time of acquisition of any land or house which has been acquired before the value of any individual land, individual house or collective house is publicly notified under the Public Notice of Values and Appraisal of Real Estate Act, or the standard market price at the time of acquisition of any building which has been acquired before the standard market price as referred to in paragraph (1) 1 (b) is publicly announced, shall be determined by the Presidential Decree. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6051, Dec. 28, 1999; Act No. 7335, Jan. 14, 2005; Act No. 7579, Jul. 13, 2005>(4) When the Commissioner of the National Tax Service fixes the standard market price under paragraph (1) 1 (c), he shall hear the opinion of the owner or other interested persons for more than 20 days by publicly notifying it by the means provided by Ordinance of the Ministry of Strategy and Finance, such as the notice through the Internet, etc. before such standard market price is publicly notified. <Newly Inserted by Act No. 7579, Jul. 13, 2005; Act No. 8852, Feb. 29, 2008>(5) When the Commissioner of the National Tax Service has received the opinions from the owner or other interested persons under paragraph (4), he shall make a notification of the results of its disposal within 30 days from the date when the opinion submission period expires. <Newly Inserted by Act No. 7579, Jul. 13, 2005>(6) The public notification under paragraph (4) shall contain the matters prescribed by Presidential Decree, such as the perusal place of the perusal register of standard market price, the period of opinion submission, etc. <Newly Inserted by Act No. 7579, Jul. 13, 2005>

(1) Any owner or other interested person who is dissatisfied with the publicly notified standard market price under Article 99 (1) 1 (c) may file in writing an application for the re-computation of the standard market price and pubic notification thereof with the Commissioner of the National Tax Service within 30 days from the date of public notification of standard market price.(2) The Commissioner of the National Tax Service shall notify in writing the applicant of the results of its disposal within 30 days from the date when the application period under paragraph (1) expires. In this case, when the Commissioner of the National Tax Service deems that the details of application are acceptable, he shall compute again the standard market price under Article 99 (1) 1 (c) and notify it publicly.(3) When the Commissioner of the National Tax Service has discovered that the standard market price has been computed and publicly notified by mistake or any error in writing and other apparent errors prescribed by Presidential Decree have been made, he shall compute it again without delay and notify it publicly.(4) Matters necessary for an application for re-computation and public notification and the procedures for disposal, etc. shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 7579, Jul. 13, 2005]

(1) In calculating gains from the transfer, if the transfer value is calculated based on the actual transaction value (including the value provided for in Article 96 (3) and the corresponding transaction example value, appraised value, etc. that are applicable under Article 114 (7)), the acquisition value shall also be calculated based on the actual transaction value (including the value provided for in Article 97 (7) and the corresponding transaction example value, appraised value, conversion value, etc. that are applicable under Article 114 (7)) and, if the acquisition value shall be calculated based on the standard market price, the transfer value shall also be calculated based on the standard market price. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>(2) In applying the provisions of paragraph (1), if the transfer value or acquisition value of the land, buildings, etc. that are acquired or transferred simultaneously is computed based on the actual transaction value, the value of land and that of buildings, etc. shall be entered in a book separately. If the separation between the value of the land and that of buildings, etc. is obscure, their values shall be calculated on a proportional basis as prescribed by Presidential Decree, taking into account their standard market prices, etc. at the time of acquisition or transfer. In such cases, the common acquisition value and transfer expenses shall be calculated on a proportional basis of the separate values of the relevant assets. <Amended by Act No. 6292, Dec. 29, 2000>(3) Matters necessary for the calculation of gains from the transfer shall be determined by Presidential Decree.

(1) If it is deemed that any act or calculation of a resident having any transfer income, makes the burden of tax on such income reduced wrongfully through a transaction with a person having a special relationship with the resident, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment may calculate the income amount accruing during the corresponding year in disregard of such act or calculation of the resident. <Amended by Act No. 5031, Dec. 29, 1995>(2) If any person donates any assets to the person having a special relationship as referred to in paragraph (1) (excluding cases of spouse, lineal ascendants and descendants being subject to Article 97 (4)) with the intention of reducing wrongfully the income tax on the transfer income, and then the donee transfers such assets to another person within five years from the donation date, the donator shall be considered to have transferred directly the assets to the transferee. In such case, no gift tax shall be levied on the originally-donated assets, notwithstanding the provisions of the Inheritance Tax and Gift Tax Act. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 9270, Dec. 26, 2008>(3) With respect to the calculation of the number of years pursuant to paragraph (2) of this Article, the provisions of Article 97 (6) shall apply mutatis mutandis. <Amended by Act No. 5191, Dec. 30, 1996>(4) The scope of those having the special relationship as referred to in paragraph (1), and other matters necessary for the calculation by wrongful acts shall be determined by Presidential Decree. <Newly Inserted by Act No. 5031, Dec. 29, 1995>

(1) Any transfer income shall be classified into the incomes falling under any of the following subparagraphs. In this case, the losses accruing from calculating the income amount shall not be summed up to the income amount under the different subparagraphs: <Amended by Act No. 6292, Dec. 29, 2000>1. The income as prescribed in Article 94 (1) 1, 2 and 4; and2. The income as prescribed in Article 94 (1) 3.(2) In calculating the transfer income amount under the provisions of paragraph (1), if there exists any loss from the transfer of any property, such a loss from the transfer shall be deducted from the transfer income amount derived from other assets than the relevant assets by each subparagraph of paragraph (1). In such case, the method of deduction shall be prescribed by Presidential Decree by taking account of the tax rate, etc. of the transfer income amount. <Newly Inserted by Act No. 7006, Dec. 30, 2003>[This Article Wholly Amended by Act No. 6051, Dec. 28, 1999]

(1) For a resident having any transfer income, 2.5 million won per income falling under each of the following subparagraphs shall be deducted each year from the transfer income amount accruing during the corresponding year: <Amended by Act No. 6292, Dec. 29, 2000>1. Income under Article 94 (1) 1, 2 and 4, excluding the income accruing from the transfer of assets without registration pursuant to Article 104 (3); and2. Income under Article 94 (1) 3.(2) In applying paragraph (1), any income subject to reduction or exemption under this Act, the Special Tax Treatment Control Act or other Acts that is included in any transfer income under Article 95, shall be deducted from the transfer income other than such income subject to reduction or exemption in the order that the income from the transfer of assets accrues during the corresponding year. <Newly Inserted by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>(3) The deduction as referred to in paragraph (1) shall be referred to as “basic deduction for transfer income”.

(1) Any transfer income tax on a resident shall be the amount calculated by applying the following tax rates to the tax base of transfer income accruing during the corresponding year (hereinafter referred to as “calculated amount of transfer income tax”). In such case, if a single property corresponds to two or more tax rates from among those under the provisions of the following subparagraphs, the highest rate from among them shall be applied: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 9270, Dec. 26, 2008>1. Assets prescribed in Article 94 (1) 1, 2 and 4: Tax rate under Article 55 (1);2. Assets prescribed in Article 94 (1) 1 and 2, the holding period of which is not less than one year but less than two years: 40/100 of the tax base of transfer income;2-2. Assets prescribed in Article 94 (1) 1 and 2, the holding period of which is less than one year: 50/100 of the tax base of transfer income;2-3. House falling under one of three houses or more held by one household prescribed by Presidential Decree (including land annexed thereto; hereafter the same shall apply in this Article): 60/100 of the tax base of transfer income;2-4. Where one household prescribed by Presidential Decree holds houses and occupation rights of association members under Article 89 (2), and where the aggregate of the number of houses and occupation rights is not less than three, the relevant house (excluding cases prescribed by Presidential Decree): 60/100 of the tax base of transfer income;2-5. House falling under one of two houses held by one household as prescribed by Presidential Decree: 50/100 of the tax base of transfer income;2-6. Where one household prescribed by Presidential Decree holds respectively one house and one occupation right of association members under Article 89 (2), the relevant house (excluding cases prescribed by Presidential Decree): 50/100 of the tax base of transfer income;2-7. Land for non-business under Article 104-3: 60/100 of the tax base of transfer income;2-8. Assets prescribed by Presidential Decree by taking account of current possessing status of the land for non-business under Article 104-3 among the assets under Article 94 (1) 4 (c): 60/100 of the tax base of transfer income;3. Unregistered transfer assets: 70/100 of the tax base of transfer income;4. Assets prescribed in Article 94 (1) 3:(a) Stocks, etc. of a corporation other than small and medium enterprises prescribed by Presidential Decree (hereafter referred to as “small and medium enterprises” in this Chapter and Article 160 (6)), which have been held for less than one year by such corporation’s major stockholders: 30/100 of the tax base of transfer income;(b) Stocks, etc. of small and medium enterprises: 10/100 of the tax base of transfer income; or(c) Stocks, etc. other than those under items (a) and (b): 20/100 of the tax base of transfer income; and5. Deleted. <by Act No. 6292, Dec. 29, 2000>(2) The holding period referred to in paragraph (1) 2, 2-2 and 4 (a) shall be from the acquisition date to the transfer date of the assets concerned: Provided, That the respective given dates shall be the acquisition date of the assets concerned if they fall under any of the following subparagraphs: <Amended by Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003>1. The date acquired by the predecessor in case of inherited assets;2. The date on which the donor acquired the relevant assets in case of assets falling under Article 97 (4); and3. The date on which the stocks, etc. of a merged corporation, a divided corporation or a counterpart corporation of the one extinguished by divided merger, in case where the stocks, etc. are acquired anew from a merging corporation, a corporation newly organized by division or a counterpart corporation of such divided merger, on account of a merger or a division (excluding physical division) of corporations.(3) The term “transfer of unregistered assets” used in paragraph (1) 3, means that a person who has acquired the assets as prescribed in Article 94 (1) 1 and 2, transfers the assets without making a registration concerning the acquisition thereof: Provided, That such assets as prescribed by Presidential Decree are excluded. <Amended by Act No. 6292, Dec. 29, 2000>(4) The tax rates as referred to in paragraph (1) may be adjusted by Presidential Decree, within the limit of adding or reducing 15/100 to the tax rates: Provided, That in case where it is necessary for the stabilization of real estates’ prices, the objects for its application may be limited to the real estates falling under each of the following subparagraphs: <Amended by Act No. 6051, Dec. 28, 1999; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005>1. Real estates within the designated area under the provisions of Article 104-2 (2); and2. House falling under one of two houses or more held by one household prescribed by Presidential Decree, which is located within the designated area under the provisions of Article 104-2 (2).(5) Matters necessary for calculated amount of transfer income tax, other than those under paragraphs (1) through (4) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007>(6) In lieu of the tax rates prescribed in paragraph (1) 2-3 through 2-6, tax rates prescribed in the following subparagraphs shall apply to the income accruing from a house transferred not later than December 31, 2010, which falls under subparagraphs 2-3 through 2-6 of the same paragraph: <Newly Inserted by Act No. 9270, Dec. 26, 2008>1. House falling under paragraph (1) 2-3 and 2-4: 45/100 of the tax base of transfer income (tax rate under paragraph (1) 2-2 for a house that has been held less than one year); and2. House falling under paragraph (1) 2-5 and 2-6: Tax rate under paragraph (1) 1 (tax rate under paragraph (1) 2 or 2-2 for a house that has been held less than two years).

(1) In the area where the increasing rate of real estate price of relevant area is higher than that of the national consumers price, and where the real estate price in the relevant area has rapidly increased, or where existing the worries over a rapid increase by taking account of the increasing rate of the national real estate prices, etc., the Minister of Strategy and Finance may designate it as the designated area under the standard and methods prescribed by Presidential Decree. <Amended by Act No. 8852, Feb. 29, 2008>(2) The term “real estate within the designated area” in Articles 96 (2) 7 and 104 (4) 1 and 2 means the real estate prescribed by Presidential Decree from among the real estate located in the designated area under the provisions of paragraph (1).(3) The Deliberative Committee on Stabilization of Real Estate Prices shall be established in the Ministry of Strategy and Finance for designation and cancellation of the designated areas under the provisions of paragraph (1) and deliberation of other necessary matters. <Amended by Act No. 8852, Feb. 29, 2008>(4) Matters necessary for the standard and methods of cancellation of the designated areas under the provisions of paragraph (1) and the organization and operation of the Deliberative Committee on Stabilization of Real Estate Prices shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

(1) The term “land for non-business” in Articles 96 (2) 8 and 104 (1) 2-7 means the land falling under any of the following subparagraphs owned for the period prescribed by Presidential Decree from among the period of owning the relevant land: <Amended by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Paddy field, ordinary field, and orchard (hereafter referred to as “farmland” in this Article) which fall under any of the following items:(a) The farmland for which the owner is not residing in the location of farmland under conditions prescribed by Presidential Decree, or the farmland which is not cultivated by himself: Provided, That the same shall not apply to farmland prescribed by Presidential Decree as may be owned under the Farmland Act and other Acts; and(b) The farmland within the city area under the provisions of the National Land Planning and Utilization Act (excluding the area prescribed by Presidential Decree; hereafter the same shall apply in this subparagraph) from among the Special Metropolitan City, the Metropolitan City (excluding the Guns located in the Metropolitan City; hereafter the same shall apply in this Article) and Si area (excluding the Eup/Myeon area in the Si of a form of city and agricultural complex under the provisions of Article 3 (4) of the Local Autonomy Act; hereafter the same shall apply in this Article): Provided, That the farmland for which the period prescribed by Presidential Decree has not been passed from the day when the farmland whose owner has lived and cultivated under conditions prescribed by Presidential Decree has been incorporated into the city area of the Special Metropolitan City, the Metropolitan City and the Si, shall be excluded;2. Forest land: Provided, That this shall not apply to that falling under any of the following items:(a) The forest for protecting forest hereditary resources designated under the Creation and Management of Forest Resources Act, reserved forest, seed-gathering forest and test forest, and other forests necessary for public interests or for the protection and fosterage of forests which are prescribed by Presidential Decree;(b) The forest owned by the persons who live in the place where the forest locates under the conditions as prescribed by the Presidential Decree; and(c) The forest having considerable reasons for admitting that having direct relations with the residing or business in view with the owner, location, utilization situation, possession period and area of the land, which are prescribed by the Presidential Decree;3. The land for pasturage which falls under any one of the following items: Provided, That what are prescribed by the Presidential Decree which are the land for pasturage having considerable reasons for admitting that having direct relations with the residing or business in view with the owner, location, utilization situation, possession period and area of the land, shall be excluded:(a) The land for pasturage owned by the person operating a stock-raising business which exceeds the standard area of land for pasturage as prescribed by the Presidential Decree, or which are located within the city area of the Special Metropolitan City, the Metropolitan City and the Si (excluding the area as prescribed by the Presidential Decree; hereafter in this subparagraph, the same shall apply) (excluding the case where the period as prescribed by the Presidential Decree has not elapsed from the date of incorporated into the city area); and(b) The land owned by the person who does not operate the stock-raising business;4. The land excluding each of the following items from among the land other than the farmland, forestry and land for pasturage:(a) The land for which the property tax is not levied or exempted under the provisions of Local Tax Act or related Acts;(b) The land subject to a separate adding up of the property tax under the provisions of Article 182 (1) 2 and 3 of the Local Tax Act, or to a separate taxation; and(c) The land having a considerable reason for recognizing that it has a direct relation with the residing or business by taking account of the land utilization situation, whether or not performing the obligation under the related statutes, and the income amount etc., what are prescribed by the Presidential Decree;5. The land exceeding the area computed by multiplying the area, whereon the house is fixed, by the ratio as prescribed by the Presidential Decree from among the land annexed to the house under the provisions of Article 182 (2) of the Local Tax Act;6. The building for residence which is not used for the usual residing, but is used for the purposes such as recreation, summering, comforting pleasure, etc. (hereafter in this subparagraph, referred to as the “villa”) and the land annexed thereto: Provided, That this shall not apply to the house of fishing and agrarian village located in Eup, Myeon area under the provisions of Article 3 (3) and (4) of the Local Autonomy Act and corresponding to the scope and criteria as prescribed by the Presidential Decree and the land annexed thereto, and when the boundary of the land annexed to the villa is not clear, the land corresponding to ten times the floor areas of such building shall be regarded as the annexed land; and7. Other lands similar to subparagraphs 1 through 6 as prescribed by the Presidential Decree as having considerable reasons for admitting that they have no direct relations with the residing or business of a resident.(2) In applying the provisions of paragraph (1), land which corresponds to the land for non-business the prohibition of use under other Acts after its acquisition due to and other inevitable reasons as prescribed by the Presidential Decree, may not be regarded as the land for non-business under the conditions as prescribed by the Presidential Decree.(3) In applying the provisions of paragraphs (1) and (2), matters necessary for the scope, etc. of the farmland, forest and land for pasturage shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

(1) Any resident who has transferred assets as prescribed in any subparagraphs of Article 94 (1) shall file the return of tax base of the transfer income calculated under Article 92 (2) to the chief of the tax office in the place of tax payment within the time limit as classified under the following subparagraphs, under the conditions as prescribed by the Presidential Decree: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6781, Dec. 18, 2002; Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006>1. Where the assets provided for in Article 94 (1) 1, 2, and 4 are transferred, the time limit shall be within two months from the last date of the month to which the transfer date belongs: Provided, That where the land located in the zone where transaction contracts are subject to approval under Article 117 (1) of the National Land Planning and Utilization Act is transferred and its price is paid before the approval for the land transaction contract is granted, the time limit shall be within two months from the last date of the month to which the relevant approval date belongs; and2. Where the assets provided for in Article 94 (1) 3 are transferred, the time limit shall be within two months from the last date of the quarter to which the transfer date belongs.(2) The return of tax base of any transfer income as referred to in paragraph (1) shall be referred to as provisional return. <Amended by Act No. 6051, Dec. 28, 1999>(3) The provisions of paragraph (1) shall also apply when there accrues no gain, or any loss, from the transfer.

(1) Any resident shall, upon making a provisional return, pay the tax amount calculated by deducting the tax deductions as prescribed by the Special Tax Treatment Control Act and other Acts or the tax credit amount for the payment by provisional tax return as provided for in Article 108 from the tax amount calculated under Article 107, to a tax office having jurisdiction over the place of tax payment, the Bank of Korea or a postal agency as prescribed by the Presidential Decree. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>(2) The payment as referred to in paragraph (1) shall be referred to as voluntary payment by provisional return. <Amended by Act No. 6051, Dec. 28, 1999>(3) In case where there exists the tax amount of occasional assessment as referred to in Articles 82 and 118 in the voluntary payment by preliminary return, it shall be deducted from the payment. <Newly Inserted by Act No. 6051, Dec. 28, 1999>

(1) The calculated tax amount payable in a payment by a provisional return shall be the amount calculated by applying the tax rate as prescribed in Article 104 (1) to the amount obtained by making the special long-term holding deduction and the basic transfer income deduction from the gains on transfer. <Amended by Act No. 6051, Dec. 28, 1999>(2) Where the provisional tax return is made more than twice on assets subject to progressive tax rates in relevant tax year, and if a resident intends to make a return by adding to the already returned transfer income amount, the amount obtained by the following formula shall be the calculated tax amount to be filed for the second and subsequent preliminary returns: <Amended by Act No. 6292, Dec. 29, 2000>Calculated tax amount for provisional return = {(transfer income tax base already filed + transfer income tax base filed on the second or subsequent returns) × tax rate as prescribed in Article 104 (1) 1 and 4 (a)} - calculated tax amount filed on previous provisional returns.(3) Deleted. <by Act No. 6292, Dec. 29, 2000>

(1) If the voluntary payment is made at the time of the provisional return, the amount equivalent to 10/100 of the payable tax amount shall be deducted from the calculated tax amount. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000>(2) The deduction as referred to in paragraph (1) shall be referred to as deduction of tax amount paid by preliminary return. <Amended by Act No. 6051, Dec. 28, 1999>

(1) Any resident having any transfer income amount in the current year shall make a return on the tax base of transfer income to the chief of the tax office in the place of tax payment from May 1 to 31 of the year following the current year (from May 1 to 31 of the year following the year where belongs the date when the approval is obtained for the land transaction contract, in cases falling under the proviso of Article 105 (1) 1) as prescribed by the Presidential Decree. <Amended by Act No. 6292, Dec. 29, 2000>(2) The provisions of paragraph (1) shall also apply when there is no tax base or there is any loss in the current year.(3) The return on tax base of transfer income as referred to in paragraph (1) shall be referred to as final return. <Amended by Act No. 6051, Dec. 28, 1999>(4) Notwithstanding the provisions of paragraph (1), any person who has made the preliminary return may not make the final return on such income: Provided, That this shall not apply to such cases prescribed in the Presidential Decree as a case, etc. where preliminary tax returns on assets subject to progressive tax rates are made more than twice within the current year. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000>(5) In making the final return, the documents necessary for calculating the transfer value and necessary expenses which are the basis of the calculation of the transfer income amount, and as prescribed by the Presidential Decree, shall be submitted together with such return, to the superintendent of the competent district tax office in the place of tax payment. <Amended by Act No. 6051, Dec. 28, 1999>(6) If there is any omission or error in the return and other documents submitted under paragraph (5), the chief of the tax office having jurisdiction over the place of tax payment may demand a supplement thereof.

