Extension of statutory taxation period for offshore transaction : Article 26-2, Framework Act on National Taxes (국세 부과의 제척기간의 연장)

Korean tax authorities are getting more interested in international/offshore transactions. In Korea, there are many regulations in relation to residents’ overseas assets and any kind of international transactions which might trigger tax issues in Korea. Effective Jan 1, 2019, statutory taxation period (국세 부과의 제척기간) for international/offshore translation is increased as below. Case 1. Fraud […]

Penalties on withholding taxes

In Korea, withholding tax return is normally required to be filed every 10th of the following month. Also, a yearly report on the payments’ report which were subject to the withholding taxes are required to be filed once a year. Failure to file and report the withholding taxes will result in following penalties. Item Calculation […]

Penalties on false tax invoice

From 2018, under the amended Value-added Tax law, the penalties on false tax invoice increased from 2% to 3%. Please be aware that the penalties are imposed to both supplier and the buyer. Case 1 – False tax invoice issued without a real/actual transaction. Penalty calculation : Amount stated in the tax invoice x 3% […]

Hiring people in Korea

If you had thoughts of hiring people in Korea, consider below two major contract types : Employment contract vs. Independent service contract Employment contract (고용관계) Company needs to enroll for the social securities for each employee Employer portion of social taxes: approx. 8.75% Employee portion of social taxes: approx.. 8.5% Company needs to provide paid […]

2018 세법개정안

매년 7-8월에는 기획재정부에서 세법개정안을 발표하고, 그 내용이 연말 국회를 통과할 시에 적용되고 있습니다. 기획재정부에서는 올해 8월 2일 2018년도 세법개정안을 발표하였습니다. 아래 링크를 통해 세법개정안 보도자료를 참고하시기 바랍니다. 2018 Tax Reform Proposals

Changes in the external audit requirements

Under the current Act and its Enforcement Decree, the mandatory (external) audit requirements apply to the below companies in Korea: Listed in Korea; or Total asset exceeds KRW 12 billion; or Total asset and liability exceed KRW 7 billion; or The number of employees is over 300 and total asset exceeds KRW 7 billion It’s […]

If you are looking for the accounting firm in Korea,

We, THECL Accounting Corporation ITOS (International Tax and Outsourcing Services) team, will be the right choice for your Korean business. Our team provides supporting services to companies’ important functions such as finance, accounting, treasury, tax, HR, and administration. We are focused on effectively servicing clients for different phases of their business, from setup to the […]

Value-Added Tax in Korea

VAT is levied at a rate of 10% on the supply of goods and services, except zero-rated VAT on certain supply of goods and services (i.e.  services rendered to non-residents earning foreign currency, etc.) and exemption on certain goods and services (e.g. basic life necessities and services, such as unprocessed foodstuffs and agricultural products; medical and health services; finance and […]

Basic Reporting Requirements in Korea

Under the Korean Commercial Law and related tax laws, a company is required to keep its accounting records using “double-entry” bookkeeping system, and prepare financial statements and maintain them for at least five (5) years. Also, once you start a business in Korea, you would be required for following reporting requirements : Value Added Tax […]

Increase in dispatched workers’ withholding tax rate and expansion of scope of withholding agents

Article 156-7 (1) of the Income Tax Act, Article 207-10 (1) of the Enforcement Decree of the Act □In order to tighten control on the tax source from foreign dispatched workers, the following revisions will be made: ○Expansion of scope of withholding agents: -Current: A domestic company whose total payment in return for labor provided […]

Amended Korean Tax Law for Foreign Tax Residents in Korea – Requirement for Submission of Foreign Investment or Real Estate

Under the Income Tax Act Article 165-2 (Duty to Submit Documents about Overseas Investment or Real Estate), a Korean tax resident is required to report and submit certain documents to the Korean tax authority on a yearly basis – by end of May every year. Types of documents to submit to the Korean tax authority […]

Transfer Pricing (TP) in Korea

Transfer Pricing refers to the pricing of international transactions between two “associated” enterprises. Due to the special relationship between related parties, the transfer price may be different than the price that would have been agreed between unrelated parties. A price between unrelated parities is known as the “arm’s length” price. Under Korea’s transfer pricing rules, […]