Article 1 (Taxable Objects)

Article 1 (Taxable Objects)The securities transaction tax shall be imposed onthetransfer of sharecertificates or portions (hereinafter referred to as“share certificates,etc.”) under this Act:Provided,That in cases where the transfer of sharecertificates, etc. falls under any of the following subparagraphs, no securities transaction tax shall be levied:<Amended by Act No. 9274, Dec. 26, 2008>1. Where share certificates, etc. listed on the market in a foreign country (limited to the market prescribed by Presidential Decree; hereafter in this Article“foreign securities market”) which is similar to the securities market under Article 9 (13) 1 of the Capital Market and Financial Investment Business Act and the KOSDAQ market under subparagraph 2 of the same paragraph (hereinafter“securities market”), are transferred;2. Where share certificates, etc. are transferred to the underwriters (refers to the underwriters under Article 9 (12) of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply) in order to list such share certificates, etc. on the foreign securities market; or3. Where the Korea Exchange that has underwritten liability under subparagraph 3 of Article 377 of the Financial Investment Services and Capital Markets Act transfers share certificates, etc.[This Article Wholly Amended by Act No. 6302, Dec. 29, 2000]

Article 2 (Definitions)(1) For the purpose of this Act, the term“share certificates”means anyofthe following subparagraphs:<Amended by Act No.5156, Aug. 14, 1996; Act No. 6302, Dec.29, 2000; Act No. 9274, Dec. 26, 2008>1. Share certificates of a corporation established under the Commercial Act or under other special Acts; or2. Share certificates or depository receipts which are issued by a foreign corporation and are listed on the securities market.(2) For the purpose of this Act, the term“portion”means a certain share of a partner or member of an partnership, limited partnership and limited liability company established under the Commercial Act.(3) For the purpose of this Act, the term“transfer”means that the ownership is transferred onerously by contract or legal causes.(4) Share prior to issuance of the share certificates, rights acquired by subscribing for the shares, preemptive rights, and certificates of contribution issued by a corporation which is established under a special Act, shall be deemed to be share certificates in applying this Act.(5) In applying this Act, the terms of a resident, non-resident, domestic corporation, foreign corporation, domestic business place of a non-resident or foreign corporation, shall have the same meaning as those used in the Income Tax Act and the Corporation Tax Act.<Newly Inserted by Act No. 4670, Dec. 31, 1993>

Article 3 (Taxpayer)Persons who falls under any of the following subparagraphs shall be taxpayers of securities transaction tax:<Amended by Act No. 5156, Aug.14, 1996; Act No. 6302, Dec. 29, 2000; Act No. 9274, Dec. 26, 2008>1. Where transaction of share certificates falling under any of the following items is settled by transfer between accounts, the Korea Securities Depository (hereinafter“Securities Depository”) established under Article 294 of the Financial Investment Services and Capital Markets Act:(a) Share certificates transferred on the securities market; and(b) Share certificates transferred outside of the securities market by a method prescribed by Presidential Decree;2. Where share certificates, etc. are transferred through a financial investment business operator under Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereinafter“financial investment business operator”) in addition to cases under subparagraph 1, the relevant financial investment business operator; or3. Where share certificates, etc. are transferred except the cases as provided in subparagraphs 1 and 2, the transferor of the relevant share certificates, etc.:Provided,That where a non-resident or foreign corporation that does not have any place of business in Korea transfers share certificates, etc., not through any financial investment business operator, the transferee of such share certificates, etc. shall be the taxpayer.[This Article Wholly Amended by Act No. 4670, Dec. 31, 1993]

Article 4 (Place of Tax Payment)(1) The place where the securities transaction tax is to be paid shall be any of the following places:<Amended by Act No. 6302, Dec. 29, 2000>1. In cases referred to in subparagraphs 1 and 2 of Article 3, the location of each place of business of the relevant taxpayer:Provided, That in cases prescribed by Presidential Decree, the location of the head office or principal office may be made as the place of payment for securities transaction tax; or2. In cases referred to in subparagraph 3 of Article 3:(a) If the taxpayer is a resident, his/her domicile:Provided,That if he/she has no domicile, it shall be his/her residence;(b) If the taxpayer is a domestic corporation, the location of its head or principal office recorded in the register;(c) If the taxpayer is a non-resident or foreign corporation and has a place of business in Korea, the location of such place of business (if he/she has two or more places of business in Korea, the principal one); or(d) If the taxpayer is a non-resident or foreign corporation and has no place of business in Korea, the location of the head or principal office of the corporation which has issued the share certificates on which the securities transaction tax is levied.(2) If the place of tax payment is not clear, it shall be determined underthe conditions prescribed by Presidential Decree.[This Article Wholly Amended by Act No. 4670, Dec. 31, 1993]

Article 5 (Timing of Transfer)(1) In applying this Act, the timing of transfer of a share certificate, etc. shall be the time when the transaction is settled definitely.(2) Matters necessary for a definite settlement of a transaction under paragraph (1) shall be prescribed by Presidential Decree.