(1) Each resident shall pay the amount calculated by deducting the reduced or exempted tax amount and the tax credit amount from the transfer income tax amount calculated on the tax base in the relevant year, to the competent tax office having jurisdiction over the place of tax payment, the Bank of Korea or the postal service organization, by the deadline for the final return as prescribed in Article 110 (1) (including Article 74 (1) through (4) which are applicable mutatis mutandis under Article 118), under conditions prescribed by Presidential Decree. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 8825, Dec. 31, 2007>(2) The payment as referred to in paragraph (1) shall be referred to as voluntary payment by final return. <Amended by Act No. 6051, Dec. 28, 1999>(3) In a voluntary payment by final return, if there is the calculated tax amount by preliminary return as prescribed in Article 107, and any tax amount determined or rectified under Article 114 or that of occasional assessment under Articles 82 and 118, the payment thereof shall be made after deducting such amounts. <Amended by Act No. 6051, Dec. 28, 1999>

Any resident whose tax amount to be paid under Article 106 or 111 exceeds ten million won, may pay in installments a part of such payable tax amount, within two months from the expiration date of the payment term, under conditions prescribed by Presidential Decree. <Amended by Act No. 9270, Dec. 26, 2008>

(1) In cases where it is deemed difficult to be paid in cash the transfer income tax on the income accruing on the land, etc. being transferred to a person who carries out the public works for the use of the public works to which the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor applies or being expropriated by the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and other Acts, such transfer income tax may be paid with the bonds issued as the purchase price of the relevant land, etc.: Provided, That the same shall not apply to cases prescribed by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>(2) Matters necessary for the scope of payment in kind, the assessment of the bond in payment in kind and the procedure for payment in kind shall be prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 5191, Dec. 30, 1996]

(1) Where a resident who has to make a provisional return under Article 105 or a final return under Article 110 fails to such return, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment shall determine the tax base and tax amount of the transfer income for the resident concerned.(2) Where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment has found that there is any omission or error in the contents of the provisional return or final return filed under Article 105 or 110, he shall reassess the tax base and tax amount of the transfer income.(3) Where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment has found that there is any omission or error in the determination or reassessment after he has determined or reassessed the tax base and tax amount of the transfer income, he shall immediately reassess them.(4) Where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment determines or reassesses the tax base and the tax amount of the transfer income pursuant to paragraphs (1) through (3), he shall do so based on the values referred to in Articles 96 and 97. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(5) Where any person who has transferred the assets under the provisions of Article 94 (1) 1 and is liable to make a final return on the tax base of a transfer income by calculating the transfer value and the acquisition value based on the actual transaction value (hereinafter referred to as the “person liable for a final return”) has failed to file such a final return and falls under the case prescribed by the Presidential Decree considering the tax base and tax amount of the transfer income or whether or not the person liable for the final return reassesses the actual transaction value, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment may determine the tax base and tax amount of the transfer income, notwithstanding the provisions of paragraph (4), by presuming the transaction value entered in the register under the provisions of Article 57 (4) of the Registration of Real Estate Act (hereinafter referred to as the “value entered in the register”) as the actual transaction value: Provided, That where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment has confirmed that the value entered in the register differs from the actual transaction value, the same shall not apply. <Newly Inserted by Act No. 8144, Dec. 30, 2006>(6) In applying the provisions of paragraph (4), where a person has filed a provisional return or final return on the tax base or tax amount of a transfer income by calculating the transfer value and acquisition value based on the actual transaction value, but it is found that the value of the relevant return is different from the fact, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment shall confirm the actual transaction value and reassess the tax base and tax amount of the transfer income by calculating the transfer value or the acquisition value based on the value so confirmed. <Newly Inserted by Act No. 8144, Dec. 30, 2006>(7) In applying the provisions of paragraphs (4) and (6), where the transfer value or acquisition value is calculated based on the actual transaction value and where it is impossible to admit or confirm the actual transaction value at the time of transfer or acquisition of the property concerned by the books or other supporting documents on the grounds as determined by the Presidential Decree, the transfer value or acquisition value may be determined or reassessed based on the transaction example value, appraised value, conversion value (referring to the acquisition value converted from the actual transaction value, transaction example value or appraised value by the method as determined by the Presidential Decree) or the standard market price, etc. under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(8) Where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment has determined or reassessed the transfer income tax base and tax amount of any resident as referred to in paragraphs (1) through (7), he shall notify in writing to the relevant resident under conditions prescribed by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(9) In applying the provisions of paragraphs (1) through (3), where the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment needs to verify the appropriateness of the matters omitted or erroneous and the fairness of the transaction particulars in the return concerning the gains from transfer of stocks, etc. under Article 94 (1) 3 and 4, he may make an inquiry into them directly to any investment trader or investment broker under the Financial Investment Services and Capital Markets Act or to the corporation that issued the stocks, etc. or investment certificates, as prescribed by Presidential Decree, notwithstanding the provisions of the Act on Real Name Financial Transactions and Guarantee of Secrecy and other Acts. <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>[This Article Wholly Amended by Act No. 6051, Dec. 28, 1999]

In cases where the transaction particulars, etc. of the stocks or investment shares transferred by a major stockholder of any corporation (including small and medium enterprises) have not been entered in or omitted from the book, an amount equivalent to 10/100 of the amount calculated by multiplying the calculated tax amount by the rate at which the income amount not entered in or omitted from the book occupies in the transfer income amount (hereinafter referred to as “additional tax for insincere entry”) shall be added to the calculated tax amount: Provided, That where no calculated tax amount exists, an amount equivalent to 7/10,000 of the transaction amount shall be imposed as the additional tax for insincere entry.[This Article Wholly Amended by Act No. 8144, Dec. 30, 2006]

(1) Where a resident has not paid all or parts of the transfer income tax payable for the corresponding year under Article 111, the chief of a tax office having jurisdiction over the place of tax payment shall collect the outstanding portion of the transfer income tax amount within three months from the expiration of the time limit for the payment. The same shall apply to the case where the tax amount paid by the provisional return as referred to in Article 106.(2) Where the gross final tax amount of any transfer income as referred to in subparagraph 3 of Article 93 exceeds the total sum of the amount falling under each of the following subparagraphs as a result of the determination or reassessment of the tax base and tax amount of the transfer income as referred to in Article 114, the chief of a tax office having jurisdiction over the place of tax payment shall collect such excess amount (hereinafter referred to as the “additional paid-in tax amount”) from the resident concerned within thirty days from the date of notification: <Amended by Act No. 8144, Dec. 30, 2006>1. The tax amount paid voluntarily by the provisional return as referred to in Article 106, and the tax amount paid voluntarily by the final return as referred to in Article 111;2. The tax amount collected under the provision of paragraph (1);3. The tax amount by occasional assessment as referred to in Articles 82 and 118; and4. The tax amount withheld at source under the provisions of Article 156 (1) 3-2.[This Article Wholly Amended by Act No. 6051, Dec. 28, 1999]

If the sum of the amount prescribed in each subparagraph of Article 116 (2) exceeds the total final tax amount of any transfer income prescribed in subparagraph 3 of Article 93 on the annual basis, the chief of a tax office having jurisdiction over the place of tax payment shall refund or credit such excess tax amount to other accounts of national taxes, additional dues and expenses for disposition of tax in arrears. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000>

The provisions of Articles 24, 27, 33, 39, 43, 44, 46, 74, 75 and 82 shall apply mutatis mutandis to any transfer income tax. <Amended by Act No. 6051, Dec. 28, 1999>

Any transfer income accruing from the transfer of assets in a foreign country which are owned by a resident (limited to those with a domicile or temporary domicile in Korea for not less than five consecutive years until the day of the transfer of the corresponding assets), shall be the income falling under any of the following subparagraphs that accrues from the transfer of assets in a foreign country in the corresponding year: <Amended by Act No. 8825, Dec. 31, 2007>1. Income accruing from the transfer of buildings or land;2. Income accruing from the transfer of the right to immovables determined by the Presidential Decree;3. Income accruing from the transfer of stocks or investment shares determined by the Presidential Decree; and4. Income accruing from the transfer of assets determined by the Presidential Decree, other than such incomes as stipulated in subparagraphs 1 through 3.[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) The transfer value of assets (hereinafter referred to as “assets abroad” in this Section) pursuant to the provisions of Article 118-2 shall be determined on the basis of the actual transaction value of the corresponding assets at the time of the transfer: Provided, That when it is impossible to confirm the actual transaction value, the transfer value shall be determined based on the market price at the time of the transfer which reflects the circumstances of the country in which the assets are located, and when it is difficult to calculate the market price, the transfer value shall be determined by the Presidential Decree, taking into account the type and size of the assets and the circumstances at the time of the transaction.(2) The calculation of the market price under paragraph (1) and other necessary matters shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) In the calculation of gains from the transfer of assets abroad, the necessary expenses deductible from the transfer amount shall be the sum of the amount falling under each of the following subparagraphs:1. Acquisition value: The actual transaction value disbursed for the acquisition of the asset concerned: Provided, That when it is impossible to confirm the actual transaction value at the time of acquisition, the acquisition value shall be determined based on the market price at the time of acquisition which reflects the circumstances of the country wherein the corresponding asset is located, and when it is difficult to calculate the market price, the acquisition value shall be determined by the Presidential Decree, taking into account the type and size of the asset and the circumstances at the time of the transaction;2. Deleted; <by Act No. 7006, Dec. 30, 2003>3. Capital expenditure determined by the Presidential Decree; and4. Transfer cost determined by the Presidential Decree.(2) Matters necessary for currency exchange of gains from transfer, actual transaction value disbursed for the acquisition, and calculation of a market price under paragraph (1) shall be determined by the Presidential Decree.[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) The income tax on any transfer income accruing from assets abroad shall be calculated by applying the tax rates under the following subparagraphs to the tax base of the transfer income accruing during the corresponding year. In such case, when one asset is subject to the application of two or more tax rates falling under any of the following subparagraphs, it shall be subject to the application of the tax rate whichever is higher: <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>1. Assets pursuant to subparagraphs 1, 2, and 4 of Article 118-2;2. and 2-2 Deleted; and <by Act No. 8825, Dec. 31, 2007>3. Assets provided for in subparagraph 3 of Article 118-2:(a) Stocks, etc. of small and medium enterprises: 10/100 of the tax base of any transfer income; and(b) Stocks, etc. other than those of item (a): 20/100 of the tax base of any transfer income.(2) The provisions of Article 104 (4) shall apply mutatis mutandis with respect to the adjustment of tax rates under paragraph (1). <Amended by Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) When a foreign country imposes a tax on any income accruing from the transfer of an asset in the country concerned and a taxpayer has paid or is to pay the transfer income tax amount as prescribed by the Presidential Decree (hereafter in this Article referred to as the “transfer income tax amount of assets abroad”) to the corresponding country, one of the following may be selected and applied:1. Deducting the transfer income tax amount of assets abroad from the calculated tax amount of the transfer income accruing during the corresponding year within the scope of the amount obtained by multiplying the calculated tax amount of transfer income accruing during the taxable period under Article 118-5 by the ratio of the transfer income from assets abroad to the transfer income accruing during the corresponding taxable period; and2. Counting the transfer income tax amount of assets abroad paid or payable to the foreign country concerned as necessary expense in the calculation of the transfer income amount accruing during the corresponding year.(2) Matters necessary for the calculation of necessary expenses and tax credit under paragraph (1) shall be determined by Presidential Decree.[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) For a resident having any transfer income accruing from the transfer of assets abroad, 2.5 million won for each of the income falling under any of the following subparagraphs shall be deducted from the transfer income accruing during the corresponding year:1. Income under subparagraphs 1, 2 and 4 of Article 118-2; or2. Income under subparagraph 3 of Article 118-2.(2) In applying paragraph (1), if any transfer income accruing during the corresponding year includes any income subject to reduction or exemption under this Act, the Special Tax Treatment Control Act or other Acts, the basic deductions shall be taken from the transfer income amount other than such income subject to reduction or exemption in the order the transfer income accrues from the transfer of assets during the corresponding year. <Amended by Act No. 8144, Dec. 30, 2006>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

The provisions of Articles 89, 90, 92, 93, 95, 97 (2), 98, 100, 101, 105 through 112, and 113 through 118 shall apply mutatis mutandis to the taxation of transfer income accruing from the transfer of assets abroad: Provided, That the special long-term holding deduction amount under Article 95 shall not be deducted. <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

Any domestic source income of a nonresident shall be classified as follows: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act Nos. 7289 & 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8531, Jul. 19, 2007; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Interests as prescribed in Article 16 (1) (excluding the income as prescribed in subparagraph 8 of the same paragraph) which are provided for in the following items: Provided, That any interest on a loan borrowed directly by an overseas business place on the behalf of such overseas business place of a resident or domestic corporation shall be excluded:(a) Incomes received from the State or local governments, residents, domestic corporations, domestic business places of foreign corporations as prescribed in Article 94 of the Corporation Tax Act, or domestic business places of nonresidents as prescribed in Article 120; and(b) Incomes received from a foreign corporation or nonresident, which is counted in the loss or necessary expenses in calculation of the income amount of its domestic business place, in substantial connection with such domestic business place of the foreign corporation or nonresident;2. Dividend incomes as prescribed in subparagraphs of Article 17 (1) (excluding subparagraph 6) received from any domestic corporation, any organization considered as a corporation, or other domestic sources, and the amount disposed of dividends under Articles 9 and 14 of the Act for the Coordination of International Tax Affairs;3. Incomes accruing from a transfer, lease or other operation of any real estate in Korea or the rights to such real estate, the rights to mining, mining concession, the rights to development and use of groundwater, the rights to fisheries, or the rights to take the earth, sand and stones, which are acquired in Korea: Provided, That the transfer income as prescribed in subparagraph 9 shall be excluded;4. Incomes accruing from a lease of any vessel, aircraft, registered motor vehicles, construction machines, or industrial, commercial or scientific machines, equipment, apparatuses, and tools and other instruments prescribed by Presidential Decree to a resident, domestic corporation, or domestic business place of a foreign corporation as prescribed in Article 94 of the Corporation Tax Act, or a domestic business place of a nonresident as prescribed in Article 120;5. Incomes accruing from any business conducted by nonresidents (including incomes taxable as business incomes accruing from domestic sources according to the tax treaty), and as prescribed by Presidential Decree: Provided, That the incomes falling under subparagraph 6 shall be excluded;6. Incomes accruing from the offer of personal services prescribed by Presidential Decree in Korea. In such cases, where the person receiving the offer of the relevant personal services bears the expenses, including air fees, as prescribed by Presidential Decree, they mean the amount excluding the relevant expenses;7. Wages received in consideration of any services furnished in Korea and such other services prescribed by Presidential Decree;8. Retirement benefits received in consideration of any services furnished in Korea, and as prescribed by Presidential Decree;9. Transfer income from assets or rights falling under any of the following items: Provided, That it is limited to cases where the assets or rights that yield income are in Korea:(a) Assets or rights under Article 94 (1) 1 and 2, and subparagraph 4 (a) and (b) of the same paragraph; and(b) Stocks or investment shares (hereafter referred to as “real estate stocks, etc.” in this Article) in a corporation the total amount of assets in Article 94 (1) 1 and 2 of which is 50/100 or more of the total amount of assets of the corporation as at the commencement date of business year to which the transfer date belongs from among the stocks and investment shares (including certificates of deposit and preemptive rights issued on the basis of stocks and investment shares; hereafter the same shall apply in this Chapter) of a domestic corporation, which have not been listed on the securities market;10. Deleted; <by Act No. 8144, Dec. 30, 2006>11. Considerations for the rights, assets or information (hereafter referred to as “rights, etc.” in this subparagraph) falling under any of the following items used in Korea, or considerations therefor paid in Korea, and incomes accruing from the transfer of such rights, etc.: Provided, That in cases where a double taxation avoidance agreement with respect to income prescribes whether the relevant income is a domestic source income depends on the place of its use, the considerations for the rights, etc. used overseas shall not be considered as a domestic source income, regardless of whether being paid in Korea or not. In such cases, rights that require registration to exercise the rights, such as patent right, utility model right, trademark right, and design right (hereafter referred to as “patent right, etc.” in this subparagraph) shall be deemed to have been used in Korea, regardless of whether the relevant patent right, etc. have been registered in Korea in cases where the patent right, etc. concerned were registered out of Korea, and have been used for manufacture, sale, etc. in Korea:(a) Copyright of any scientific or artistic works (including films of motion pictures), patent right, trademark right, designs, models or drawings, or secret formula or processes, films and tapes for radio and television broadcasts, and miscellaneous assets or rights similar thereto; and(b) Information or know-how on industrial, commercial or scientific knowledge and experience;12. Incomes prescribed by Presidential Decree accruing from the transfer of stocks, investment shares (including real estate stocks, etc. listed on the securities market), or other securities (including securities under Article 4 of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply) falling under any of the following items:(a) Stocks, investment shares, or other securities issued by a domestic corporation; and(b) Stocks or investment shares issued by a foreign corporation (limited to those listed on the securities market) and other securities issued by a domestic business place of a foreign corporation; and13. Incomes falling under any of the following items, other than those referred to in subparagraphs 1 through 12:(a) Insurance money, indemnity, or compensation for losses received in connection with real property or miscellaneous assets located in Korea and with trade or business operated in Korea;(b) Penalty or indemnity paid in Korea as prescribed by Presidential Decree;(c) Prize money, prize contest or reward, or other similar income paid in Korea: Provided, That the prize money and supplementary prize prescribed in subparagraph 5 (c) of Article 12 shall be excluded;(d) Income from buried or underground deposits discovered in Korea;(e) Income from the transfer of a license, permit, or other rights set up by similar administrative dispositions under the Korean laws and regulations, or income from the transfer of assets located in Korea other than real estates;(f) Prize money and other valuables received by a winner of a lottery, gift coupon, or lottery ticket issued in Korea, and refund received by a purchaser of a horse racing ticket, winner voting ticket, bullfighting match voting ticket or sports promotion voting ticket;(g) Prize money or valuables received by participating in acts using slot machines, etc.;(h) Amount that has been disposed of as miscellaneous income pursuant to Article 67 of the Corporation Tax Act or Article 9 of the Act for the Coordination of International Tax Affairs;(i) Incomes from an increase of values of stocks or investment shares due to the capital transaction prescribed by the Presidential Decree, which are possessed by nonresidents in a special relationship as prescribed by the Presidential Decree (hereafter in Article 156, referred to as “nonresidents in a special relationship”); or(j) Other than those falling under items (a) through (i), economic benefits accruing from a business operated in Korea, the offer of personal services in Korea, or assets located in Korea (excluding the excess amount where the redeemed amount of foreign currency bonds issued by the State or financial institutions established under special Acts exceeds their issued values), or such other similar incomes as prescribed in the Presidential Decree.

(1) If a nonresident has a fixed place to carry out the whole or part of the business in Korea, he shall be considered to have a business place in Korea (hereinafter referred to as a “domestic business place”).(2) Any domestic business place as referred to in paragraph (1) shall be considered to include the following places: <Amended by Act No. 6557, Dec. 31, 2001>1. Branch, office or place of business;2. Store or other fixed selling places;3. Workplace, factory or warehouse;4. Construction place continuing to exist in excess of six months, fields of any construction, assembly and installation works, or places where any supervisory activities related to such works are carried out;5. Place where services are offered by the nonresident’s employees, which falls under any of the following items:(a) Place where services are offered for the period exceeding 6 months in total from among 12-month period during which the offer of services is continued; or(b) Place where services of similar kind are continually and repeatedly offered for 2 or more years, in the case of not exceeding 6 months in total from among 12-month period during which the offer of services is continued; and6. Mine, quarry or place where any submarine natural resources and other natural resources are probed or taken (including places on the sea bed and subsoil in the submarine area in which Korea exercises its sovereignty outside the territorial waters under the international laws, and which is contiguous to the coasts of Korea).(3) In case where a nonresident having no domestic business place carries on the business by employing in Korea a person who is authorized to enter into any contract on his behalf and exercises repeatedly such authority, or a person similar to such a person, as prescribed by the Presidential Decree, he shall be considered to have the domestic business place at the seat of such person’s business place (the domicile in case where there is no business place, and the temporary domicile in case where there is no existence of the domicile).(4) Any domestic business place as referred to in paragraph (1) shall not include the following places:1. A specific place used by a nonresident only for purchasing assets;2. A specific place used by a nonresident only for storing or keeping any assets not for sale;3. A specific place used by a nonresident for any advertisement, publicity, collection and furnishing of information, market survey, and other activities of the preliminary and auxiliary nature for carrying on his business; and4. A specific place used by a nonresident only for having another person process his assets.

(1) Any income tax on any nonresident shall be calculated by dividing into the case where it is assessed by adding up his domestic source incomes and the case where it is assessed by separating his domestic source incomes. <Amended by Act No. 6051, Dec. 28, 1999>(2) For a nonresident having a domestic business place as prescribed in Article 120 and a nonresident having an income as prescribed in subparagraph 3 of Article 119, tax shall be assessed by adding up the incomes as prescribed in subparagraphs 1 through 7 and 11 through 13 of Article 119 (excluding any income which is withheld at source under Articles 156 (1) and 156-3 through 156-5), and for a nonresident having an income as prescribed in subparagraphs 8 and 9 of Article 119, any income tax shall be assessed by the same method as it is for a resident. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(3) For a nonresident having no domestic business place as prescribed in Article 120, any income tax shall be assessed by separating the incomes as prescribed in any subparagraph of Article 119 (excluding subparagraphs 8 and 9). <Amended by Act No. 8144, Dec. 30, 2006>(4) For incomes, on which tax is withheld under Articles 156 (1) and 156-3 through 156-5, and which are domestic source incomes of nonresidents having a domestic business place under Article 120, any income tax shall be assessed by separating the incomes falling under subparagraphs of Article 119. <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 9270, Dec. 26, 2008>(5) In taxation under paragraphs (3) and (4), where a nonresident having the income under subparagraph 6 of Article 119 among income subject to withholding makes a final return on the tax base of global income by applying mutatis mutandis the provisions of Article 70, any income tax may be accessed by adding up the incomes falling under subparagraphs 1 through 7 and 11 through 13 of Article 119. <Newly Inserted by Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>

With respect to the calculation of any tax base and tax amount of any income that is earned by any nonresident provided for in Article 121 (2) or (5) or any income provided for in subparagraph 7 of Article 119 that is earned by any nonresident provided for in Article 121 (3) and (4), the provisions of this Act concerning the calculation of any income tax base and income tax amount of a resident shall apply mutatis mutandis accordingly: Provided, That the personal deduction under Article 51-2 (3) shall be allowable only for the nonresident and the special deduction under Article 52 shall not be allowable. <Amended by Act No. 5155, Aug. 14, 1996; Act No. 5580, Dec. 28, 1998; Act No. 7837, Dec. 31, 2005>

Where a nonresident having no domestic business place as prescribed in Article 120, has any income as prescribed in Article 13 (1), the income tax on such income shall be reduced and exempted even if the application as prescribed in Article 75 is not filed.

The provisions of this Act concerning return and payment by a resident shall apply mutatis mutandis to the return and payment (including the interim prepayment) of a nonresident whose tax base and tax amount of income tax are calculated under Article 122: Provided, That any income withheld under Articles 156 and 156-3 through 156-5 is included in the tax base of a nonresident as prescribed in Article 122 in applying Article 76 mutatis mutandis, the tax amount withheld shall be considered as the tax amount deducted under Article 76 (3) 4. <Amended by Act No. 9270, Dec. 26, 2008>

In cases where any income tax is assessed by adding up the domestic source incomes of a nonresident, the provisions of this Act concerning the determination, reassessment, collection and refund of any income tax on a resident shall apply mutatis mutandis to the determination, reassessment, collection and refund of such income tax: Provided, That any income withheld under Articles 156 and 156-3 through 156-5 is included in the tax base of a nonresident as prescribed in Article 122 in applying Article 76 mutatis mutandis, the tax amount withheld shall be considered as the tax amount deducted under Article 76 (3) 4. <Amended by Act No. 9270, Dec. 26, 2008>

(1) For a separate taxation on a nonresident under Article 121 (3) and (4), the tax base and tax amount shall be calculated based on the amount of incomes from each domestic source received by the nonresident: Provided, That the tax base and tax amount of the income in the following subparagraphs may be calculated based on the amount which is obtained by deducting necessary expenses, etc. from the income amount as prescribed in the same subparagraphs: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 9270, Dec. 26, 2008>1. As for domestic source income prescribed in subparagraph 12 of Article 119, the amount obtained by deducting the acquisition value and transfer expenses of the securities verified as prescribed by Presidential Decree from the income amount; and2. As for prize money, supplementary prize, etc. prescribed by Presidential Decree from among the domestic source income prescribed in subparagraph 13 of Article 119, the amount obtained by deducting the amount prescribed by Presidential Decree from the income amount.(2) The tax amount of any domestic source income as referred to in paragraph (1), shall be calculated by multiplying the tax base as referred to in the said paragraph by the tax rate as prescribed in each subparagraphs of Article 156 (1).(3) Notwithstanding the provisions of paragraph (1), if a nonresident without a domicile business place as prescribed in Article 120, has a domestic source income as stipulated in subparagraph 12 of Article 119 that meets the following conditions, the amount of such income shall be the normal price (hereafter referred to as “normal price” in this paragraph) determined by Presidential Decree: <Newly Inserted by Act No. 5580, Dec. 28, 1998>1. Transaction by and between nonresidents without a domestic business place as prescribed in Article 120 and nonresidents (including foreign corporations) in special relationship determined by Presidential Decree; and2. Cases where the price of transaction under subparagraph 1 is less than the normal price.

(1) Where a nonresident without a domestic business place comes to satisfy the criteria for taxation under the relevant tax treaty by transferring stocks or investment shares of the same domestic corporation twice or more times in the same business year (referring to the business year of the domestic corporation that issued such stocks or investment shares; hereafter the same shall apply in this Article), he shall make a return on the income from which a withholding tax has not been collected at source at the time of their transfer (hereafter referred to as an “income” in this Article) and pay the amount equivalent to the withholding tax to the chief of a tax office having jurisdiction over the place of tax payment within three months from the closing date of the business year where the transfer date belongs, under conditions prescribed by Presidential Decree.(2) The provisions of paragraph (1) shall also apply mutatis mutandis to the income of a nonresident with a domestic business place that is not substantially related to or does not belong to his domestic business place.(3) In cases where a nonresident without a place of business in Korea transfers stocks, investment shares, or other securities (hereafter referred to as “stocks, etc.” in this paragraph) to another nonresident or a foreign corporation without a place of business in Korea, and if such cases are prescribed by Presidential Decree, he shall report and pay the amount that income occurred by such transfer multiplied by the ratio under Article 156 (1) 4, to the chief of tax office having jurisdiction over the place of taxation, as prescribed by Presidential Decree, until the 10th day of two months later from the month to which day of receiving the amount belong: Provided, That the same shall not apply, if a payer of income amount occurred from transfer of stocks, etc. paid, pursuant to Article 156, withholding income tax on domestically-generated income, such as stocks, etc., owned by the relevant nonresident. <Newly Inserted by Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(4) If a nonresident fails to make returns or payment pursuant to paragraphs (1) through (3), makes a return on the amount short of the tax base which requires to be returned, or underpays the payable tax amount, the chief of a tax office having jurisdiction over the place of tax payment shall collect the relevant tax amount by applying the provisions of Article 80 mutatis mutandis. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) Any person who pays the income amounts falling under any of the following subparagraphs to a resident or nonresident in Korea, shall collect the income tax at source from such resident or nonresident under the provisions of this Section: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 7528, May 31, 2005; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006>1. Interest income amount;2. Dividend income amount (excluding the dividend income amount added to the total gross income amount under the proviso to Article 17 (3));3. Business income amount as prescribed by the Presidential Decree;4. Class A earned income amount;4-2. Annuity income amount (referring to the income amount before the annuity income deduction under Article 47-2 in cases falling under Article 20-3 (1) 3, 4 and 4-2; hereinafter the same shall apply);5. Miscellaneous income amount: Provided, That an amount falling under any one of the following items shall be excluded:(a) An amount falling under the provision of subparagraph 7;(b) Damages for breach of contract or indemnities under the provisions of Article 21 (1) 10 (only the cases where earnest money is replaced with damages for breach of contract or indemnities); and(c) An amount under the provisions of Article 21 (1) 23 or 2;6. Class A retirement income amount; and7. Service charges determined by Presidential Decree.(2) Any acts of the person acting for the person liable for withholding as referred to in paragraph (1), or the person entrusted by him shall be considered as those of the person liable for withholding or the entrusting person within the limit of the entrustment or delegation, and the provisions of paragraph (1) shall apply.(3) If a financial institution falling under any one of the items of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy (hereinafter referred to as the “financial institutions”) accepts, sells, mediates or acts for a bill or a bond issued by a domestic person, it shall be considered that there exists a relation of procuration or trust between the financial institution concerned and such domestic person, and the provisions of paragraph (2) shall apply. <Amended by Act No. 6051, Dec. 28, 1999; Act No. 8144, Dec. 30, 2006>(4) In calculating the income amount of the domestic business place as prescribed in the proviso of Article 20 (1) 2 (b), any wage appropriated as necessary expenses or loss shall be considered as one paid at the domestic business place, and shall be subject to the application of this Act.(5) Any person liable for withholding tax as referred to in paragraphs (1) through (4), shall be referred to as a “withholding agent”. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8825, Dec. 31, 2007>(6) In cases where any income amount as referred to in paragraph (1) 1 and 2 accruing from any bonds and securities issued by a foreign corporation is paid to a resident, the provisions of paragraph (1) shall apply to a person who acts for the foreign corporation or is delegated or entrusted by the foreign corporation in Korea, deeming that he is a withholding agent. <Newly Inserted by Act No. 5031, Dec. 29, 1995>(7) The provisions of paragraph (1) shall apply to a business proprietor (including a corporation; hereafter the same shall apply in this paragraph) who receives a service charge referred to in paragraph (1) 7 together with a charge for the supply of food and accommodation services or other services, and pays it to the relevant income gainer, deeming that he is a withholding agent. <Newly Inserted by Act No. 5580, Dec. 28, 1998>(8) In the withholding as referred to in paragraphs (1) 3 and (2), the scope of withholding agents, and other matters necessary for withholding shall be determined by Presidential Decree. <Amended by Act No. 9270, Dec. 26, 2008>

(1) Any withholding agent shall pay the income tax withheld to a tax office having jurisdiction over the withholding, the Bank of Korea or the postal service organization by no later than the 10th day of the month following the month to which the collection day belongs under conditions prescribed by Presidential Decree: Provided, That the withholding agent who is prescribed by Presidential Decree taking into account the number of regular employees, types of business, etc., may pay the income tax withheld by no later than the 10th day of the month following the last month of the half year to which the collection day belongs. <Amended by Act No. 5580, Dec. 28, 1998>(2) The withholding agent provided for in the proviso to paragraph (1) shall pay the tax withheld from the bonus, dividends, and miscellaneous incomes disposed of pursuant to Article 67 of the Corporation Tax Act, in accordance with the main sentence of paragraph (1). <Newly Inserted by Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006>

(1) Any income tax withheld by a withholding agent shall be an amount calculated by applying the tax rates classified under the following subparagraphs (hereinafter referred to as the “withholding tax rate”) to the income or revenue amount paid by the withholding agent: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5532, Apr. 10, 1998; Act No. 5552, Sep. 16, 1998; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>1. With respect to any interest income amount, the following tax rates:(a) Where a resident who paid any interest and discount amount accruing from his own long-term bonds as determined by Presidential Decree makes an application for separate taxation to the relevant financial institutions or their payers under conditions prescribed by Presidential Decree, 30/100 for the interest and discount amount;(b) 25/100 for any profits accruing from a loan for non-business; and(c) 14/100 for other interest income amount;2. 14/100 on any dividend incomes (25/100 for the dividend income of the joint investment business proprietors under the provisions of Article 17 (1) 6-3);3. 3/100 for any business income amount determined by Presidential Decree;4. Basic tax rate for any Class A earned income amount;4-2. The following tax rates for any annuity income amount:(a) The basic tax rate for an annuity income falling under Article 20-3 (1) 1 and 2; or(b) 5/100 for any annuity income falling under Article 20-3 (1) 3, 4 and 4-2;5. 8/100 for any earned income amount of a daily-paid worker;6. 20/100 for miscellaneous income amount: Provided, That cases where subparagraphs 8 and 9 apply shall not be included;7. Basic tax rate for any Class A retirement income amount and any excess refund of a workplace mutual aid association as prescribed in Article 63;8. 5/100 for any income amount accruing from service charges determined by Presidential Decree; and9. 30/100 for an amount in excess of 300 million won in cases where the income amount falling under Article 14 (3) 7 exceeds 300 million won.(2) Notwithstanding the provisions of paragraph (1), the withholding tax rate for any interest income and dividend income falling under each of the following subparagraphs shall be as follows: <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7319, Dec. 31, 2004; Act No. 8144, Dec. 30, 2006>1. 14/100 for any interest income accruing from the security deposit and knockdown price paid to a court under Articles 113 and 142 of the Civil Execution Act; or2. 35/100 for any income for which the actual name as prescribed by Presidential Decree is not verified: Provided, That where Article 5 of the Act on Real Name Financial Transactions and Guarantee of Secrecy is applied, it shall be the tax rate as stipulated in said Article.(3) Notwithstanding the provisions of paragraph (1) 4 and 4-2 (a), the simplified tax table for earned income prescribed by Presidential Decree (hereinafter referred to as the “simplified earned income tax table”) and the simplified tax amount table for annuity income prescribed by Presidential Decree (hereinafter referred to as the “simplified annuity income tax table”) shall apply to the withholding tax rates for the monthly earned income of Class A or annuity income falling under Article 20-3 (1) 1 and 2. <Amended by Act No. 6292, Dec. 29, 2000>(4) In calculating a withholding tax amount under paragraph (1), if the foreign income tax amount as determined by Presidential Decree, on the income amount as prescribed in Article 127 (1) 1 and 2, is paid in a foreign country, the amount calculated by deducting such foreign income tax amount from the withholding tax amount calculated under paragraph (1), shall be the withholding tax amount. In this case, if the foreign income tax amount exceeds the withholding tax amount calculated under paragraph (1), such excess amount shall be considered not to exist. <Newly Inserted by Act No. 5031, Dec. 29, 1995>

When a withholding agent pays any interest or dividend income, he shall withhold the income tax calculated by applying a withholding tax rate to such income amount. <Amended by Act No. 6292, Dec. 29, 2000; Act No. 7319, Dec. 31, 2004>

(1) If a person has subscribed for a fixed installment deposit connected with a fixed deposit for which the financial institution concerned substitutes the interest of the fixed deposit for the installments to be paid in, the interest of such fixed deposit shall be considered to have been paid when the fixed deposit or fixed installment deposit is cancelled, or the savings period of the fixed installment deposit expires.(2) The payment time of the interest and discount amount other than those as referred to in paragraph (1), shall be such date as determined by the Presidential Decree.

(1) If a corporation fails to pay any dividend income accruing from disposal of any profits or surplus within three months of the determination of such disposal, the dividend income shall be considered to have been paid at the expiration of such three months.(2) Time for payment of dividend shall be determined by the Presidential Decree. <Amended by Act No. 8825, Dec. 31, 2007>

(1) Any withholding agent, who pays in Korea any interest or dividend income, shall deliver a withholding receipt specifying the interest or dividend income and other necessary matters, to the recipient at the time of payment thereof, under the conditions as prescribed by the Presidential Decree: Provided, That if the withholding agent notifies the interest or dividend income and other necessary matters, to the person receiving the interest or dividend income, by the end of March in the year following the year to which the payment day belongs under the conditions as prescribed by the Presidential Decree, he shall be considered to have delivered such withholding receipt.(2) Any withholding agency pursuant to paragraph (1) may not issue a withholding tax receipt if interest or dividend he pays falls short of the amount provided for in the Presidential Decree: Provided, That he shall issue the withholding tax receipt or make the notice as provided under paragraph (1) in cases where the same is issued under Article 46 (2) or where the recipient of such interest or dividend demands the issuance of the withholding tax receipt. <Newly Inserted by Act No. 6292, Dec. 29, 2000; Act No. 7319, Dec. 31, 2004>

(1) When a withholding agent pays any monthly earned income of Class A, he shall withhold any income tax according to the simplified earned income tax table. <Amended by Act No. 6292, Dec. 29, 2000>(2) In cases where a withholding agent falls under any of the following subparagraphs, he shall withhold any income tax pursuant to Article 137 or 138; and in case of subparagraph 1, he shall withhold any income tax from the earned income corresponding to the portion paid in February of the year following the corresponding year, pursuant to paragraph (1): <Amended by Act No. 5191, Dec. 30, 1996; Act No. 8825, Dec. 31, 2007>1. When he pays any earned income corresponding to the portion paid in February of the year following the corresponding year (in cases where the earned income corresponding to the portion of February is not paid until the last day of February or there is no earned income in February, the last day of February; hereinafter the same shall apply); and2. When he pays any earned income corresponding to the portion of the month when a retiree retires.(3) When a withholding agent pays any earned income of a daily-paid worker, it shall withhold the income tax calculated by applying the withholding tax rate to the amount obtained by making the earned income deduction from such earned income. <Amended by Act No. 5191, Dec. 30, 1996>(4) When the income tax on a resident with the following tax credit, is withheld under paragraphs (1) and (2), the withholding shall be made after deducting the amount of the tax credit under the conditions as prescribed by the Presidential Decree:1. Tax credit on taxes paid abroad; and2. Tax credit on the earned incomes.(5) If a monthly wage is divided and paid by the same employer, as the workplace of the person having any earned income is changed, the income tax shall be withheld from the total amount of such monthly wage at the changed workplace by applying the provisions of paragraphs (1) through (4).(6) Deleted. <by Act No. 5191, Dec. 30, 1996>

(1) If a withholding agent, who is liable to pay any earned income, fails to pay the wages for January through November by December 31 in the corresponding year, the wages shall be considered to have been paid on the 31st of December.(2) If a withholding agent fails to pay wages for December by the last day of February in the following year, the wages shall be considered to have been paid on the last day of February. <Amended by Act No. 8825, Dec. 31, 2007>(3) If a corporation fails to pay any bonus to be paid by a disposal of any profits or surplus, within three months of the determination of the disposal, the bonus shall be considered to have been paid on the date when such three months expire: Provided, That in case where the disposal is determined between November 1 and December 31 in the corresponding year but the bonus is not paid by the last day of February in the following year, it shall be considered to have been paid on the last day of February. <Amended by Act No. 8825, Dec. 31, 2007>(4) Any bonus to be disposed of under the Corporation Tax Act shall be considered to have been paid on such a day as determined by the Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>

(1) Where a withholding agent withholds any income tax from any bonus corresponding to the earned income or any wage having the nature of bonus (hereinafter referred to as “bonus, etc.”), such withholding income tax shall be calculated as follows. This provision shall also apply to any bonus, etc. paid to a person who is exempted from the income tax on the earned income after making the global income deduction:1. Bonus, etc. with the payable period:The tax amount shall be calculated by deducting the paid withholding tax amount (excluding the additional tax amount) on the earned income accruing during the payable period, from the amount calculated by multiplying the amount computed by applying the simplified tax table to the amount summing up the amount calculated by dividing the amount of the bonus, etc. by the number of months for the payable period, and the monthly average wages other than the bonus, etc. accruing during the payable period, by the number of months for the payable period;2. Bonus, etc. without payable period:The tax amount shall be calculated under subparagraph 1 on the assumption that the payable period is from January 1 in the year of the receipt of the bonus, etc. to the month of the payment of such bonus, etc. In this case, if the bonus, etc. is paid two or more times in the corresponding year, the tax amount shall be calculated on the assumption that the payable period is from the month following the month of the payment of the immediately preceding bonus, etc. to the month of the payment of the subsequent bonus, etc.; and3. In the calculation as referred to in subparagraphs 1 and 2, if the payable period exceeds one year, it shall be one year, and if the payable period does not exceed one month, it shall be one month.(2) If a withholding agent pays any bonus, etc. by disposal of any surplus, the income tax to be collected through withholding shall be calculated under the conditions as prescribed by the Presidential Decree.(3) In the calculation of the tax amount to be collected from a bonus, etc., the method of application as to payable period and other necessary matters shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 5191, Dec. 30, 1996>

(1) When a withholding agent at the principal workplace pays any earned income for February in the year following the corresponding year or that for the month in which an employee retires, he shall make the global income deduction from the earned income amount accruing during the corresponding year or up to the month of retirement, according to the contents reported by the person having such earned income under Article 140, and shall determine the calculated global income tax amount using such amount as the global income tax base, making the tax credit as prescribed in subparagraphs of Article 134 (4) and deducting the withholding tax, while withholding the balance. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 8825, Dec. 31, 2007>(2) In the case as referred to in paragraph (1), if the withholding income tax paid already in the corresponding year, exceeds the amount obtained after making the tax credit as prescribed in subparagraphs of Article 134 (4) from the calculated global income tax amount, the amount in excess shall be refunded to the person who has earned the income, under the conditions as prescribed by the Presidential Decree.(3) If a withholding agent at the secondary workplace of the person who is not a daily-paid worker, and receives wages from two or more persons, withholds any income tax, he shall deduct the withholding tax paid already in the corresponding year, from the calculated global income tax amount calculated by applying the basic tax rate to the earned income amount paid at the secondary workplace in the corresponding year, and withhold the balance.(4) When a withholding agent withholds any income tax by applying the provisions of paragraph (1) to a person having any earned income who has failed to make the report as prescribed in Article 140, the basic deduction only for the relevant person himself and the standard deduction shall be allowable. <Amended by Act No. 5155, Aug. 14, 1996; Act No. 8144, Dec. 30, 2006>(5) For those, other than daily-paid workers, who have any earned income of Class A and any earned income of Class B from which the income tax has been collected by a tax association as referred to in Article 150 (3), a withholding agent at the principal workplace which pays the earned income of Class A may conduct the year-end adjustment on the sum amount of the earned income of Class A and that of Class B. <Newly Inserted by Act No. 6051, Dec. 28, 1999>

(1) When a withholding agent, who pays any earned income of Class A to a person who is employed during the corresponding year, pays to such employee the earned income for February of the year following the year to which the date of employment belongs, the withholding agent shall withhold any income tax under Article 137 from the amount summing up the earned income paid by the withholding agent and the earned income paid by the previous workplace in case where the employee has submitted the report on the income deduction as provided by Article 140 (1) after summing up the earned income paid by the withholding agent and the earned income received at the previous workplace from January in the corresponding year to the month to which the date of retirement belongs under Article 141. <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 8825, Dec. 31, 2007>(2) With respect to withholding of the income tax of a person who retired during the corresponding year, and is employed again after paying the income tax under Article 137, and then retires again during the corresponding year, the provisions of paragraph (1) shall apply mutatis mutandis.

In withholding as prescribed in Article 137 or 138 (hereinafter referred to as “year-end adjustment of earned income tax amount”), if the income tax to be collected exceeds the earned income to be paid, such excess amount shall be collected when the earned income is paid in the following month: Provided, That if there is no earned income to be paid in the following month, the tax amount shall be withheld in full.

(1) When any person who receives any earned income of Class A desires to be subject to the basic deduction, additional deduction, additional deduction for persons with many children and special deduction for his spouse or dependents, he shall file a written report indicating the cause of deduction (hereinafter referred to as the “report on income deduction for a person having any earned income”) with the withholding agent at the principal workplace which collects his income tax before he receives the wage for February of the year following the corresponding year (in case where he has retired, before he receives the wage for the month to which the date he retired belongs) under the conditions as prescribed by the Presidential Decree: Provided, That a person who is employed during the corresponding year, shall file it before he receives the first wage at the workplace. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(2) The withholding agent at the principal workplace shall, upon receiving the report on income deduction for a person having any earned income, report it to the chief of a tax office having jurisdiction over the place of withholding tax payment, and notify the withholding agent at the secondary workplace, under the conditions as prescribed by the Presidential Decree.(3) The provisions of paragraphs (1) and (2) shall not apply to a daily-paid worker.(4) Any person having any earned income, who is employed or has retired during the corresponding year, shall submit the report on income deduction, together with the certified copy of his resident registration card. In this case, the provisions of the proviso of Article 167 (1) shall apply mutatis mutandis to the submission of the certified copy of a resident registration card.