Article 6 (Transfer not Subject to Taxation)No securities transaction tax shall be assessed in the following cases:<Amended by Act No. 6302, Dec. 29, 2000;Act No. 9274, Dec. 26, 2008>1. Where the State or local government transfers share certificates, etc.;2. Where public offering of outstanding share certificates are made under Article 119 of the Financial Investment Services and Capital Markets Act (including the cases where the underwriter underwrites share certificates when the total number of subscribed share certificates falls short of the total number of share certificates intended for public offering);3. Deleted; or<by Act No. 6302, Dec. 29, 2000>4. Where share certificates, etc. determined by Presidential Decree, other than those referred to in subparagraphs 1 and 2, are transferred.

Article 7 (Tax Base)(1) The tax base of securities transaction tax shall be as follows:<Amended by Act No. 8838, Jan. 9, 2008>1. Where the share certificates under each item of subparagraph 1 of Article 3 are transferred, the sum of the transfer value of relevant share certificates; and2. Where the share certificates, etc. other than subparagraph 1 are transferred, the value under the division falling under each of the following items:(a) Where the transferred values of share certificates, etc. are known: the transferred values of relevant share certificates, etc.:Provided, That in cases under any of the following sub-items, the following value shall be the tax base:(ⅰ) The relevant market value in cases where acknowledged that the share certificates, etc. have been transferred at the price lower than the market value under Article 101 of the Income Tax Act, Article 52 of the Corporation Tax Act, or Article 35 of the Inheritance Tax and Gift Tax Act (except the cases where the provisions of Article 4 of the Act for the Coordination of International Tax Affairs shall apply); and(ⅱ) The normal value in case where acknowledged that the share certificates, etc. have been transferred at the price lower than the normal value under Article 126 of the Income Tax Act, Article 92 of the Corporation Tax Act or Article 4 of the Act for the Coordination of International Tax Affairs; or(b) Where the transferred values of share certificates, etc. are unknown: the value assessed by means of the assessment of transferred values stipulated in Presidential Decree.(2) Matters necessary for computing the market value and normal value in the application of the provisions of paragraph (1) shall be prescribed by Presidential Decree.<Amended by Act. No. 8838, Jan. 9, 2008>[This Article Wholly Amended by Act No. 6302, Dec. 29, 2000]

Article 8 (Tax Rate)(1) The tax rate of securities transaction tax shall be 5/1,000.(2) If it is deemed that there is an urgent need to support the development of the capital market, the tax rate referred to in paragraph (1) may be reduced or may be zero percent, per item only in respect of the share certificates traded on the securities market as prescribed by Presidential Decree.<Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000; Act No. 9274, Dec. 26, 2008>

Article 9 (Withholding of Securities Transaction Tax)(1) Any taxpayer under subparagraphs 1 and 2 and the proviso to subparagraph 3 of Article 3 shall withhold from the transferor of the share certificate, etc. the securities transaction tax calculated by applying the tax rate prescribed in Article 8 to the tax base prescribed in Article 7 at the time when transaction of share certificates, etc. is settled, or when share certificates, etc. are transferred.<Amended by Act No. 4670, Dec. 31, 1993; Act No. 9274, Dec. 26, 2008>(2) Where transactions of share certificates, etc. have been concluded in the securities market, the Korea Exchange under Article 373 of the Financial Investment Services and Capital Markets Act shall notify theSecurities Depository by the day next to the transaction day of the matters prescribed by Presidential Decree, such as issues, number, etc. of share certificates so that the Securities Depository may determine tax base under paragraph (1).<Newly Inserted by Act No. 9274, Dec. 26, 2008>