If a person having any earned income, who has retired during the corresponding year, is newly employed at another workplace, and receives any earned income for February of the year following the year to which the date of his new employment belongs, he may conduct the year-end adjustment of earned income tax by filing the report on income deduction with the new workplace, after summing up the earned incomes received at the new workplace and the earned incomes received at the previous workplace from February in the corresponding year to the month to which the date of his retirement belongs. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 8825, Dec. 31, 2007>

(1) Any person, other than a daily-paid worker, who receives any earned incomes from two or more workplaces, shall decide the principal and secondary workplaces, before he receives such earned incomes from two or more workplaces, and report it to a withholding agent at the principal workplace, under the conditions as prescribed by the Presidential Decree.(2) The withholding agent shall, upon receiving the report as referred to in paragraph (1), report the reported matters to the chief of a tax office having jurisdiction over the principal workplace, and notify the withholding agent at the secondary workplace, under the conditions as prescribed by the Presidential Decree.

Any withholding agent, who pays any earned income, shall deliver the withholding receipt specifying the earned income and other necessary matters, to the person receiving it, no later than the end of February of the year following the corresponding year, under the conditions as prescribed by the Presidential Decree: Provided, That with respect to a person who has retired during the corresponding year, it shall be delivered no later than the end of the month following the month to which the payment date of the wage for the month he retires belongs, and in the case of any earned income of a daily-paid worker under the provisions of the proviso of Article 164 (1), it shall be delivered no later than the end of the month following the last month of the quarter to which the payment date thereof belongs (the end of February of next year for the earned income paid in the 4th quarter). <Amended by Act No. 8144, Dec. 30, 2006>

(1) When a withholding agent pays any annuity income falling under Article 20-3 (1) 1 or 2, he shall withhold the income tax according to the simplified annuity income tax table.(2) When a withholding agent pays any annuity income falling under Article 20-3 (1) 3, 4 and 4-2, he shall collect the withholding tax by applying the withholding tax rate to the annuity amount paid. <Amended by Act No. 7837, Dec. 31, 2005>(3) When the withholding agent pays the annuity income for January of the year following the corresponding year, he shall collect the withholding tax pursuant to Article 143-4. In such cases, the income tax shall be withheld on the January annuity of the following year pursuant to paragraph (1). <Amended by Act No. 6557, Dec. 31, 2001>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) When the withholding agent under Article 143-2 (1) pays annuity income for January of the year following the corresponding year, he shall collect as withholding tax the balance after subtracting the withholding income tax already collected during the corresponding year from the global income tax, which is computed based on the global income tax base arrived by making the basic reduction, additional reduction and standard reduction from the annuity income amount accruing during the corresponding year based on the details returned by the annuity income earner pursuant to Article 143-6. <Amended by Act No. 6557, Dec. 31, 2001>(2) In cases where paragraph (1) is applicable, if the withholding income tax already collected during the corresponding year exceeds the corresponding calculated global income tax amount, the excess amount shall be refunded to the corresponding annuity income earner as provided in the President Decree.(3) In cases where income tax is collected by withholding at source pursuant to paragraph (1) from an annuity income earner who has failed to make the tax return under Article 143-6, only the basic deduction for such annuity income earner himself and the standard deduction shall be made.(4) In cases where the annuity income earner deceases in the corresponding year, the withholding agent shall make the year-end tax reconcilement for the deceased annuity income earner by the end of the month following his death by mutatis mutandis applying paragraphs (1) through (3).(5) Where the annuity income paid by the withholding agent under Article 143-2 (1) is not more than 6 million won per year, the provisions of paragraphs (1) through (4) shall not be applied, and in applying the provisions of Article 73 (4), it shall be deemed that a year-end reconcilement has been made. <Newly Inserted by Act No. 6557, Dec. 31, 2001; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

Where the income tax amount that should be collected by withholding at source pursuant to Article 143-4 (hereinafter “year-end reconcilement of annuity income tax”) exceeds the annuity amount payable, such excess amount shall be collected at the time of paying the following month’s annuity.[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) When an annuity income earner falling under Article 20-3 (1) 1 and 2 intends to apply the basic and additional deductions for his spouse or dependents, he shall submit a return (hereinafter referred to as a “return on annuity income deduction”) indicating the particulars of such deductions to the withholding agent before December 31 of the corresponding year as provided by the Presidential Decree: Provided, That where the annuity income earner deceases in the current year, his predecessor shall submit such return for annuity income deduction by the end of the month following the death of the deceased inheritee. <Amended by Act No. 8825, Dec. 31, 2007>(2) The withholding agent who receives such returns on annuity income deduction shall submit the information of such returns to the superintendent of the district tax office responsible for the withholding tax collection as provided in the Presidential Decree.(3) The annuity income earner to whom annuity income accrues for the first time during the current year shall attach his resident registration card duplicate to his return on annuity income deduction.(4) An annuity income earner may file for the annuity income deduction by such means prescribed by the Presidential Decree as information communication networks. <Newly Inserted by Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

The withholding agent paying annuity shall issue a withholding tax receipt indicating the annuity income paid and other necessary matters to the annuity income recipient by the end of February of the year following the current year as provided in the Presidential Decree: Provided, That where the annuity income earner deceases in the current year, such receipt shall be issued by the end of the month following his death.[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) When a withholding agent pays any receipt amount on such business income as prescribed by the Presidential Decree, he shall withhold the income tax calculated by applying the withholding tax rate to such payable amount.(2) The withholding agent, who pays the revenue amount on such business income as prescribed by the Presidential Decree, shall deliver to the person receiving it, the withholding receipt specifying the revenue amount and other necessary matters, when it pays the revenue amount on such business income, under the conditions as prescribed by the Presidential Decree.(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis if the tax withholding agent pays the income amount from service fee determined by the Presidential Decree. <Newly Inserted by Act No. 5580, Dec. 28, 1998>

(1) A withholding agent paying revenue amount from such business income as prescribed in Article 73 (1) 5 shall withhold the income tax determined in the year-end reconcilement of the business income tax for the current year as prescribed by the Presidential Decree. <Amended by Act No. 6292, Dec. 29, 2000>(2) The amount of business income as prescribed in paragraph (1) shall be the amount calculated by multiplying the revenue amount on business income which a withholding agent has paid by the rate as prescribed by the Presidential Decree.(3) In applying paragraph (1), other necessary matters such as the submission of the income deduction return shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 5191, Dec. 30, 1996]

(1) When a withholding agent pays any miscellaneous income, it shall withhold the income tax calculated by applying the withholding tax rate to such miscellaneous income amount.(2) Any withholding agent who pays any miscellaneous income shall deliver a withholding receipt specifying the income amount and other necessary matters to the person who is paid when he pays it under the conditions as prescribed by the Presidential Decree: Provided, That where he pays any miscellaneous income falling under Article 21 (1) 15 (a), and 19 (a) and (b) that does not exceed the amount determined by the Presidential Decree, he may not deliver a withholding receipt except the cases where the person who is paid asks for the delivery of the withholding receipt. <Amended by Act No. 8144, Dec. 30, 2006>

(1) When a withholding agent pays any Class A retirement income, he shall withhold the income tax calculated by applying the withholding tax rate to the tax base of such retirement income. <Amended by Act No. 5155, Aug. 14, 1996; Act No. 6292, Dec. 29, 2000>(2) Any withholding agent, who pays a retirement income, shall deliver a withholding receipt specifying the retirement income and other necessary matters to the person who is paid, no later than the end of the month following the month to which the payment date belongs under the conditions as prescribed by the Presidential Decree.

(1) If a withholding agent, who is to pay the retirement income, fails to pay the retirement allowance amount to the person who has retired from his service between January and November, by December 31 in the corresponding year, the retirement allowance amount shall be considered to have been paid on the 31st of December.(2) If the withholding agent fails to pay the retirement allowance amount to a person who has retired in December by January 31 in the following year, the retirement allowance amount shall be considered to have been paid on the 31st of January.(3) If a corporation fails to pay any retirement allowance amount to be paid by the disposal of any profits or surplus, within three months of the determination of such disposal, the retirement allowance amount shall be considered to be paid at the expiration of such three months: Provided, That if the retirement allowance amount the disposal of which is decided from November 1 to December 31, is not paid by January 31 in the following year, the retirement allowance amount shall be considered to be paid on the 31st of January.(4) The provisions of paragraphs (1) and (2) shall not be applied to the case of retirement income under Article 22 (1) 1 (d) and (e). <Newly Inserted by Act No. 6557, Dec. 31, 2001>

In cases where a withholding agent is to make payments on retirement, the calculation of withholding income tax shall be made in accordance with the following subparagraphs: <Amended by Act No. 5155, Aug. 14, 1996; Act No. 6292, Dec. 29, 2000>1. In the absence of other payments on retirement already made to a resident in the year of assessment, the amount of tax shall be calculated by multiplying the withholding tax rate by the tax base of the retirement income; and2. In case of the existence of other payments on retirement already made to a resident in the year of assessment, the amount of tax shall be decided by the deduction of the tax amount on the payments on retirement already paid from the amount of tax which is calculated by multiplying the withholding tax rate by the tax base of retirement income equal to the aggregate of payments on retirement already paid and to be paid.

The residents falling under any of the following subparagraphs, may organize a tax association under the conditions as prescribed by the Presidential Decree:1. Those who have the earned incomes of Class B; and2. Businessmen as prescribed by the Presidential Decree.

(1) The tax association shall collect each month the income tax on the earned incomes of Class B or business incomes of its members.(2) When the tax association organized by the businessmen as prescribed in subparagraph 2 of Article 149, collects under paragraph (1) the monthly income tax for its members, it shall collect as income tax, the amount obtained by deducting the amount equivalent to 10/100 of the tax amount.(3) When the tax association organized by those who have the earned income of Class B shall, as the monthly income tax, collect the amount obtained by subtracting an amount equivalent to 10/100 of the payable tax amount from its members’ income: Provided, That where a final tax base return for global incomes is filed under Article 70 or a year-end reconcilement is made under Articles 137 and 138, the amount obtained by deducting the amount equivalent to 10/100 of the calculated global income tax amount on the earned incomes withheld at source by the relevant tax association shall be paid or collected as the tax amount. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001>(4) The deduction as referred to in paragraphs (2) and (3) shall be referred to as “tax association deduction”.(5) Matters necessary for the monthly income tax to be collected by the tax association under paragraph (2), and the collection of such income tax on its members, shall be determined by Presidential Decree.

The tax association shall pay the monthly income tax collected under Article 150 to the district tax office having jurisdiction over the tax association, the Bank of Korea or a postal agency, no later than the 10th of the month following the month of the date of collection under the conditions as prescribed by Presidential Decree.

(1) The tax association as prescribed in Article 150 (2) shall collect as income tax the amount obtained by making the deduction of the tax credit and the tax association deduction from the amount equivalent to 1/12 of the tax amount calculated by applying the basic tax rate to the amount obtained after making the global income deduction from the amount calculated by multiplying the monthly income of each member of the association calculated under conditions prescribed by Presidential Decree, by 12. In such cases, if there is a fraction of less than one month, it shall be one month.(2) The tax association as prescribed in Article 150 (3) shall, with respect to the monthly income of its member, collect the amount obtained by making the tax association deduction from the income tax calculated based on the simplified earned income tax table under Article 134, but according to the examples of collecting tax through withholding, on the earned income of Class A. <Amended by Act No. 6292, Dec. 29, 2000>

(1) The tax association may act as the tax manager of its members, handling matters concerning the return, payment, or refund of its members’ income tax. <Amended by Act No. 6292, Dec. 29, 2000>(2) If the tax association desires to act as the tax manager of its members under paragraph (1), it shall report it to the chief of a tax office having jurisdiction over the tax association, under conditions prescribed by Presidential Decree.

When a withholding agent pays any income as prescribed in subparagraphs of Article 127 (1), on which no income tax is levied or which is exempted from the income tax, he shall not withhold the income tax.

In the event that any income as prescribed in subparagraphs of Article 127 (1) on which no income tax is withheld due to non-payment thereof, is added to the global income and the income tax is levied on such global income, the income tax shall not be withheld from such income.

As for trust other than collective investment scheme under Article 4 (2), the person who collects income tax at source as proxy or who has been entrusted with collection of income tax at source under Article 127 (2) shall collect income tax at source deeming a specified date (limited to a date within the same year of reversion) within three months from the date when incomes under subparagraphs of Article 127 (1) were reverted to the trust as the receiving date under Article 24 and paying date under Article 130, notwithstanding Article 130.[This Article Newly Inserted by Act No. 9270, Dec. 26, 2008]

The income amount under subparagraphs of Article 127 (1) shall not be deemed to have been paid at the time when it was reverted to the collective investment property under the Financial Investment Services and Capital Markets Act.[This Article Newly Inserted by Act No. 9270, Dec. 26, 2008]

(1) Notwithstanding Article 127, any person (excluding any resident or nonresident who pays an income under the provisions of subparagraph 9 of Article 119) who pays to a nonresident an income accruing from domestic sources as prescribed in subparagraphs 1, 2, 4 through 6, 9 and 11 through 13 of Article 119 (including any amount paid to a nonresident without any domestic business place) that has no substantial relationship with any domestic business place provided for in Article 120 or does not belong to such domestic business place, shall withhold the amount falling under any of the following subparagraphs as the income tax from the domestic source income of the nonresident at the time he pays it, and pay the withheld amount to the tax office having jurisdiction over the withholding, the Bank of Korea or a postal agency by no later than the 10th day of the month following the month to which the day of such withholding belongs, under conditions prescribed by Presidential Decree: Provided, That the incomes provided for in subparagraph 5 of Article 119 which may be taxable as a business income accruing from domestic sources in accordance with the tax treaty shall be excluded: <Amended by Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. With respect to the income as prescribed in subparagraphs 4 and 5 of Article 119, 2/100 of the amount paid;2. With respect to the income as prescribed in subparagraph 6 of Article 119, 20/100 of the amount paid;3. With respect to the income as prescribed in subparagraphs 1, 2, 11 and 13 of Article 119, 20/100 of the amount paid (as for the prize money, supplementary prize, etc. under Article 126 (1) 2, it shall be an amount calculated according to the same subparagraph): Provided, That with respect to the interest income accruing from the bonds issued by the State, local governments and domestic corporations, it shall be 14/100 of the amount paid;3-2. With respect to the income prescribed in subparagraph 9 of Article 119, 10/100 of the amount paid: Provided, That where the acquisition value and transfer expenses of the asset transferred are verified, it shall be an amount equivalent to 10/100 of the amount paid or an amount equivalent to 20/100 of the gains from the transfer of the relevant asset, whichever is smaller; and4. With respect to the income prescribed in subparagraph 12 of Article 119, 10/100 of the amount paid (if it falls under Article 126 (3), it refers to the “normal price” under the same paragraph; hereafter referred to as “amount paid, etc.” in this subparagraph): Provided, That if the acquisition value and transfer expenses of the relevant securities are verified under Article 126 (1) 1, it shall be an amount equivalent to 10/100 of the amount paid, etc. or an amount equivalent to 20/100 of the amount calculated pursuant to the same subparagraph, whichever is smaller.(2) In cases where any domestic source income as referred to in paragraph (1), is paid overseas, if the payer has in Korea an address, residence or domicile, head office, principal office or domestic business place (including any domestic business place as prescribed in Article 94 of the Corporation Tax Act), it shall be considered that the payer pays in Korea such domestic source income amount, and the provisions of paragraph (1) shall apply to it. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(3) Any person who pays any domestic source income as prescribed in subparagraphs 1, 5, 6 and 11 of Article 119 with any foreign loan funds to a nonresident having no domestic business place as prescribed in Article 120, shall withhold the income tax from such income as referred to in paragraph (1), whenever such income is paid pursuant to the terms and conditions of payment on the contract, even in cases where he does not pay it directly according to the terms and conditions of the contract.(4) When a person who is a domestic agent of a nonresident operating a vessel or aircraft navigating to and from foreign countries and does not fall under Article 120 (3), pays to the nonresident any income accruing from the navigation of the vessel or aircraft navigating to and from foreign countries, he shall withhold the income tax from the domestic source income of the nonresident under paragraph (1).(5) Where securities under subparagraph 12 of Article 119 are transferred through an investment trader or investment broker under the Financial Investment Services and Capital Markets Act, the relevant investment trader or investment broker shall collect income tax at source as prescribed in paragraph (1): Provided, That in cases where stocks are being listed under the Financial Investment Services and Capital Markets Act, and where stocks that have been already issued are to be transferred, the corporation that has issued the stocks shall collect income tax at source. <Amended by Act No. 9270, Dec. 26, 2008>(6) Any person who pays to a nonresident any domestic source income accruing from any building or construction, installation, assembly or other work of machines, apparatus, etc., or offer of any service as to direction, control, etc. of such works, or any domestic source income as prescribed in subparagraph 6 of Article 119, shall withhold the income tax as referred to in paragraph (1), even though the nonresident has the domestic business place as prescribed in Article 120, except in case where the nonresident has made the registration of business under Article 168.(7) The provisions of Article 84 shall apply mutatis mutandis to the case where the provisions of paragraph (1) apply to the income under subparagraph 13 (f) of Article 119 (limited to any refund of a horse racing ticket, winner voting ticket, bullfighting match voting ticket and sports promotion voting ticket) and subparagraph 13 (g) of the same Article. <Newly Inserted by Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006>(8) The withholding agent under paragraphs (1) through (7) shall, upon withholding the income tax, deliver a withholding receipt specifying the income amount and other necessary matters to a person who is paid, under the conditions as prescribed by Presidential Decree. <Amended by Act No. 6292, Dec. 29, 2000; Act No. 8825, Dec. 31, 2007>(9) With respect to the domestic source income under subparagraph 13 (i) of Article 119, the domestic corporation which has issued stocks or investment shares shall make the withholding at the time as prescribed by Presidential Decree from the overseas person in a special relationship who possesses the relevant stocks or investment shares. <Newly Inserted by Act No. 7006, Dec. 30, 2003>(10) Detailed methods of the withholding under the provisions of paragraph (9) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 7006, Dec. 30, 2003>(11) In applying the provisions of paragraph (1), where the nonresident having the income under subparagraph 9 of Article 119 has made the payment in advance of the income tax on the relevant income under the conditions as prescribed by Presidential Decree, or proven that the relevant income is non-taxable or falls short of taxation, the income tax shall not be collected through withholding on the relevant income. <Newly Inserted by Act No. 7837, Dec. 31, 2005>

Any nonresident who intends to be subjected to a non-taxation or exemption under the tax treaties on the domestic source incomes under Article 119 (excluding the incomes under subparagraphs 5 and 6 of the same Article) shall, under conditions prescribed by Presidential Decree, file an application for such non-taxation or exemption with the chief of a tax office having jurisdiction over the place of tax payment.[This Article Newly Inserted by Act No. 6557, Dec. 31, 2001]

Any person who pays the interest and discount amount (hereafter referred to as “interest, etc.” in this Article) of the debentures, etc. under the provisions of Article 46 (1) (hereafter referred to as “debentures, etc.” in this Article) to nonresidents, or who purchases the debentures, etc. from nonresidents before receiving the interest, etc. of debentures, etc. shall make the withholding under conditions prescribed by Presidential Decree by taking account of the possessing period of the relevant nonresidents.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

(1) Where a withholding agent under Articles 156 and 156-3 makes the withholding as income taxes on the income under subparagraph 1, 2, 11 or 12 of Article 119 from among the domestic withholding income of nonresidents located in the country or area notified publicly by the Minister of Strategy and Finance, he shall make the withholding by preferentially applying the tax rate under the provisions of each subparagraph of Article 156 (1), notwithstanding Article 156-2 and the provisions of nontaxation, exemption or limited tax rate in the tax treaty: Provided, That the same shall not apply where the Commissioner of the National Tax Service makes prior approval that he may be subject to the provisions of nontaxation, exemption or limited tax rate in the tax treaty, as prescribed by Presidential Decree. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 9270, Dec. 26, 2008>(2) Where the person who actually has a domestic withholding income provided for in paragraph (1) (including his agent or a tax manager under the provisions of Article 82 of the Basic Act for National Taxes) intends to be subject to an application of the provisions of nontaxation, exemption or limited tax rate in the tax treaty to the relevant income, he may request a revision to the chief of a tax office having jurisdiction over the tax payment place of the person liable for withholding under the conditions as prescribed by Presidential Decree within 3 years from the last day of the month whereto the day on which the tax amount has been withheld under the provisions of paragraph (1).(3) The head of tax office in receipt of request for a revision under the provisions of paragraph (2) shall make a revision of the taxation standard and tax amount within 6 months, or notify the person who has made the relevant request of the purport that there exist no reason for making a revision.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

(1) Where nonresident entertainers or sports players (hereafter referred to as “nonresident entertainers or such”) receive compensation or fees for their services performed domestically (including those under subparagraphs 6, 7, and 13 of Article 119; hereafter the same shall apply in this Article), a payor, who pays compensation or fees to a foreign corporation that is exempt from taxation due to such reasons as having no regular place of business or not belonging to the regular place of business pursuant to tax treaties (hereafter referred to as “foreign entertainers or corporations exempt from taxation” in this Article) for the services performed domestically by non resident entertainers or such, shall withhold 20/100 of the payment amount in spite of tax treaties, and then pay to the tax office having jurisdiction over the place of tax payment, Bank of Korea, or communications agency as prescribed by Presidential Decree, until the 10th of the month following the month to which the day of withholding belong.(2) Notwithstanding Article 156 (1), where foreign entertainers or corporations exempt from taxation pay for compensation or fees for the services performed domestically by nonresident entertainers or such, the foreign entertainers or corporations exempt from taxation shall withhold 20/100 of the payment amount, and then pay to the tax office having jurisdiction over the place of tax payment, Bank of Korea, or communications agency as prescribed by Presidential Decree, until the 10th of the month following the month to which the day of withholding belong. In such cases, if a payer, who pays compensation or fees for the services performed domestically by nonresident entertainers, etc. to a foreign corporation that is exempt from taxation, paid such withholding amount pursuant to paragraph (1), his payment shall be deemed as paid within the scope of the amount paid.(3) If the withholding amount paid under paragraph (1) is larger than that under paragraph (2), a foreign entertainer or corporation exempt from taxation may apply for a refund of such difference to the chief of tax office having jurisdiction over the place of tax payment as prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8825, Dec. 31, 2007]

(1) In cases where a corporation is dissolved, if the income tax to be withheld is not collected, or income tax collected is not paid and the remaining property is distributed, the liquidator shall be liable to pay the income tax jointly and severally with the person who has the property distributed, within the limit of the amount distributed. <Amended by Act No. 8825, Dec. 31, 2007>(2) In cases where corporations are merged, the corporation that continues to exist after the merger or established by the merger, shall bear the liability to pay taxes, which is to be collected and paid through withholding by the corporation extinguished by the merger. <Amended by Act No. 8825, Dec. 31, 2007>

(1) If a withholding agent or a person liable for withholding the tax under Articles 156 and 156-3 through 156-5 fails to pay the tax amount collected or to be collected, in the prescribed period, or he has paid it insufficiently, he shall pay as tax amount the amount obtained by adding the larger one of the amounts provided for in the following subparagraphs within the limit of the amount equivalent to 10/100 of the tax amount not paid or insufficient, to the tax amount to be collected: Provided, That the provisions of paragraph (2) shall govern the cases where the withholding agent or the person liable for withholding the tax under Articles 156 and 156-3 through 156-5 is the State, local government, or local governments association (hereafter referred to as the “State, etc.” in this Article): <Amended by Act No. 6781, Dec. 18, 2002; Act No. 7319, Dec. 31, 2004; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Tax amount unpaid (if insufficiently paid, such insufficient amount) × Period from the date next to a payment deadline to the voluntary payment day or the date of tax payment notice × Interest rate prescribed by Presidential Decree, taking a penalty interest rate applied on loans in arrears of financial institutions into account; and2. 5/100 of the tax amount unpaid (if insufficiently paid, such insufficient amount).(2) When any person who is paid the earned income from the State, etc. has received the unjustifiable income deduction by writing the report on deduction of income by person having earned income under Article 140 (1) differently from the fact, and paid the tax amount to be withheld by the State, etc. insufficiently within the relevant period, the State, etc. shall add the amount calculated pursuant to paragraph (1) to the tax amount to be collected, and collect it from the relevant person having earned income, and pay it. <Newly Inserted by Act No. 6781, Dec. 18, 2002; Act No. 7319, Dec. 31, 2004>(3) The amount added under paragraphs (1) and (2) shall be referred to as the “additional tax for being unfaithful in withholding, collection and payment”. <Amended by Act No. 6781, Dec. 18, 2002>(4) The provisions of paragraph (1) shall not apply to the United States armed forces stationed in Korea.(5) The provisions of paragraph (1) shall not be applied to the person who pays the incomes under Article 20-3 (1) 1 and 2, or 22 (1) 1 (d) and (e). <Newly Inserted by Act No. 6557, Dec. 31, 2001>

(1) If the tax association fails to collect each month the income taxes of its members and to pay them in the payment term, or it has paid insufficient tax amount, it shall pay as the tax amount the amount obtained by adding the amount equivalent to 5/100 of the tax amount not paid each month or insufficient, to the calculated tax amount.(2) The amount added to the calculated tax amount under paragraph (1), shall be referred to as “additional tax amount for nonpayment by a tax association”.(3) In the case as referred to in paragraph (1), the chief of a tax office having jurisdiction over the tax association shall collect the monthly tax amount not paid or underpaid, from the tax association concerned.

(1) Any business operator shall keep the supporting documents, etc. so as to calculate any income amount, and enter all transactions related to the business in the books by means of double entry and manage them so as to be explained if necessary. <Amended by Act No. 5580, Dec. 28, 1998>(2) When any operator of the business whose scale is smaller than that as determined by Presidential Decree by types of business taking the industry, size, etc. into consideration conducts a simple bookkeeping as determined by Presidential Decree (hereinafter referred to as the “simple bookkeeping”) and has sincerely entered the details of his business transactions, he shall be deemed to have kept and entered the book referred to in paragraph (1). <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(3) Any operator of the business whose scale is smaller than that as determined by Presidential Decree by the types of business under the provisions of paragraph (2) shall be referred to as the “person subject to simple bookkeeping” and any business operator other than the person subject to simple bookkeeping shall be referred to as a “person liable for bookkeeping by double entry”. <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(4) In the case of paragraph (1) or (2), any business operator having both any real estate rental income and any business income, shall separately account them. In this case, any common income amount indivisible by income and the common expenses corresponding to such common income amount shall be divided and entered in books in proportion to the total income amount. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(5) Any business proprietor having two or more places of business shall conduct a bookkeeping in such manner that the details of transaction by place of business may be distinguished from each other.(6) For the stocks or investment shares transferred by major stockholders of a corporation (including any small and medium enterprises), the transaction particulars, etc. by transaction date with a classification by item as determined by Presidential Decree shall be entered in the books, and its supporting documents shall be kept: Provided, That in cases where the written transaction particulars issued by an investment trader or investment broker under the Financial Investment Services and Capital Markets Act are kept, the books shall be deemed to be entered or necessary matters shall be deemed to be kept in the books. <Newly Inserted by Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(7) Matters necessary for entry and keeping of the books and supporting documents as referred to in paragraphs (1) through (5), shall be determined by Presidential Decree. <Amended by Act No. 5580, Dec. 28, 1998; Act No. 8825, Dec. 31, 2007>

(1) When any resident intends to calculate necessary expenses under the provisions of Article 27 in calculating any real estate rental income amount, business income amount or miscellaneous income amount, he shall receive the supporting documents concerning the disbursement of such expenditure and keep them for five years from the date of termination of the period for final return: Provided, That the person who has been given deduction of deficit occurred five years before the starting date of each taxable period shall keep the supporting document of the taxable period in which the relevant deficit occurred until May 31 of the year after the next of the year of the taxable period in which deduction was given. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(2) In cases under paragraph (1), when any person having any real estate rental income or business income receives goods or services related to his business from a business proprietor (including a corporation) and disburses the price thereof to him, he shall receive supporting documents falling under any of the following subparagraphs: Provided, That the same shall not apply to cases determined by Presidential Decree: <Amended by Act No. 8144, Dec. 30, 2006>1. Account statement under Article 163 of this Act and Article 121 of the Corporation Tax Act;2. Tax invoice under Article 16 of the Value-Added Tax Act;3. Credit card sales slips under the Specialized Credit Financial Business Act (if a card similar to a credit card, as determined by Presidential Decree, is used for a transaction, the supporting documents thereof shall be included); and4. Cash receipt.(3) In applying the provisions of paragraph (2), where any business operator has failed to receive a tax invoice referred to in subparagraph 2 of the same paragraph and where he issues and keeps a tax invoice issued by a purchaser under the provisions of Article 126-4 (1) of the Special Tax Treatment Control Act, he shall be deemed to have fulfilled the obligation to receive and keep the supporting documents under paragraph (2). <Newly Inserted by Act No. 8144, Dec. 30, 2006>(4) In applying the provisions of paragraphs (1) through (3), the receipt and keeping of the supporting documents on the disbursement of expenses and other necessary matters shall be determined by the Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) Where a person who takes charge of issuing donation receipts required for the inclusion of donations in necessary expenses or for the deduction of donations from the income amount under Articles 34, 52 (6) of this Act and Article 73 (1) of the Special Tax Treatment Control Act issues donation receipts to the persons who falling under the following subparagraphs, he shall make records thereof for each such contributor as prescribed by Presidential Decree and then keep them for five years from the date of issuance thereof: <Amended by Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>1. Until December 31, 2008: donor who donates more than one million won a year;2. From January 1, 2009 to December 31, 2009: donor who donates more than a half million won a year; or3. From January 1, 2009: any person who makes donation, no matter how much it is.(2) A person who takes charge of issuing donation receipts shall submit the records of issuing donation receipts for each donor kept under paragraph (1) to the Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment, if so requested. <Amended by Act No. 8825, Dec. 31, 2007>(3) A person who takes charge of issuing donation receipts shall submit the record of donation receipt issuance where total numbers of receipt issuance and donation amounts during the corresponding taxation period, to chief of tax office having jurisdiction over the place of taxation pursuant to Article 168 (5) until June 30 of the year following the corresponding taxation period. <Amended by Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 7319, Dec. 31, 2004]

(1) Where a financial institution issues certificates required for the deduction from income amounts under this Act or the Special Tax Treatment Control Act, it shall make records thereof for each resident concerned as prescribed by Presidential Decree and then keep them for five years from the date of issuance thereof. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(2) A financial institution shall submit the records of issuing certificates for each resident kept under paragraph (1) to the Commissioner of the National Tax Service, if so requested. <Amended by Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 7319, Dec. 31, 2004]

(1) In case of any deal wherein a person subject to bookkeeping by double entry is supplied or supplies goods or services in connection with his business, the person subject to bookkeeping by double entry shall, when he falls under any one of the following subparagraphs, use a business account as determined by Presidential Decree (hereinafter referred to as the “business account”): <Amended by Act No. 8825, Dec. 31, 2007>1. When he pays or receives the settlement fund through a financial institution; and2. When he pays or is paid labor costs or rental fees: Provided, That in cases of transactions where labor costs are paid or receive, the transactions prescribed by Presidential Decree from among transaction which is not made through a business account due to the other party’s circumstances.(2) Deleted. <by Act No. 9270, Dec. 26, 2008>(3) Any person subject to bookkeeping by double entry shall open a business account within three months from the commencing date of the taxable period wherein he is subject to bookkeeping by double entry (the commencement date of the next taxable period in cases where he is subject to bookkeeping by double entry at the same time of his business commencement), and file a report thereon with the chief of a tax office having jurisdiction over his place of business: Provided, That where the business account has already been opened and reported, the same shall not apply. <Amended by Act No. 9270, Dec. 26, 2008>(4) Any person subject to bookkeeping by double entry shall, in cases where he changes or additionally opens a business account, report such change or additional opening within a deadline falling under any of the following subparagraphs:1. When he is liable for reporting on present situation of business place under the provisions of Article 78, within the deadline for reporting under the same Article; and2. When he is a business proprietor under the provisions of Article 2 of the Value-Added Tax Act, within the deadline for reporting under the provisions of Articles 19 and 27 of the same Act.(5) Matters necessary for opening, reporting, changing, adding a business account, reporting method thereof, the scope of deals wherein the use of a business account is required, drawing up a list of particulars, etc. shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

Any person who desires to have any income tax reduced or exempted under Article 13 (1) 3, shall enter the reducible or exemptible incomes in the books separately from miscellaneous incomes.[This Article Wholly Amended by Act No. 5580, Dec. 28, 1998]Article 162 (Installation and Use of Cash Register)(1) Notwithstanding the provisions of Article 24 (1), if a business proprietor prescribed by Presidential Decree installs and uses a cash register, the calculation of the total income amount may be based on the sum of the amounts received during the corresponding year.(2) Matters necessary for installing and using a cash register shall be determined by Presidential Decree.

(1) The Commissioner of the National Tax Service may, when he finds it necessary for tax administration, give guidance to the business proprietors falling under the requirement set by Presidential Decree considering types or scales of business into account, from among those supplying goods or services mainly to consumers who are not business proprietors, to join in credit card member stores. <Amended by Act No. 8825, Dec. 31, 2007>(2) Where a credit card member store (referring to a business proprietor falling under the requirements pursuant to paragraph (1); hereafter the same shall apply in this Article) supplies goods or services with regard to business and the other party intends to settle the transaction with a credit card under Article 35 (2) 1 (a), the credit card member store shall not refuse it or issue a credit card sales slip under Article 160-2 (2) 3 (hereafter referred to as “credit card sales slip” in this Article) differently from the fact: Provided, That a person who operates a superstore under subparagraph 3 of Article 2 of the Distribution Industry Development Act or a sports facility under subparagraph 1 of Article 2 of the Installation and Utilization of Sports Facilities Act (hereafter referred to as “superstore, etc.” in this Article) issues a credit card sales slip after adding up the sales of other businesses in the relevant superstore, etc. (limited to cases where the person who operates the superstore, etc. operates the equipment for point of sale system, and where business proprietors have agreed upon between themselves in advance), he shall not be deemed to have issued a credit card sales slip differently from the fact. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>(3) Any person who is refused a transaction by credit card by a credit card member store or is issued a credit card sales slip differently from the fact may report the details of deal thereof to the Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the chief of a tax office having jurisdiction over the place of tax payment. <Newly Inserted by Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(4) Any person who has received the report under the provisions of paragraph (3) shall notify the chief of a tax office having jurisdiction over the place of tax payment of the credit card member store thereof. In such cases, the chief of such tax office shall notify the relevant credit card member store of the reported amount during the relevant taxable period. <Newly Inserted by Act No. 8144, Dec. 30, 2006>(5) The Commissioner of the National Tax Service may issue an order necessary for correction thereof to the credit card member store which has refused a transaction by credit card or has issued a credit card sales slip differently from the fact. <Newly Inserted by Act No. 8144, Dec. 30, 2006; Act No. 9270, Dec. 26, 2008>(6) The administrative guidance for subscription to credit card member store, method of reporting and notification for refusal of transaction by credit card and for issuance of credit card sales slip made differently from the fact, and other necessary matters shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>[This Article Newly Inserted by Act No. 5580, Dec. 28, 1998]

(1) Any business proprietor who supplies goods or services mainly to consumers who are not proprietors and meets the requirements determined by Presidential Decree in consideration of the type of business, scale, etc. shall subscribe for a cash receipt member store within three months from the day he satisfies such requirements.(2) Any business proprietor who subscribes for a cash receipt member store under the provisions of paragraph (1) shall put up a signboard indicating a cash receipt member store under conditions determined by the Commissioner of the National Tax Service.(3) Where any cash receipt member store supplies goods or services in relation to a business and the other party thereof requests to issue a cash receipt after paying the price thereof in cash, it shall not refuse to issue the cash receipt or issue it differently from the fact.(4) Where any person who is supplied goods or services from a cash receipt member store is refused to issue a cash receipt after paying the price thereof in cash or is issued a cash receipt differently from the fact, he may report the details of the relevant deal in cash to the Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the chief of a tax office.(5) Any person who has received the report under the provisions of paragraph (4) shall report it to the chief of a tax office having jurisdiction over the place of tax payment of the cash receipt member store. In this case, the chief of such a tax office shall notify the relevant cash receipt member store of the reported amount during the relevant taxable period.(6) The Commissioner of the National Tax Service may issue an order necessary for correction thereof to the cash receipt member store which refuses to issue a cash receipt or issues it differently from the fact.(7) Subscription for or withdrawal from a cash receipt member store, amounts subject to an issuance, method of report and notification for a refusal of issuance of cash receipt and an issuance made differently from the fact and other necessary matters shall be prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

(1) When a businessman who has made a business registration under Article 168 supplies any goods or services, he shall prepare an account statement or receipt (hereinafter referred to as the “account statement, etc.”) and deliver it to the person who is supplied such goods or services under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 6557, Dec. 31, 2001>(2) In case of the sales on consignment or by proxy of such products of agriculture, livestock, fishery, and forestry which are exempted from any value-added tax under Article 12 (1) 1 of the Value-Added Tax Act, a consignee or proxy shall prepare account statements, etc. and deliver them to the person being supplied such goods, by deeming that the consignee or proxy supplies such goods: Provided, That if account statements, etc. are delivered pursuant to paragraph (1) under the conditions as prescribed by the Presidential Decree, it shall not be so. <Newly Inserted by Act No. 5580, Dec. 28, 1998; Act No. 8144, Dec. 30, 2006>(3) With respect to the imported goods, the head of any customshouse shall issue an account statement to the importer under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 6557, Dec. 31, 2001>(4) The provisions of paragraphs (1) through (3) shall not be applied to the cases where an issuance of account statements, etc. is deemed to be improper, such as the cases, etc. of a sale of real estate, which are prescribed by the Presidential Decree. <Newly Inserted by Act No. 6557, Dec. 31, 2001; Act No. 8825, Dec. 31, 2007>(5) Any businessman shall submit a table of total account statements by buyer and seller, which he has issued or been issued under paragraphs (1) through (3) (hereinafter referred to as the “table of total account statements by buyer and seller”), to the chief of a tax office having jurisdiction over the seat of the place of business within such time limit as determined by the Presidential Decree: Provided, That the importer in receipt of an issuance of account statements under the provisions of paragraph (3) may not submit the table of total account statement by seller. <Amended by Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6557, Dec. 31, 2001; Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>(6) The portion in which a tax invoice or a receipt is prepared and delivered or a table of sum of tax invoices by buyer and seller is submitted under the Value-Added Tax Act, shall be considered as the portion in which an account statement, etc. has been prepared and delivered or a table of total account statements by buyer and seller has been submitted pursuant to the provisions of paragraphs (1) through (3) and (5). <Amended by Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6557, Dec. 31, 2001; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(7) Matters necessary for the preparation and delivery of an account statement, etc. and the submission of a table of total account statements by buyer and seller, shall be determined by the Presidential Decree. <Amended by Act No. 5580, Dec. 28, 1998>

(1) Any businessman who has to file a report on present situation of the business place under the provisions of Article 78 (1) shall, when he is issued an tax invoice under the provisions of Article 16 (1) and (3) of the Value-Added Tax Act after having been supplied goods or services, submit a table of sum of tax invoices by seller to the chief of a tax office having jurisdiction over the place of tax payment within 31 days from the end of the corresponding taxable period (for a business operator referred to in Article 78 (1) 1, it refers to the time limit for the final return of tax base under the provisions of Article 74): Provided, That the same shall not apply when he has submitted pursuant to Article 20 (4) of the Value-Added Tax Act.(2) Matters necessary for the submission, etc. of a table of sum of tax invoices by seller shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

(1) A person who pays an amount falling under any of the following subparagraphs in Korea to an individual liable for the payment of income tax under the provisions of Article 1 (including a corporation, a person who makes a vicarious payment of income amount or who is delegated or entrusted with the payment thereof under the provisions of Article 127 (6), a tax association under the provisions of Article 150, a person for whom the address of main office or principal office is the place of withholding tax payment under Article 7 of this Act or Article 9 of the Corporation Tax Act, and a business proprietor qualified for consolidated return under Article 4 of the Value-Added Tax Act), shall submit a payment record to the chief of a tax office having jurisdiction over the place of withholding tax payment, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service under conditions prescribed by Presidential Decree by not later than the end of February (March 10 of the following year in cases of earned income under subparagraph 4, and end of the month after next of the month to which the date of suspension or closure belongs in cases where business has been suspended or closed) of the year following the year to which the day of payment belongs (with respect to the income falling under Article 73 (1) 5 as prescribed by Presidential Decree and the income subject to the application of Articles 135 (2) and (3) and 147 (2) through (4), referring to the last day of the taxable year for the relevant income amount; hereafter the same shall apply in this paragraph): Provided, That for any earned income of a daily-paid worker prescribed by Presidential Decree from among earned incomes under subparagraph 4, a payment record shall be submitted by not later than the end of the month following the last month of the quarter to which the payment date thereof belongs (referring to the end of February of next year for the earned income paid in the 4th quarter): <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5580, Dec. 28, 1998; Act No. 6051, Dec. 28, 1999; Act No. 6292, Dec. 29, 2000; Act No. 7006, Dec. 30, 2003; Act No. 7319, Dec. 31, 2004; Act No. 7837, Dec. 31, 2005; Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. Interest income;2. Dividend income;3. Proceeds accruing from such business as prescribed by Presidential Decree;4. Earned income or retirement income;4-2. Annuity income;5. Miscellaneous incomes (not including service charges under subparagraph 7);6. Deleted; <by Act No. 6292, Dec. 29, 2000>7. Service charges determined by Presidential Decree; and8. Gain from long-term savings insurances prescribed by the Presidential Decree.(2) The provisions of paragraph (1) may not apply to such income as determined by Presidential Decree from among those as referred to in any subparagraphs of paragraph (1).(3) Any person liable for filing a payment record under paragraph (1) shall either send the matters to be entered on the payment record through the information and communications network under the provisions of subparagraph 18 of Article 2 of the Basic Act for National Taxes, or put them on a magnetic tape or diskette processed by a computer and submit it. In this case, any person who pays the income prescribed by Presidential Decree from among the incomes falling under each subparagraph of paragraph (1) may submit a payment record thereof by means as prescribed by Presidential Decree, such as the issuing equipment of cash receipts under the provisions of Article 126-3 of the Special Tax Treatment Control Act. <Amended by Act No. 7006, Dec. 30, 2003; Act No. 7837, Dec. 31, 2005; Act No. 8825, Dec. 31, 2007>(4) Notwithstanding the provisions of paragraph (3), the Commissioner of the National Tax Service may allow the person, operating the business of a specific type or the business whose scale is smaller than a specific scale to file a payment record in writing in accordance with the Presidential Decree. <Amended by Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007>(5) Deleted. <by Act No. 5031, Dec. 29, 1995>(6) Where a portion of related documents concerning the tax withholding, filed by a withholding agent under Presidential Decree, corresponds to a payment record, the payment record corresponding to the portion shall be considered to have been filed. <Amended by Act No. 8825, Dec. 31, 2007>(7) Where a portion of the table of total account statements by buyer and seller, filed under Article 163 (2) with the chief of a tax office having jurisdiction over the business place, and the table of total tax invoices by buyer and seller, filed under the Value-Added Tax Act with the chief of a tax office having jurisdiction over the seat of the place of business corresponds to a payment record, the payment record corresponding to the portion shall be considered to have been filed. <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(8) The chief of a tax office having jurisdiction over the place of withholding tax payment, the Commissioner of the competent Regional Tax Office, the Commissioner of the National Tax Service, may demand a payment record whenever he deems it necessary. <Amended by Act No. 8825, Dec. 31, 2007>(9) Any act of the person acting for the payer as referred to in paragraph (1) or the person authorized by him, shall be considered as the act of the person himself or the mandator in the limit of the authorization or mandate, and the provisions of paragraph (1) shall apply to it.(10) Where the Commissioner of the National Tax Service has received a payment record for miscellaneous income prescribed by the Presidential Decree from among miscellaneous incomes under the provisions of paragraph (1) 5, he shall provide the contents thereof to the person liable to pay a tax on the relevant miscellaneous income amount by using the national tax information and communications network under the provisions of subparagraph 19 of Article 2 of the Basic Act for National Taxes under the conditions as prescribed by the Presidential Decree. <Newly Inserted by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007>(11) Other matters necessary for the submission of the payment record as referred to in paragraphs (1) through (9), shall be determined by the Presidential Decree. <Amended by Act No. 8825, Dec. 31, 2007>