Article 10 (Tax Return, Payment and Refund)(1) Any taxpayer of securities transaction tax shall file a return of tax base and tax amount according to the classification in the following subparagraphs with the director of a competent tax office as prescribed by Presidential Decree:<Amended by Act No. 5156, Aug. 14, 1996; Act No. 9274, Dec. 26, 2008>1. To file a return of tax base and tax amount of each month by tenth of the next month in the cases under subparagraphs 1 and 2 of Article 3; and2. To file a return of tax base and tax amount of each quarter within two months from the last day of the quarter to which the transfer date belongs in the cases under of subparagraph 3 of Article 3.(2) The taxpayer shall pay to the tax office having jurisdiction over thetax payment place, the Bank of Korea (including its agents) or the postaloffices the securities transaction tax for the relevant month or for the relevant quarter as prescribed by Presidential Decree at the same time when he/shefiles a returnas provided in the subparagraphs of paragraph (1).<Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000; Act No. 9274, Dec. 26, 2008>(3) Where there exists any excessive or wrong payment in the securities transaction tax paid under paragraph (2) by the taxpayer under subparagraph 1 of Article 3, and where the refund is made to the transferor of the share certificates, etc., it may be refunded by adjusting the securities transaction tax to be paid by the relevant taxpayer by withholding at the trade.<Newly Inserted by Act No. 6302, Dec. 29, 2000>(4) Matters necessary for the requisites, etc. of the refund under paragraph (3) shall be prescribed by Presidential Decree.<Newly Inserted by Act No. 6302, Dec. 29, 2000>

Article 10-2 (Consolidated Tax Return and Payment at Main Office, etc.)Where a taxpayer of securities transaction tax is an entrepreneur qualified for consolidated tax return under Article 4 (3) of the Value-Added Tax Act, he/she may file a return and pay en masse at the main office or principal place of business, notwithstanding Article 4 (1) 1, and Article 10 (1) and (2).[This Article Newly Inserted by Act No. 9274, Dec. 26, 2008]

Article 11 (Adjustment)(1) If no return is made on the tax base and tax amount under Article10, or any error or omission is found in the contents of return, the directorof a competent tax office may investigate such tax base and tax amount, and determine or adjust both of them.<Amended by Act No. 5156, Aug. 14, 1996>(2) In making a decision or adjustment under paragraph (1), it shall be based on books and other documentary evidence:Provided,That if it is unable to be based on books or other documentary evidence and it is prescribed by Presidential Decree, such decision or adjustment may be based on the estimation.<Amended by Act No. 6302, Dec. 29, 2000>(3) If it is found that an error or omission is included in the tax base and tax amount decided or adjusted under paragraphs (1) and (2), the director of a competent tax office shall adjust it immediately.<Amended by Act No. 5156, Aug. 14, 1996>

Article 12 (Occasional Imposition)Notwithstanding the provisions of Article 10, when a taxpayer suspends or discontinues his/her business, or it is deemed that a taxpayer might evade paymentobligations of the securities transaction tax, the director of a competent tax office may investigate and decide at any time his/her taxbase andtax amount. In this case, the provisions of Article 11 (2) shall applymutatis mutandis.<Amended by Act No. 5156, Aug. 14, 1996>

Article 13 (Collection)If a taxpayer of securities transaction tax fails to pay the tax amountin full for which a tax return was filed earlier, the director of a competenttax office shall collect the unpaid or insufficient tax amount, and if adecision,adjustment or occasional imposition is made under Articles 11 and 12, the payable tax amount.<Amended by Act No. 5156, Aug. 14, 1996>

Article 14<revisioninfo>Deleted. <by Act No. 8139, Dec. 30, 2006></revisioninfo>

Article 15 (Keeping and Entry of Books)(1) The corporation which is a taxpayer of securities transaction tax shall keep books relating to its business, and record thereon the kinds,quantity, transaction amount of share certificate, etc. and other matters as prescribed by Presidential Decree.(2) Books as referred to in paragraph (1) shall be preserved for fiveyears from date on which the tax return is filed.

Article 16 (Matters to be Ordered)If the Government deems it necessary for the purpose of assuring the payment of the securities transaction tax, the Government may order any taxpayer to observe matters necessary to keep control over purchase and sale, tax-free transfers, etc. of share certificates, etc. under the conditions as prescribed by Presidential Decree.

Article 17 (Question and Inspection)Any tax official who is engaged in duties concerning securities transaction tax, may ask a taxpayer and his/her counterpart of the transaction in respect of the matters in relation to the securities transaction tax, or inspect books, documents or other things pertaining to his/her business.

Article 18<revisioninfo>Deleted. <by Act No. 5156, Aug. 14, 1996></revisioninfo>