(1) Any person who pays a domestic source income under Article 119 to a nonresident shall submit a payment record to the chief of a tax office having jurisdiction over the place of tax payment, not later than the end of February (the end of two months following the month to which the date of suspension or closure belongs in case where the business is suspended or closed) of the year following the year to which the date of such payment belongs: Provided, That this shall not apply to the case where the income prescribed by the Presidential Decree, such as the income which is verified under Article 156-2 as being subject to a non-taxation or tax exemption, is paid. <Amended by Act No. 6557, Dec. 31, 2001; Act No. 7006, Dec. 30, 2003; Act No. 8825, Dec. 31, 2007>(2) The provisions of Article 164 shall apply mutatis mutandis to the submission of payment records pursuant to paragraph (1). <Amended by Act No. 8825, Dec. 31, 2007>[This Article Newly Inserted by Act No. 6292, Dec. 29, 2000]

(1) Any person issuing supporting documents required for the income deduction as prescribed by the Presidential Decree (hereinafter referred to as “supporting documents for income deduction”) from among the income deduction under this Act or the Special Tax Treatment Control Act shall submit the supporting documents for income deduction to the Commissioner of the National Tax Service under the conditions as prescribed by the Presidential Decree such as the utilization of information and communications networks: Provided, That the same shall not apply to the cases as prescribed by the Presidential Decree, such as the person being issued supporting documents for income deduction refuses to submit the supporting documents.(2) Any person who has been issued the supporting documents for income deduction under the provisions of paragraph (1) shall not provide them to other persons or divulge them, or use them for other purposes than taxation purposes.(3) Any person, other than the public officials, who has been issued supporting documents for income deduction under the provisions of paragraph (1) shall be regarded as the public official in applying the penal provisions under the Criminal Act or other Acts.(4) The Commissioner of the National Tax Service may guide any person issuing supporting documents for income deduction to submit the supporting documents for income deduction to himself.(5) Matters necessary for the guidance under the provisions of paragraph (4) shall be prescribed by the Presidential Decree.(6) Where the Commissioner of the National Tax Service has obtained approval of the person subject to the basic deduction on the supply of information on the supporting documents for income deduction by a method prescribed by Presidential Decree, such as in writing, he may supply the relevant information on the dependant family to the resident having global income under Article 50 (1). <Newly Inserted by Act No. 9270, Dec. 26, 2008>[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

For the purpose of efficiently dealing with the affairs concerning the assessment and collection of any income tax, the matters necessary for the use of the computer processing information data on resident registration as prescribed by the Resident Registration Act, shall be determined by Presidential Decree. <Amended by Act No. 8144, Dec. 30, 2006>

(1) When a resident files a final return on tax base, the chief of a tax office having jurisdiction over the place of tax payment shall confirm his resident registration (a certificate of family relation, when his family relation cannot be proved by a certified copy of resident registration; hereafter referred to as “resident registration, etc.” in this Article) via information systems and review his family members’ eligibility for the spouse, a dependent subject to the income deduction, a handicapped person subject to deduction or a senior subject to deduction: Provided, That if a resident does not agree with such confirmation via information systems by the chief of a tax office having jurisdiction over the place of tax payment shall submit a certified copy of his resident registration along with his final return on tax base, however he may not submit a certified copy of his resident registration, if he submitted a certified copy of his resident registration before, and he does not have any changes in his family members’ eligibility for the spouse, a dependent subject to the income deduction, a handicapped person subject to deduction or a senior subject to deduction. <Amended by Act No. 8825, Dec. 31, 2007>(2) If a nonresident makes a final return on tax base, he shall submit a certified copy of his foreigner registration card or any documents corresponding thereto, to the chief of a tax office having jurisdiction over the place of tax payment, under conditions prescribed by Presidential Decree.

(1) Any business proprietor who starts a new business, shall register it with the chief of a tax office having jurisdiction over the seat of the business place. <Amended by Act No. 6051, Dec. 28, 1999>(2) Any business proprietor who has made the registration of business under the Value-Added Tax Act, shall be considered to have made the registration as referred to in paragraph (1) with respect to the relevant business. <Amended by Act No. 8144, Dec. 30, 2006>(3) The provisions of Article 5 of the Value-Added Tax Act shall apply mutatis mutandis to any business proprietor who makes the registration of business under this Act. <Amended by Act No. 8144, Dec. 30, 2006>(4) Deleted. <by Act No. 5191, Dec. 30, 1996>(5) The chief of a tax office, having jurisdiction over the place of a business, an association or a foundation, other than organizations considered as corporations, or other organizations, may assign a taxpayer code number as prescribed by Presidential Decree, to a person falling under any of the following subparagraphs: <Amended by Act No. 8825, Dec. 31, 2007>1. A person who have global income, but not a business proprietor; and2. A person who is deemed necessary for efficient process of tax information, and post-factum inspection on income deduction of organizations registered under the Assistance for Non-profit, Non-governmental Organizations Act.(6) Deleted. <by Act No. 6292, Dec. 29, 2000>

The Commissioner of the National Tax Service shall pay the grant to any person who has collected and paid the income tax under Article 150, as prescribed by Presidential Decree.

Any public official who is engaged in the businesses concerning the income tax may, if it is necessary for conducting such businesses, put forward any question to the person falling under any of the following subparagraphs, or investigate any books, documents, and other things, or order him to present them: <Amended by Act No. 8144, Dec. 30, 2006; Act No. 8825, Dec. 31, 2007; Act No. 9270, Dec. 26, 2008>1. A person liable to pay a tax or a person who is deemed liable to pay a tax;2. A withholding agent;3. A tax association;4. A person liable to submit payment records;5. A withholding agent as prescribed in Articles 156 and 156-3 through 156-5;6. A tax manager as prescribed in Article 82 of the Basic Act for National Taxes;7. A person who is deemed to make any transaction with the person as referred to in subparagraph 1;8. A trade association organized by persons liable to pay taxes and an organization similar thereto; and9. An issuer of donation receipts.

If it is required for the return, determination, reassessment or investigation on the income tax, the chief of a tax office, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service may consult the matters concerning the income tax, with a trade association organized by business proprietors and an organization similar thereto, or any person who is well informed of the circumstances as to such business.

Where the chief of the competent tax office or the Commissioner of the competent Regional Tax Office, or tax official entrusted by him requests the perusal or reproduction of related documents on the data falling under each of the following subparagraphs in order to ascertain the property and income of any individual, the related agencies shall comply with it unless they have any justifiable grounds to the contrary: <Amended by Act No. 8825, Dec. 31, 2007>1. Data on the sale, entry, registration of house, land, factory foundation, mining industry foundation, ship, aircraft, construction machinery, automobile, etc.;2. Data on the income, assets and allowances of beneficiaries, etc. under the National Basic Living Security Act;3. Data on the income, assets and allowances of subscribers, etc. under the National Pension Act;4. Data on the income, assets and medical care expenses of subscribers, etc. under the National Health Insurance Act;5. Data on the wages and allowances of the insured, etc. under the Employment Insurance Act;6. Data on the wages and allowances of beneficiaries, etc. under the Industrial Accident Compensation Insurance Act; and7. Data prescribed by Presidential Decree which are similar to the data under subparagraphs 1 through 6.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

(1) Any persons prescribed by Presidential Decree who is the individual liable to pay an income tax under Article 1, such as the persons, etc. providing the business places related to the provision of services to the persons who provide services as prescribed by Presidential Decree (hereafter in this Article, referred to as the “service provider”) such as driving by proxy, parcel delivery, etc. under the Korea Standard Industrial Classification, shall faithfully prepare the taxation data on the service providers, and submit them to the chief of a tax office having jurisdiction over the seat of the place of business, the Commissioner of the competent Regional Tax Office, or the Commissioner of the National Tax Service by the end of February of the year following the year during which incomes accrue.(2) The Commissioner of the National Tax Service may guide the persons liable to submit the taxation data under the provisions of paragraph (1), so as to have them faithfully submit them.(3) Matters necessary for the preparation methods, etc. of the taxation data under the provisions of paragraph (1) shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 7837, Dec. 31, 2005]

When any nonlife insurance company under the Insurance Business Act (hereafter in this Article referred to as the “nonlife insurance company”) has paid insurance money as the result of a lawsuit, it shall submit the material of the relevant payment of insurance money against loss as prescribed by Presidential Decree to the chief of a tax office having jurisdiction over the nonlife insurance company not later than the end of February of the year next to the year to which the day of payment belongs.[This Article Newly Inserted by Act No. 8144, Dec. 30, 2006]

(1) The chief of tax office having the jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall conduct a sample survey within two years from the last day of the corresponding taxation period, to examine appropriateness of calculation of necessary expenses or income deduction, for persons who used donation in calculation or received donation reduction.(2) A sample survey shall be conducted to the number of people corresponding to the ration prescribed by Presidential Decree.(3) Necessary matters for methods and procedures for a sample survey shall be prescribed by Presidential Decree.[This Article Newly Inserted by Act No. 8825, Dec. 31, 2007]

ADDENDA

(1) This Act shall enter into force on January 1, 1996: Provided, That Articles 17 (2) (referring to the revised provisions of the previous Article 26 (1)), 32 (1) (referring to the revised provisions of the previous Article 39 (1)), 47 (1) (referring to the revised provisions of the previous Article 61 (1)), 69 (1) (referring to the revised provisions of the previous Article 90 (1)), 84 (referring to the revised provisions of the previous Article 130), 99 (referring to the revised provisions of the previous Article 60), 105 (1) (referring to the revised provisions of the previous Article 95 (1)), 163 (referring to the revised provisions of the previous Article 189), 164 (7) (referring to the revised provisions of the previous Article 193 (6)) and 166 (referring to the revised provisions of the previous Article 195) shall enter into force on January 1, 1995, and the provisions of Article 16 (1) 11, on January 1, 1999, respectively.(2) The provisions of Article 47 (1) (referring to the revised provisions of the previous Article 61 (1)) shall enter into force on January 1, 1995, but the following amount shall be deducted from any earned income accruing from January 1, 1995 to December 31, 1995, regardless of the provisions of Article 47 (1). In this case, if the amount of deduction exceeds 6,900,000 won, 6,900,000 won shall be deducted: <Amount of Wage>
<Amount of Deduction>
3,100,000 or less won
Amount of wage
Over 3,100,000 won

3,100,000 won + 30/100 of the amount exceeding 3,100,000 won

This Act shall apply to the portion of income accruing for the first time after this Act enters into force: Provided, That the provisions of Article 69 (1) (referring to the revised provisions of the previous Article 90 (1)) shall apply to the portion to be sold for the first time after January 1, 1995.

The provisions of this Act concerning transfer income shall apply to the portion to be transferred for the first time after the corresponding Articles enter into force.

The provisions of Article 16 (1) 11 shall apply to the portion to be paid after joining the workplace mutual aid association, for the first time after January 1, 1999.

The provisions of Articles 24 through 36, 38 through 45, 57, 70 (4) (subparagraphs 3 and 4), 78 through 80, 81 (1), (2) and (6), 85 and 160 shall apply to those the return term of which arrives for the first time after January 1, 1996.

The provisions of Article 52 (1) 5 shall apply to the amount of savings paid for the first time after January 1, 1996, or to the repayment of principal and interest of the loan borrowed to acquire or rent a house after January 1, 1996: Provided, That for a person who is to benefit from the tax credit on the housing funds repayment as prescribed in Article 6 of the previous Act on the Assistance to Residential Stability and Lump Sum-Raising Savings of Workers, on January 1, 1996, even with respect to any loan for the house acquired or rented before December 31, 1995, the provisions of item (b) of the said subparagraph shall apply to from the amount of repayment made for the first time after January 1, 1996.

The provisions of Article 129 (1) and (2) shall apply to from the payment of any income accruing for the first time after January 1, 1996.

Any assets as prescribed in subparagraph 1 of Article 94 and acquired before December 31, 1984, shall be considered to have been acquired in January 1, 1985, and the assets as prescribed in subparagraphs 2 through 5 of the said Article and as prescribed by the Presidential Decree, shall be considered to have been acquired on such day as determined by the Presidential Decree.[This Article Wholly Amended by Act No. 5031, Dec. 29, 1995]

Income tax shall not be levied on any interest accruing from the following bonds or savings:1. National housing bonds issued by the Housing and Commercial Bank under the Housing Construction Promotion Act before January 1, 1982;2. Bonds issued before January 1, 1983, and falling under any of the following items:(a) Industrial reconstruction bonds issued by the Government under the previous Industrial Reconstruction Bonds Act;(b) Requisition compensation bonds issued by the Government under the Act on Special Measures for Readjustment of Requisitioned Properties;(c) Telegraph and telephone bonds issued by the Government under the previous Provisional Measures Act Incidental to Expansion of Communication Facilities;(d) National housing bonds issued by the Government under the Housing Construction Promotion Act;(e) Subway bonds, road bonds and waterworks bonds issued by the local governments under the Local Finance Act; and(f) Land development bonds issued by the Korea Land Corporation under the Korea Land Corporation Act; and3. Interest accruing from any savings in the National Savings Association before January 1, 1991.

The tax rate for collection through withholding of any income tax on January 1, 1991 on the interest and dividend incomes accruing before January 1, 1991, and the defense and education taxes as prescribed by the Defense Tax Act and the Education Tax Act before December 31, 1990, which are not paid, shall be subject to the conditions as prescribed in Article 16 of the Addenda of the Act No. 4281 (Amendment of the Income Tax Act).

Any income tax assessed or to be assessed pursuant to the previous provisions before the corresponding Articles of this Act enter into force, shall be governed by the previous provisions.

In case where other Acts and subordinate statutes cite the provisions of the previous Income Tax Act on January 1, 1996, if this Act includes the provisions corresponding to them, the corresponding provisions of this Act shall be considered to be cited in lieu of the previous ones.

ADDENDA <Act No. 5031, Dec. 29, 1995>

This Act shall enter into force on January 1, 1996: Provided, That the revised provisions of Articles 17, 56 (1) and 165, and 8 of the Addenda of the Act (Act No. 4803) shall enter into force on January 1, 1997, and those of subparagraph 4-2 of Article 12 and Article 20-2 (1) 1, on January 1, 2004, respectively. <Amended by Act No. 5424, Dec. 13, 1997; Act No. 6292, Dec. 29, 2000>

This Act shall apply to the income portion accruing for the first time after this Act enters into force.

The revised provisions of Article 4 (1) 1, subparagraph 4-2 of Article 12, and Article 20-2, shall apply to from the income portion accruing for the first time after the respective Article enters into force.

The revised provisions of Article 13 shall apply to the portion the tax base of which is returned, or the portion of pay received for furnishing any labor, for the first time after this Act enters into force.

(1) The revised provisions of Article 46 shall apply to the portion the interest, etc. of which is paid, or which is transferred to a corporation, for the first time after this Act enters into force.(2) With respect to the bonds, etc. issued before this Act enters into force, and the interest, etc. of which is paid, or which are sold to a corporation, for the first time after the enforcement of this Act, the provisions of Article 46 shall apply even to the amount equivalent to the interest accruing from the issue date of such bonds, etc. or the immediately preceding withholding day, to December 31, 1995, deeming that the interest income is reverted to the person who receives the interest, etc., but the calculation of the tax amount at the time of withholding shall be subject to the previous provisions.

The revised provisions of Article 46-2 shall apply to the portion of the interest income accruing for the first time after this Act enters into force, which is reduced by a termination before maturity.

The revised provisions of Article 86 shall apply to the portion the withholding time of which arrives for the first time after this Act enter into force.

(1) The provisions of this Act concerning transfer income shall apply to the portion transferred for the first time after the respective Article enters into force: Provided, That the revised provision of Article 165 shall apply the portion entering into the real estate transfer contract (referred to as the date causing registration entered on the register) for the first time after January 1, 1997. <Amended by Act No. 5191, Dec. 30, 1996>(2) The revised provisions of Article 112-2 shall apply to the portion the payment term of which arrives for the first time after this Act enters into force.(3) The revised provisions of Article 8 of the Addenda of the Act (Act No. 4803) shall apply to the portion transferred for the first time after January 1, 1997.

The revised provisions of subparagraph 1 of Article 119 shall apply to from the portion of the income accruing and paid for the first time after this Act enters into force.

The revised provisions of Article 127 (6) shall apply to the portion of the income accruing and paid for the first time after this Act enters into force.

The revised provisions of Article 164 (1) shall apply to the portion of the income accruing and paid for the first time after this Act enters into force.

The revised provisions of Article 165 shall apply to the portion transferred for the first time after January 1, 1997.

ADDENDA <Act No. 5108, Dec. 29, 1995>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 5155, Aug. 14, 1996>

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

This Act shall apply to the taxable period on which the enforcement date of this Act falls.

(1) When the tax amount on employment income for the year 1996 was settled in the year-end accounts or the tax amount on the retirement income was withheld under the previous provisions due to the retirement taken place before the enforcement of this Act, and such-tax amount exceeds the amount to be determined under the revised provisions of this Act, the refunded thereof may be made by the report of determined tax base under Article 70 or 71.(2) Application for refund under paragraph (1) or other necessary matters shall be determined by the Presidential Decree.

ADDENDA <Act No. 5191, Dec. 30, 1996>

This Act shall enter into force on January 1, 1997.

This Act shall apply to the portion of income accruing for the first time after this Act enters into force.

The revised provisions of Article 14 shall apply to the portion the return period, of which arrives for the first time after this Act enters into force.

The revised provisions of Articles 81 and 163 shall apply to the statement of accounts on the portion of goods and services to supply or to be supplied for the first time after this Act enters into force.

(1) The provisions concerning the transfer income in this Act shall apply to the portion transferred for the first time after this Act enters into force.(2) The revised provisions of Articles 95 (4) (proviso), 97 (4) and (6), 101 (2) and 104 (2) (proviso) shall apply to the portion which is donated by a spouse and is transferred for the first time after this Act enters into force.(3) The revised provisions of Article 112-2 shall apply to the portion the payable period of which arrives for the first time after this Act enters into force.

The revised provisions of subparagraph 11 of Article 119 shall apply to from the portion of income paid for the first time after this Act enters into force.

ADDENDA <Act No. 5193, Dec. 30, 1996>

This Act shall enter into force on January 1, 1997.

ADDENDA <Act No. 5259, Jan. 13, 1997>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 5291, Jan. 13, 1997>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 5374, Aug. 28, 1997>

This Act shall enter into force on January 1, 1998.

ADDENDA <Act No. 5424, Dec. 13, 1997>(1) (Enforcement Date) This Act shall enter into force on January 1, 1998.(2) (Examples of Application to Special Deduction) The amended provisions of Article 52 shall apply to the portion paid for infant caring fee for the first time after this Act enters into force.ADDENDA <Act No. 5493, Dec. 31, 1997>

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

ADDENDA <Act No. 5503, Jan. 13, 1998>

This Act shall enter into force on April 1, 1998. (Proviso Omitted.)

ADDENDA <Act No. 5532, Apr. 10, 1998>(1) (Enforcement Date) This Act shall enter into force on the first day of the month following the month which includes the day of promulgation.(2) (Application Example regarding Special Repair Appropriation Fund) The amended provisions of Article 30 shall apply to the portion calculated as necessary expense in the taxable year which terminates on or after the date of enforcement of this Act.(3) (Application Example regarding Tax Imposed by Withholding) The amended provisions of Article 129 shall apply to the portion of income which is paid on or after the date of enforcement of this Act.(4) (Transitional Measures) If there is special repair appropriation fund calculated under Article 30 of the previous Act at the entry into force of this Act, it shall be offset with the cost for special repair or be counted into the total income amount.ADDENDA <Act No. 5552, Sep. 16, 1998>

This Act shall enter into force on the first day of the month following the month in which is included the day of the promulgation of this Act.

(1) The amended provisions of Article 62 (1) 1 (a) (ⅱ) shall apply starting from the taxable period in which is included the enforcement date of this Act.(2) The amended provisions of Article 129 shall apply to the portion of income which is paid on or after the date of enforcement of this Act: Provided, That for bonds under Article 46 (1), the said Article shall apply to the bonds issued on or after the date of enforcement of this Act.

(1) The amended provisions of the Special Tax Law for Rural Development as prescribed in Article 3 (1) of these Addenda shall apply to the portion of income accruing on or after the date of enforcement of this Act: Provided, That concerning the bonds under Article 46 (1), it shall apply to the portion issued on or after the date of enforcement of this Act.(2) The amended provisions of the Act on Real Name Financial Transactions and Guarantee of Secrecy as prescribed in Article 3 (2) of these Addenda shall apply to the portion of income paid on or after the enforcement of this Act: Provided, That for bonds under Article 46 (1), it shall apply to the portion issued on or after the date of enforcement of this Act.

ADDENDA <Act No. 5559, Sep. 16, 1998>

This Act shall enter into force two months after the date of its promulgation.

ADDENDA <Act No. 5580, Dec. 28, 1998>

This Act shall enter into force on January 1, 1999: Provided, That the amended provisions of Articles 17 (2) (limited to the part concerning division), 40 (3) 3 and 48 (1) 1 shall enter into force on the date of its promulgation, whereas the amended provisions of Article 81 (8) through (10) shall enter into force on January 1, 2000, and the amended provisions of Articles 163 (2) and 165 (1), (2), and (5) shall enter into force on July 1, 1999.

This Act shall apply to all income proportions accruing on or after the entry into force of this Act: Provided, That the amended provisions of Articles 17 (2) (limited to the part concerning division), 40 (3) 3 and 48 (1) 1 shall enter into force on or after the taxable period which includes the date of the enforcement of this Act, and the amended provisions of Article 82 (1) 3 shall apply from the portion where application for occasional assessment is made on or after the enforcement date of this Act.

The amendments regarding transfer income in this Act, shall apply to the portion which includes the transfer on or after the enforcement date of this Act.

(1) The amended provisions of Article 17 (2) 2 shall apply to the portion which is capitalized on or after the entry into force of this Act: Provided, That the amended provisions of item (a) of the said subparagraph (limited to the marginal gain accruing from evaluation of corporations undergoing merger or that from evaluation of dividing companies) shall apply to the portions accruing from the merger on or after the entry into force of this Act or the division during the taxable period which includes the date of enforcement of this Act which have been capitalized.(2) The amended provisions of Article 17 (2) 6 shall apply to the portion which divides during and after the taxable period in which is included the enforcement date of this Act.

The amended provisions of Articles 126 (3) and 156 (1) 4 shall apply to the portion which includes the transfer on or after the enforcement date of this Act.

The amended provisions of Article 163 (2) shall apply to the portion of goods supplied on or after July 1, 1999.

(1) In the application of Article 35 (1) 3, if the taxable period terminates before December 31, 1999 from the enforcement date of this Act, the application ratio shall be as follows notwithstanding the amended chart in the said subparagraph: (Income Amount)
(Application Ratio)
Under 10 billion won
30/10,000
Over 10 billion won Under 50 billion won
30 million won + 15/10,000 of an amount exceeding 10 billion won
Over 50 billion won
90 million won + 4/10,000 of an amount exceeding 50 billion won
(2) In the application of Article 35 (2) and (4), during the taxable periods which terminate before Dec. 31, 1999 after the entry into force of this Act, the portion of secret expense under the previous provisions of the proviso of Article 35 (3), within the limit of the amount equivalent to 10/100 of the total amount calculated under the amended provisions of Article 35 (1), shall be deemed as entertainment expense, and the amended provisions of Article 35 (2) shall not apply thereto.

(1) In the application of the amended provisions of Article 48 (1) 1, if a taxpayer was imposed the withholding tax on the retirement income tax amount for the year 1998 of a resident where previous provisions were applied due to his retirement prior to the entry into force of this Act, and the tax amount concerned exceeds the amount of tax to be paid under the amended provisions of this Act, the tax payer may be refunded the amount that was overpaid by making a final return on tax base pursuant to Article 71.(2) Matters necessary for the request of refund under paragraph (1) shall be determined by the Presidential Decree.

ADDENDA <Act No. 5994, Aug. 31, 1999>(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.(2) (General Application Example) This act shall apply from the part of taxable period whereto the enforcement date of this Act belongs.(3) (Application Example to Transfer Report of Real Estate) The amended provisions of Article 165 (2) shall apply from the part of transfer for the first time since July 1, 1999.ADDENDA <Act No. 6051, Dec. 28, 1999>

This Act shall enter into force on January 1, 2000: Provided, That the amendment provisions of Articles 14, 62 and 129, and the amended provisons of Article 12 of the Addenda of Act No. 5493, the Act on Real Name Financial Transactions and Guarantee of Secrecy under the provisions of Article 6 (2) of the Addenda shall enter into force on January 1, 2001, and the amended provisions of Articles 81 (1) and 87 (2) shall enter into force on the date of its promulgation.

This Act shall apply to the portion of the income which accrues for the first time after its enforcement: Provided, That the amended provisions of Articles 14, 62 and 129, and the provisions of Article 12 of the Addenda of the Act No. 5493, the Act on Real Name Financial Transactions and Guarantee of Secrecy under the provisons of Article 6 (2) of the Addenda shall apply to the portion of incomes which accrues and is paid for the first time after January 1, 2001, and the amended provisions of Articles 81 (1) and 87 (2) shall apply to the portion of the first taxable period belonging to the date on which this Act is promulgated.

With regard to long-term bonds under Article 62 (5) which carry a period of not less than 10 years from the date of issuance to the date of final redemption, in the case where a resident, who is to be paid with interest and discount amount, which accrue before December 31, 2000, after January 1, 2001, files an application for the separate taxation on the interest income from the long-term bonds to the superintendent of the competent district tax office pursuant to Article 62 (5), the tax rate of 25/100 shall apply to the interest and discount amount which accrue before December 31, 2000.

In applying the amended provisions of (c) of Article 129 (1), the withholding tax rate on the interest income amount falling under each of the following subparagraphs shall be 20/100 notwithstanding the said provisions:1. The income accruing from January 1 to December 31, 2000: Provided, That the income paid before December 31, 1999 shall be excluded; and2. The income paid from January 1 to December 31, 2000, which accrues after January 1, 2001.

(1) The provisions concerning the transfer income tax in this Act shall apply to the portion of transfer for the first time after the enforcement of this Act.(2) The amended provisions of Article 99 (1) 1 (b) and (3) shall apply to the portion transferred for the first time after January 1, 2001: Provided, That with regard to assets falling under Article 99 (1) 1 (b), the calculation of a standard market price for the portion of such assets transferred from January 1 to December 31, 2000 shall be dealt with according to the previous previsions.

The amended provisions of the Special Tax Law for Rural Development under the provisions of Article 6 (1) of the Addenda and the amended provisions of Article 5 of the Act on Real Name Financial Transactions and Guarantee of Secrecy under Article 6 (2) of these Addenda shall apply to the portion of income accruing for the first time after the enforcement of this Act. In this case, the tax rate (15/100 respectively) to be applied after January 1, 2001 shall apply to the portion of income which accrues and is paid after January 1, 2001.

ADDENDA <Act No. 6124, Jan. 12, 2000>

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

ADDENDA <Act No. 6276, Oct. 23, 2000>(1) (Enforcement Date) This Act shall enter into force on the first of the month following the month to which the date of its promulgation belongs.(2) (General Application Example) This Act shall apply to starting with the portion paid after the enforcement of this Act: Provided, That the provisions concerning contributions and the amended provisions of Article 52 (1) 6 from among the amended provisions of Articles 34 (1) through (3) and 52 (6) through (9) shall apply to starting with the portion paid in the taxable year to which the date on which this Act enters into force belongs.(3) (Transitional Measures concerning Tax Credit Applied to Interest Redemption of Housing Lease Funds, etc.) The previous provisions of Article 52 (1) 5 shall apply to any resident who earns a employment income and is subject to the application of the previous provisions of Article 52 (1) 5 at the time that this Act enters into force by the end of the taxable year to which the date of December 31, 2005 belongs and in the application of the annual limit of income deduction amount, “1.8 million won” per year described in the main sentence of Article 52 (1) 5 shall be deemed “3 million won” per year. In this case, when a resident who earns employment income becomes subject to the application of the amended provisions of Article 52 (2) through (5), he may make himself subject to such application at his choice in each taxable year.ADDENDA <Act No. 6292, Dec. 29, 2000>

This Act shall enter into force on January 1, 2001: Provided, That the amended provisions of subparagraph 4 (m) of Article 12, Article 35 (2), Article 52 (1) 4 and (12), Article 126-2 shall enter into force on the date of its promulgation, while the amended provisions of Articles 46 and 130 shall enter into force on July 1, 2001, the amended provisions of Article 48 (1) 1, on January 1, 2002, the amended provisions of Articles 80 (2) 2, 81 (5), 164 (1) 6 and 164-2, on July 1, 2002, the amended provisions of subparagraph 2 of Article 15, Article 59-2, Article 146 (1) and Article 148, on January 1, 2003, and the amended provisions of Article 20-3 (1) 3, on January 1, 2005, respectively. <Amended by Act No. 6557, Dec. 31, 2001>

This Act shall apply starting with the income that first accrues after the enforcement of this Act.

The provisions on transfer income tax in this Act shall apply starting with the portion that is first transferred after the enforcement of this Act.

The amended provisions of Article 7 (1) 4 shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of Article 17 (4) shall apply starting with stock retirement, reduction of equity capital, corporate dissolution, merger or division that is first effected after the enforcement of this Act.

The amended provisions of Article 20-3 (1) 3 shall apply starting with the retirement annuity that is first paid after the enforcement of this Act.

The amended provisions of Article 35 (5) shall apply starting with the portion that is first disbursed after the enforcement of this Act.

The amended provisions of Article 46 shall apply starting with the portion of interest, etc. from bonds, etc. that is first received or with the portion of bonds, etc. that are first sold after the enforcement of this Act: Provided, That the previous provisions of the same Article shall apply till the date when interest, etc. from bonds, etc. is first paid after this Act enters into force where the period for computing the interest on bonds, etc. issued before the enforcement of this Act spans over the periods before and after the enforcement of this Act.

(1) In applying the amended provisions of Article 51-3, 50/100 of the insurance premium paid within the relevant period of time shall be deducted if such premium is paid from January 1, 2001 to December 31, 2001.(2) In applying the amended provisions of Article 51-3, the retroactive contributions or retroactive charges 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 shall be excluded from the annuity premiums subject to deduction. <Newly Inserted by Act No. 6557, Dec. 31, 2001>

The amended provisions of Article 52 (1) 2-2 and 3 shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of subparagraph 4 (m) of Article 12, Article 35 (2), and Article 52 (1) 4 and (12) shall apply starting with the portion that is paid or disbursed in the tax period where the promulgation date of this Act belongs.

The amended provisions of Articles 65 through 67 shall apply starting with the portion of interim prepaid tax in the interim prepayment period that first commences after the enforcement of this Act.

(1) The amended provisions of subparagraphs 9 and 12 of Article 119, the proviso of Article 126 (1), and the proviso of Article 156 (1) 4 shall apply starting with the portion that is first transferred after the enforcement of this Act.(2) The amended provisions of subparagraph 13 of Article 119 and Article 156 (7) and (8) shall apply starting with the portion of income that is first accrued after the enforcement of this Act.

The amended provisions of Article 126-2 shall apply starting with the portion that first satisfies the criteria for taxation under tax treaties after the promulgation date of this Act.

The amended provisions of Article 164 (excluding paragraph (1) 6 of the same Article) shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of Article 80 (2) 2, Article 81 (5), Article 164 (1) 6, and Article 164-2 shall apply starting with the portion that is first paid after the enforcement of this Act.

In applying the amended provisions of subparagraph 2 of Article 15, Article 59-2, Article 146 (1), and Article 148, the previous provisions shall apply to the tax period that ends in the period from January 1, 2003 to December 31, 2004, notwithstanding the amended provisions. “50/ 100” and “240,000 won” in the previous provisions of Article 59-2 shall read “25/100” and “120,000 won,” respectively for such transitional application.

Income tax shall not be imposed on income other than the taxable income under the amended provisions of Article 20-3 or 22 among annuities or lump sum retirement payments received under the National Pension Act, the Public Officials Pension Act, the Veterans’ Pension Act, the Pension for Private School Teachers and Staff Act, or the Special Post Offices Act on or after January 1, 2002.

The former provisions shall apply to income received for retirement on or before December 31, 2004 among the income corresponding to annuity income under the amended provisions of Article 20-3 (1) 3 by treating such income as subject to the former provisions of Article 22.

ADDENDA <Act No. 6429, Mar. 28, 2001>

This Act shall enter into force on a date which is determined by Presidential Decree, within two years of the date of its promulgation. (Proviso Omitted.)

ADDENDA <Act No. 6557, Dec. 31, 2001>

This Act shall enter into force on January 1, 2002: Provided, That the amended provisions of Articles 14 (3), 25 (1), 51-3 (4), and 81 (8) shall enter into force on the date of its promulgation, and the amended provisions of Articles 156-2, 164-2 (1), and 165, on July 1, 2002.

The amended provisions of Article 158 (4) shall apply only to the portion of income that is paid until December 31, 2002.

This Act shall apply starting with the portion of income that is first accrued after this Act enters into force.

The amended provisions concerning transfer income tax in this Act shall apply starting with the portion that is first transferred after this Act enters into force.

The amended provisions of Article 7 (1) 4 shall apply starting with the portion that is first paid after this Act enters into force.

The amended provisions of Article 14 (3) shall apply starting with the portion of income that is accrued in the taxable period whereto belongs the date of promulgation of this Act.

The amended provisions of Article 25 (1) shall apply starting with the portion of income that is accrued in the taxable period whereto belongs the date of promulgation of this Act.

The amended provisions of Article 34 (2) shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of Article 35 (3) and (4) shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of Article 51-3 (4) shall apply starting with the portion of taxable period whereto belongs the date of promulgation of this Act, but with respect to the annuity premiums paid from January 1, 2001 to December 31, 2001, the amount equivalent to 50/100 of the premiums paid during the relevant period shall be deducted.

The amended provisions of Article 52 (1) shall apply starting with the portion that is first paid after the enforcement of this Act.

The amended provisions of Article 81 (8) shall apply starting with the portion of goods or services that are provided in the taxable period whereto belongs the date of promulgation of this Act.

(1) The amended provisions of Article 114 (4) shall apply starting with the portion of a report that is first made after the enforcement of this Act.(2) In applying the amended provisions of Article 165, the previous provisions shall apply to the case where a report on real estate transfer is filed under the previous provisions before the enforcement of this Act, which is the portion of transfer after the enforcement of this Act.

(1) The amended provisions of subparagraphs 2 and 13 of Article 119 shall apply starting with the portion that is first appropriated as the dividend income or miscellaneous income after the enforcement of this Act.(2) The amended provisions of Article 120 (2) 5 shall apply starting with the portion of income that is first accrued after the enforcement of this Act.(3) The amended provisions of Article 126-2 (3) shall apply starting with the portion of a return or payment that is first made after the enforcement of this Act.

The amended provisions of Article 156-2 shall apply to the portion of a non-taxation or exemption that is made on or after July 1, 2002.

The amended provisions of Article 163 (3) and (4) shall apply starting with the portion that is first imported after the enforcement of this Act.

The amended provisions of Article 164-2 (1) shall apply to the portion of payment that is made on or after July 1, 2002.

ADDENDA <Act No. 6781, Dec. 18, 2002>

This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 47 (2) and 52, subparagraph 3 of Article 89, Articles 95, 96 (1) 1, 97, and 105 (1) 1 shall enter into force on January 1, 2003.

This Act shall apply from the portion of a tax base return of income tax, or of a decision on the income tax, first made after August 29, 2002.

The amended provisions concerning transfer income tax in this Act shall apply from the portion of a transfer first made after the enforcement of this Act.

The amended provision of Article 47 (2) shall apply from the portion of incomes first accrued after the enforcement of this Act.

The amended provisions of Article 50 shall apply from the portion of a tax base return of income tax, or of a decision on the income tax, or a year-end adjustment, first made after August 29, 2002.

The amended provisions of Article 52 (1) and (5) shall apply from the portion of a payment first made after the enforcement of this Act.

The amended provisions of Article 81 (7) 2 shall apply starting from the taxable period whereto belongs the date of promulgation of this Act.

The amended provisions of Article 158 shall apply from the portion of a year-end settlement first made after the enforcement of this Act.

ADDENDA <Act No. 6852, Dec. 30, 2002>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 6916, May 29, 2003>

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

ADDENDA <Act No. 6958, Jul. 30, 2003>

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

(1) Notwithstanding the amendments to Article 47 (1), the following amount shall be deducted from the gross pay in the case of a portion of the taxable period from January 1, 2003 to December 31, 2003: <Gross pay>
<Amount to be deducted>
Not more than 5 million won
Gross pay
More than 5 million won, but not more than 15 million won
5 million won ＋ 475/1,000 of the amount exceeding 5 million won
More than 15 million won, but not more than 30 million won
9.75 million won ＋ 15/100 of the amount exceeding 15 million won
More than 30 million won, but not more than 45 million won
12 million won ＋ 10/100 of the amount exceeding 30 million won
More than 45 million won
13.5 million won ＋ 5/100 of the amount exceeding 45 million won
(2) Notwithstanding the amendments to Article 59 (1), the following amount shall be deducted from the calculated global income tax amount on the relevant employment income in the case of a portion of the taxable period from January 1, 2003 to December 31, 2003: Provided, That where the deducted tax amount exceeds 450,000 won, the said excessive amount shall be deemed to be non-existent: <Calculated Global Income Tax Amount on the Employment Income>
<Amount to be Deducted>
Not more than 500,000 won
50/100 of the calculated tax amount
More than 500,000 won
250,000 won+30/100 of the amount exceeding 500,000 won

ADDENDA <Act No. 7006, Dec. 30, 2003>

This Act shall enter into force on January 1, 2004: Provided, That the amended provisions of Article 34 (2) 3-2 and 6 shall enter into force on the date of its promulgation, and the amended provisions of Article 99 (1) 1 (c) shall enter into force on January 1, 2005.

This Act shall apply starting with the portion of income accruing after enforcement of this Act.

Of this Act, the amended provisions of the transfer income tax shall apply starting with the portion of transfer after enforcement of this Act.

The amended provisions of subparagraph 4 (q) of Article 12 shall apply starting with the portion of incomes paid after enforcement of this Act.

The amended provisions of Article 14 (3) 4 and (4) shall apply starting with the portion of incomes accrued and paid after enforcement of this Act: Provided, That with respect to the portion of incomes accrued between January 1, 2001 and December 31, 2003 but obtained on or after January 1, 2004, such amended provisions shall apply starting with the one reported after enforcement of this Act. <Amended by Act No. 7319, Dec. 31, 2004>

The amended provisions of subparagraph 2 of Article 15, Articles 56 (3) and (4) and 62 shall apply starting with the portion of incomes accrued and paid after enforcement of this Act: Provided, That with respect to the portion of incomes accrued between January 1, 2001 and December 31, 2003 but obtained on or after January 1, 2004, such amended provisions shall apply starting with the one reported after enforcement of this Act. <Amended by Act No. 7319, Dec. 31, 2004>

The amended provisions of Articles 16 and 17 shall apply from the enforcement date of the Act on Business of Operating Indirect Investment and Assets, and the previous provisions may govern the portion opened before the enforcement date of the said Act.

(1) The amended provisions of Article 34 (2) 3-2 shall apply starting with the portion of voluntary services furnished in the taxable year whereto belongs the promulgation date of this Act.(2) The amended provisions of Article 34 (2) 6 shall apply starting with the portion of donations in the taxable year whereto belongs the promulgation date of this Act: Provided, That in the case of Seoul National University Dental Hospital established under the Establishment of Seoul National University Dental Hospital Act, it shall apply starting with the portion of donations after the enforcement date of the said Act.

(1) The amended provisions of Article 52 (1) 3 through 5, (2), (3), (8) and (14) shall apply starting with the portion of payment after the enforcement of this Act.(2) The amended provisions of the main sentence of Article 52 (5) shall apply starting with the portion of payment or borrowing after the enforcement of this Act.(3) The amended provisions of Article 52 (9) shall apply starting with the portion of occurrence of the relevant causes after the enforcement of this Act.

The amended provisions of Article 99 (1) 1 (c) shall apply starting with the portion of transfer after January 1, 2005.

The amended provisions of the latter part of Article 101 (2) shall apply starting with the portion of transfer or determination after the enforcement of this Act.

(1) The amended provisions of subparagraph 4 of Article 119 shall apply starting with the portion of lease after the enforcement of this Act.(2) The amended provisions of subparagraph 6 of Article 119 shall apply starting with the portion of furnishing services after the enforcement of this Act.(3) The amended provisions of subparagraph 13 (i) of Article 119 and Article 156 (9) shall apply starting with the portion of making capital transaction after the enforcement of this Act.

The amended provisions of Articles 64 (1), (3) and (4) shall apply starting with the portion of income paid after the enforcement of this Act.

The amended provisions of the main sentence of Article 164-2 (1) shall apply starting with the portion of first payment of domestic source income after the enforcement of this Act.

The previous provisions shall govern the limit of income deduction for an interest redemption of the long-term housing mortgage loan borrowed under the provisons of previous Article 52 (3) at the time of enforcement of this Act, notwithstanding the amended provisions of main sentence of Article 52 (5): Provided, That in case where a redemption period for the said loan is 15 or more years, the said provisions shall apply by considering the term “six million won per year” among the main sentence of previous Article 52 (5) as “ten million won per year”.

In case where the real estate sales businessman or a person falling under three or more houses for one household at the time of enforcement of this Act transfers the housing (including a land appurtenant thereto) acquired before enforcement of this Act prior to December 31, 2004, the amended provisions of Articles 64, 95 and 104 (1) 2-3 shall not apply: Provided, That the same shall not apply to the case where the relevant real estate sales businessman or a person falling under three or more houses for one household acquires newly another housing after January 1, 2004.

With respect of the relevant price and the portion of incomes accruing from the transfer thereof in case where the industrial, commercial or scientific machines, equipments, apparatuses, etc. are domestically used or their prices are domestically paid at the time of enforcement of this Act, it shall be deemed to be the price under the previous provisions of subparagraph 11 (c) of Article 119 and the incomes accruing from their transfer, notwithstanding the amended provisions of subparagraph 4 of Article 119.

In the case of the long-term bonds, etc. under the previous provisions of Article 129 (1) 1 (a), the previous provisions shall apply not later than the final revenue period for the said bonds, etc.

ADDENDA <Act No. 7120, Jan. 29, 2004>

This Act shall enter into force one year after the date of its promulgation.

ADDENDA <Act No. 7289, Dec. 31, 2004>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 7319, Dec. 31, 2004>

This Act shall enter into force on January 1, 2005: Provided, That the amended provisions of Article 17 (3) shall take effect on January 1, 2006, and the amended provisions of Articles 46, 130, and 133 (2) (proviso), on July 1, 2005.

The amended provisions of Article 14 (3) 4, and 15, and the proviso of subparagraph 2 (a) of Article 62 shall apply to the portion of income on which a report is made on or after the enforcement date of this Act; the amended provisions of Article 17 (2) 2 (a), to the portion on which a debt-equity swap is carried out on or after the enforcement date of this Act; and the amended provisions of Article 17 (3), to the portion of dividend income which is paid on or after January 1, 2006.

The amended provisions of subparagraph 3 of Article 84 shall apply to the portion of income which is paid on or after the enforcement date of this Act.

The amended provisions of Articles 46, 130, and 133 (2) (proviso) shall apply to the portion of income on which the tax is withheld on or after July 1, 2005: Provided, That with respect to the bonds, etc. which are issued before July 1, 2005 and on which interest, etc. is first paid, or which are first sold to a corporation, on or after July 1, 2005, the previous provisions shall apply on the condition that the amount equivalent to the interest accrued from the issuing date of the bonds, etc. or the immediately preceding date of tax withholding to the date when the interest, etc. is first paid, or the bonds, etc. are first sold to the corporation, on or after July 1, 2005 is paid to the person who is paid the interest, etc. or who sells the bonds, etc. to the corporation, notwithstanding the amended provisions of Articles 46, 130, and 133 (2) (proviso).

The amended provisions of Article 118-5 (1) 1 shall apply to the portion of assets which are transferred on or after the enforcement date of this Act.

The amended provisions of subparagraph 12 of Article 119 shall apply to the portion of those which are transferred on or after the enforcement date of this Act.

The amended provisions of Article 158 (1) shall apply to the portion of income which is paid on or after the enforcement date of this Act.

The amended provisions of Article 160-3 shall apply to the portion of a contribution which is made on or after the enforcement date of this Act.

The amended provisions of Article 160-4 shall apply to the portion of certificates which are issued for the deduction of income accrued on or after the enforcement date of this Act.

The amended provisions of Article 164 (1) shall apply to the portion of income which is accrued and paid on or after the enforcement date of this Act.

This Act shall apply to the portion of income accrued on or after the enforcement date of this Act.

ADDENDA <Act No. 7335, Jan. 14, 2005>

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

ADDENDA <Act No. 7528, May 31, 2005>(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.(2) (Application Examples regarding Miscellaneous Incomes) The amended provisions of Articles 14 (3) 5, 21 (1) 23 and 24, and 127 (1) 5 shall apply starting with the portion paid for the first time after the enforcement of this Act.ADDENDA <Act No. 7579, Jul. 13, 2005>

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

This Act shall apply starting from the portion of transfer made first after the enforcement of this Act.

Where there exists no collective residence price under the amended provisions of Article 99 (1) 1 (d) at the time of enforcement of this Act, the previous provisions of Article 99 (1) 1 (c) shall apply to the computation and publication of standard market price of such collective residence notwithstanding the mended provisions of Article 99 (1) 1 (d) before the Commissioner of the National Tax Service determines and publicly notify the relevant collective residence price under the proviso of Article 17 (1) of the Public Notice of Values and Appraisal of Real Estate Act.

The amended provisions of Articles 99 (4) through (6) and 99-2 shall apply starting from the standard market price computed and publicly notified first after the enforcement of this Act.

In applying the amended provisions of Article 99 (3), the collective residence price computed and publicly notified by the Commissioner of the National Tax Service under the previous provisions of Article 99 (1) 1 (c) shall be deemed to be the collective residence price under the Public Notice of Values and Appraisal of Real Estate Act.

ADDENDA <Act No. 7837, Dec. 31, 2005>

This Act shall enter into force on January 1, 2006: Provided, That the amended provisions of Article 156-4 shall enter into force on July 1, 2006, and the amended provisions of Article 95 (2) (limited to the portions of Article 104 (1) 2-5 through 2-8 from among the main sentence other than each subparagraph), Article 101 (2) and Article 104 (1) (excluding subparagraph 2-4) shall enter into force on January 1, 2007.

This Act shall apply starting from the portions of income generated first after enforcement of this Act.

The amended provisions on the transfer income tax under this Act shall apply starting from the portions to be transferred after the enforcement of this Act.

The amended provisions of subparagraph 4 (r), 4-3 (d) and 5 (e) of Article 12 shall apply starting from the portions to be paid first after the enforcement of this Act.

The amended provisions of Article 17 (1) 6-2 and 7 shall apply starting from the taxation period first beginning after the enforcement of this Act.

The amended provisions of Article 34 (2) shall apply starting from the portion of donation first after the enforcement of this Act.

The amended provisions of Article 35 (2) shall apply starting from the portion of payment first after the enforcement of this Act.

The amended provisions of Article 51-3 (1) 3 shall apply starting from the portion of year-end settlement first after the enforcement of this Act.

The amended provisions of Article 52 (1) shall apply starting from the portion of payment first after the enforcement of this Act.

The amended provisions of Article 52 (2) through (4) shall apply starting from the portion of subscribing for or receiving loan first after the enforcement of this Act.

(1) The amended provisions of Article 81 (4) shall apply starting from the portion of paying or collecting the income tax first after the enforcement of this Act.(2) The amended provisions of Article 81 (5) and (7) shall apply starting from the portion of submittance first after the enforcement of this Act: Provided, That in the case of payment record of employment income of daily workers which has been generated and paid from the enforcement date of this Act to December 31, 2006, the additional tax on unfaithful report under the provisions of Article 81 (5) shall not be levied.(3) The amended provisions of Article 81 (11) and (12) shall apply starting from the portion of receiving the donation first after the enforcement of this Act.

(1) The amended provisions of Article 89 (2) and 104 (1) shall apply starting from the portion of approvals for the management disposition plans for the housing redevelopment project or the housing reconstruction project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents first after January 1, 2006.(2) The amended provisions of Articles 89 (2) and 104 (1) shall apply to the person who succeeds and acquires, due to the trade and inheritance etc. after January 1, 2006, the position selected as the resident which has been acquired as the management disposition plans for the housing redevelopment project or the housing reconstruction project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents have been approved before January 1, 2006, or the position selected as the resident which has been acquired as obtaining the approval for the housing reconstruction project under the provisions of Article 33 of the Housing Construction Promotion Act (referring to what before the amendment under the Act Number 6852; the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents), by regarding the position selected as the resident which has been acquired by secession as the occupation right of association members which has been acquired under the approval of the management disposition plans for the housing redevelopment project or the housing reconstruction project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents after January 1, 2006.

The amended provisions of subparagraph 2 of Article 119 shall apply starting from the portion of disposition as dividends first after the enforcement of this Act.

The amended provisions of Article 156 (11) shall apply starting from the portion of withholding first after the enforcement of this Act.

The amended provisions of Article 156-3 shall apply starting from the portion of withholding first after the enforcement of this Act.

The amended provisions of Article 156-4 shall apply starting from the portion of withholding first after the enforcement of this Act.

The amended provisions of Article 163 shall apply starting from the portion of delivery first after the enforcement of this Act.

The amended provisions of Article 165 shall apply starting from the portion of payment on income deduction for which the supporting documents for income deduction are to be submitted first after the enforcement of this Act.

The amended provisions of Article 172 shall apply starting from the portion of perusal or request for reproduction first after the enforcement of this Act.

Where being subject to non-taxation under the previous provisions of subparagraph 4 of Article 89 at the time of enforcement of this Act, or where transferring the farmland for being subject to an application of the same provision, the previous provisions shall govern, notwithstanding the amended provisions.

The area designated by the Minister of Finance and Economy under the provisions of previous Article 96 (1) 6-2 at the time of enforcement of this Act shall be regarded as the designated area designated under the amended provisions of Article 104-2.

ADDENDA <Act No. 7873, Mar. 3, 2006>

This Act shall enter into force on January 1, 2007. (Proviso Omitted.)

ADDENDA <Act No. 7896, Mar. 24, 2006>

This Act shall enter into force on January 1, 2007.

ADDENDA <Act No. 7908, Mar. 24, 2006>

This Act shall enter into force six months after the date of its promulgation.

ADDENDA <Act No. 8144, Dec. 30, 2006>

This Act shall enter into force on January 1, 2007: Provided, That the amended provisions of Articles 35 (2) 2, 70 (4) 5, 80 (2) 3 (c) through (f), 81 (4), (5), (10) and (11), 160-2 (3), 162-2, and 162-3 shall enter into force on July 1, 2007, and the amended provisions of Articles 80 (2) 3 (a) and (b) and 81 (9) shall enter into force on January 1, 2008.

This Act shall apply starting with the portion of income first accruing after the enforcement of this Act.

The amended provisions concerning the transfer income tax under this Act shall apply starting with the portion first transferred after the enforcement of this Act.

The amended provisions of Articles 4 (2) and 17 (1) 5 shall apply starting with the portion of an investment trust first established after the enforcement of this Act.

The amended provisions of Article 17 (2) shall apply starting with the portion of a debt-equity swap first conducted after the enforcement of this Act.

The amended provisions of Article 35 (2) 2 shall apply starting with the portion first paid for receiving goods or services after July 1, 2007.

The amended provisions of Article 51-4 shall apply starting with an amount equivalent to the interest which accrues from a reverse mortgage-backed retirement pension first received after the enforcement of this Act.

(1) The amended provisions of Article 52 (1) shall apply starting with the portion first paid after the enforcement of this Act.(2) The amended provisions of Article 52 (4) shall apply starting with the portion first paid by changing the borrowing conditions after the enforcement of this Act.(3) The amended provisions of Article 52 (8) and (9) shall apply starting with the portion which first comes under an applicable reason after the enforcement of this Act.

The amended provisions of Article 56 (6) shall apply starting from the portion first determined or reassessed after the enforcement of this Act.

The amended provisions of Articles 70 (4) 5 and 81 (5) shall apply starting with the portion of receipts of goods or services first supplied after July 1, 2007.

The amended provisions of Articles 78 and 81 (6) shall apply starting with the portion of reports filed after the end of the taxable period first beginning after the enforcement of this Act.

(1) The amended provisions of Article 80 (2) 1-2 shall apply starting with the portion first reassessed due to an applicable reason occurring after the enforcement of this Act.(2) The amended provisions of Articles 80 (2) 3 (a) and (b) shall apply starting with the portion first reassessed due to an applicable reason occurring after January 1, 2008.(3) The amended provisions of Article 80 (2) 3 (c) through (f) shall apply starting with the portion first reassessed due to an applicable reason occurring after July 1, 2007.

(1) The amended provisions of Articles 81 (3) and 163-2 (1) shall apply starting with the portion of the tax invoices first delivered after the enforcement of this Act.(2) The amended provisions of Article 81 (4) shall apply starting with the portion of supporting documents on goods or services first supplied after July 1, 2007.(3) The amended provisions of Article 81 (7) 1 shall apply starting with the portion of the taxable period first commencing after the enforcement of this Act.(4) The amended provisions of Article 81 (7) 2 shall apply starting with the portion first reported or reported for change after the enforcement of this Act.(5) The amended provisions of Article 81 (9) shall apply starting with the portion of the taxable period first commencing after January 1, 2008.(6) The amended provisions of Article 81 (10) and (11) shall apply starting with the portion of transaction first conducted after July 1, 2007.

The amended provisions of Articles 85 (3) and 116 (2) shall apply starting with the portion first determined or reassessed after the enforcement of this Act.

(1) The amended provisions of Article 87 (2) shall apply starting with the portion of applicable reasons first occurring after the enforcement of this Act.(2) The amended provisions of Article 87 (4) shall apply starting with the portion first reported after the enforcement of this Act.(3) The amended provisions of Article 87 (5) shall apply starting with the portion of report first changed after the enforcement of this Act.(4) Where any businessman who falls under a joint businessman under the amended provisions of Article 43 at the time of enforcement of this Act has registered the relevant joint business place under the provisions of Article 87 (3) before December 31, 2007, the provisions of Article 81 (7) 1 shall not apply to the taxable period to which the date of his business registration belongs.

The amended provisions of Article 114 (5), (7) and (8) (only the portion with regard to the determination of transfer income tax base and tax amount) shall apply starting with the portion first determined after the enforcement of this Act.

The amended provisions of Article 127 (1) 5 shall apply starting with the portion first paid after the enforcement of this Act.

The amended provisions of Article 129 (1) 2 shall apply starting with the portion of income accruing first and paid after the after the enforcement of this Act.

The amended provisions of Article 132 (2) shall apply starting with the portion of dividend incomes to have been paid first after the enforcement of this Act.

The amended provisions of Article 145 (2) shall apply starting with the portion paid first after the enforcement of this Act.

The amended provision of the main sentence other than the respective subparagraphs of Article 156 (1) shall apply starting with the portion transferred first after the enforcement of this Act.

The amended provisions of Article 160-2 (3) and (4) shall apply starting with the portion issued for goods or services first supplied after July 1, 2007.

The amended provisions of Article 160-5 shall apply starting with the portion of goods or services supplying or being supplied first after January 1, 2007.

The amended provisions of Article 162-2 shall apply starting with the portion of goods or services supplying first after July 1, 2007.

The amended provisions of Article 162-3 shall apply starting with the portion of goods or services supplying first after July 1, 2007.

The amended provisions of Article 164 (1) shall apply starting with the portion of deadline for reporting arriving first after the enforcement of this Act.

The amended provisions of Article 174 shall apply starting with the portion paid first after the enforcement of this Act.

Any businessman who is subject to bookkeeping by double entry at the time of enforcement of this Act or who is subject to bookkeeping by double entry simultaneously with the commencement of business before or by March 31, 2007 may, notwithstanding the amended provisions of Article 160-5 (3), open and report a business account within the period from the enforcement date of this Act to June 30, 2007.

Notwithstanding the provisions of the amended provisions of Article 162-3 (1), any businessman who meets the requirements of subscription for a cash receipt member store during the period from the enforcement date of this Act to March 31, 2007 may subscribe for a cash receipt member store within the period from the enforcement date of this Act to June 30, 2007.

Notwithstanding the amended provisions of Article 16 (1) 5 and 8, the previous provisions shall govern the interest income accruing from an investment trust established before the enforcement of this Act.

Notwithstanding the amended provisions of Article 81 (1) through (4), the previous provisions shall govern the additional tax which has been levied or is to be levied under the previous provisions of Article 81 (1) through (4) before the enforcement of this Act.

Notwithstanding the amended provisions of Article 114, the previous provisions shall govern the reassessment and notification of the tax base and tax amount of the income accruing from the assets transferred before the enforcement of this Act.

Notwithstanding the amended provisions of Article 115, the additional tax on the transfer income tax which has been levied or is to be levied under the previous provisions of Article 115 as the transfer was made before the enforcement of this Act, the previous provisions shall govern.

ADDENDA <Act No. 8435, May 17, 2007>

This Act shall enter into force on January 1, 2008. (Proviso Omitted.)

ADDENDA <Act No. 8524, Jul. 19, 2007>(1) (Enforcement Date) This Act shall enter into force on January 1, 2008.(2) (Enforceability to the Non-taxable Childcare Leave Benefits) Subparagraph 4 (e) of Article 12 as amended shall be enforceable to the benefits paid on or after the enforcement date of this Act.(3) (Enforceability to the Income during Taxable Period of Sincere Small or Medium Business Proprietors) Chapter Ⅱ-2 (Articles 87-2 through 87-7) as amended shall be enforceable the income during the taxable period on which the enforcement date of this Act falls or thereafter.ADDENDA <Act No. 8531, Jul. 19, 2007>(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation.(2) and (3) Omitted.ADDENDA <Act No. 8541, Jul. 23, 2007>

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

ADDENDA <Act No. 8825, Dec. 31, 2007>

This Act shall enter into force on January 1, 2008: Provided, That the amended provisions of subparagraph 4 (n) of Article 12 and Article 52 (1) 1 shall enter into force July 1, 2008.

This Act shall be enforced from the first income occurred after this Act enters into force.

The provisions on transfer income tax among this Act shall apply from the first transfer occurred after this Act enters into force.

The amended provisions of subparagraph 5 (d) of Article 12 shall apply from the first compensation received after this Act enters into force.

The amended provisions of Article 17 (2) 3 shall apply from the first transformation of structures made after this Act enters into force.

The amended provisions of the latter part of Article 32 (2) shall apply from the first subsidy received after this Act enters into force.

The amended provisions of the latter part of Article 32 (2) shall apply from the first subsidy received after this Act enters into force.

The amended provisions of Article 45 (3) shall apply from the first additional assessment or decision of additional assessment made after this Act enters into force.

The amended provisions of Article 51 (1) 5 shall apply from the birth or adoption first reported after this Act enters into force.

(1) The amended provisions of Article 52 (1)1 shall apply from the first payment made after July 1, 2007.(2) The amended provisions of Article 52 (1) 4 (excluding (a) (ⅲ)) shall apply from the fist payment made after this Act enters into force.(3) The amended provisions of Article 52 (1) 4 (a) (ⅲ) shall apply from the expenditures made during the taxation period when the promulgation date of this Act belongs to.(4) The amended provisions of Article 52 (3) or (4) 4 shall apply from the taxation period when the promulgation date of this Act belongs to.(5) The amended provisions of Article 52 (3) shall apply from the first payment made after this Act enters into force.(6) The amended provisions of Article 52 (6) shall apply from the first payment made after this Act enters into force.

The amended provisions of the main text of Article 57 (1) and subparagraph 1 of same paragraph shall apply from the first retirement income received, or deemed to be received, after this Act enters into force.

The amended proviso of Article 73 (3) shall apply from the first income tax paid according to withholding after this Act enters into force.

(1) The amended provisions of Article 80 (2) 1 (c) shall apply from the first change or correction due to the relevant circumstances after this Act enters into force.(2) The amended provisions of Article 80 (2) 3 (c) shall apply from the first change or correction on the taxation period when the promulgation date of this Act belongs to.

(1) The amended provisions of Article 81(8) and (9)2 and Article 12 shall apply from the taxation period when the promulgation date of this Act belongs to.(2) The amended proviso of Article 81 (11) shall apply from the person who first supply goods or services after this Act enters into force.

The amended provisions of Article 119 (12) shall apply from the first transfer made after this Act enters into force.

The amended provisions of Article 126-2 (3) and (4) shall apply from the first transfer made after this Act enters into force.

The amended provisions of Article 132 (2) shall apply from the first payment deemed to be made after this Act enters into force.

The amended provisions of Article 156-5 shall apply from the first service performed and compensation thereof received after this Act enters into force.

The amended provisions of Article 160-3 (3) shall apply from the first submission after this Act enters into force.

The amended provisions of Article 160-5 (1)2 shall apply from the first account opened, reported and used after this Act enters into force.

The amended provisions of Article 162-2 shall apply from the first person who supply goods or services after this Act enters into force.

The amended provisions of Article 167-1 shall apply from the first person make a report after this Act enters into force.

The amended provisions of Article 175 shall apply from the first payment made after this Act enters into force.

For the taxation period to which the date this Act enters into force belongs, medical expenses paid from December 1, 2007 to December 31, 2008 shall be deducted from earned income amount, notwithstanding the amended provisions of the main body of Article 52 (1).

ADDENDA <Act No. 8852, Feb. 29, 2008>

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

ADDENDA <Act No. 8911, Mar. 21, 2008>(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.(2) (Applicability to Transfer Income Amount) The amended provisions of Article 95 (2) shall apply from the first transfer made after this Act enters into force.ADDENDA <Act No. 9270, Dec. 26, 2008>

This Act shall enter into force on January 1, 2009: Provided, That the amended provisions of subparagraph 4 (e) and (n) of Article 12 and Article 58 (1) shall enter into force on the date of its promulgation, the amended provisions of Articles 4 (2), 17 (1) 5, 46, 94 (1) 3, 114 (9), 156 (5) and 160 (6) shall enter into force on February 4, 2009, and the amended provisions of subparagraph 5 (f) and (g) of Article 12, Articles 14 (3) 5-2 and 21 (1) 25 shall enter into force on January 1, 2011.

(1) This Act shall apply from the first income that accrues after this Act enters into force.(2) The amended provisions concerning transfer income in this Act shall apply from the first transfer after this Act enters into force: Provided, That the amended provisions of Articles 97 (4) and 101 (2) shall apply from the first transfer after being donated after this Act enters into force.

The amended provisions of subparagraph 4 (e) of Article 12 shall apply from the taxable period to which the date this Act enters into force belongs.

The amended provisions of Article 45 (2) and the proviso to Article 160-2 (1) shall apply from the first deficit accruing after this Act enters into force.

The amended provisions of Article 58 (1) shall apply from the first casualty loss that occurs after this Act enters into force.

The amended provisions of Articles 77 and 112 shall apply from the portion for which first report or payment is made after this Act enters into force.

(1) The amended provisions of Article 81 (9) shall apply from the final return of tax base that is first filed after this Act enters into force.(2) The amended provision of Article 81 (11) shall apply from the deadline for subscription to cash receipt member store that first arrives after this Act enters into force.

The amended part of Article 114 (7) from among the amended provision of Article 97 (3) 1 (b) shall apply from the first portion for which decision or rectification is made after this Act enters into force.

The amended provisions of subparagraph 13 (c) of Article 119, and Articles 126 (1) and 156 (1) shall apply from the portion for which first payment is made after this Act enters into force.

The amended provisions of Article 155-2 shall apply from the first contract or renewal of contract that is signed after this Act enters into force.

The amended provisions of Article 160-5 (3) shall apply from the first business that starts after this Act enters into force.

The amended part concerning time to submit payment record of earned income from among the amended provisions of the main sentence of Article 164 (1) shall apply from the portion for which the first deadline of submission of payment record arrives after this Act enters into force.

(1) The term “securities market” in the amended provisions of subparagraph 9 (b) of Article 119, the main body of subparagraph 12 of the same Article and item (b) of the same subparagraph shall be construed as “securities market or KOSDAQ market under the Securities and Exchange Act” until February 3, 2009.(2) The term “collective investment scheme” in the amended provisions of Article 155-2 shall be construed as “investment trust” until February 3, 2009.(3) The term “collective investment property under the Financial Investment Services and Capital Markets Act” in the amended provisions of Article 155-3 shall be construed as “property of investment company, investment trust or private equity fund under the Indirect Investment Asset Management Act” until February 3, 2009.

(1) Notwithstanding the provisions of Article 104 (1) 2-3 through 2-6, tax rates under the following subparagraphs shall apply to the income accruing from transfer of a house acquired on or before December 31, 2010 after this Act enters into force:1. House falling under Article 104 (1) 2-3 and 2-4: 45/100 of the tax base of transfer income (tax rate under Article 104 (1) 2-2 for a house held for less than one year); and2. House falling under Article 104 (1) 2-5 and 2-6: Tax rate under the amended provision of Article 104 (1) 1 (tax rate under Article 104 (1) 2 or 2-2 for a house held for less than two year).(2) Special long-term holding deduction under Article 95 shall not apply to the income accruing from the transfer of a house to which tax rate in paragraph (1) applies, even if the house has been held for three years or more.

The former provisions shall apply to the income tax (including additional tax) that has been imposed or is to be imposed under the former provisions at the time when this Act enters into force.