{{vm.title}}
25{{vm.includesText}}
{{item}}
{{vm.selectText}}
{{ vm.welcomeLabel.trim() }},
{{ vm.userName }}
{{ vm.text }}
{{vm.newUser1}} {{vm.newUser2}} {{vm.newUser3}} {{vm.newUser4}}
{{ vm.unknownUser }}
{{ vm.title }}
{{ vm.title }}
{{ vm.title }}
- {{ vm.siteSelectorList.flyout.cell1.heading }} {{ site.countryLocale }} {{ vm.siteSelectorList.flyout.cell1.global.countryLocale }}
{{ vm.closeTabLabel }}
- {{ vm.flyout.cell2.title }} {{ vm.flyout.cell2.newTabAllow }} {{ vm.flyout.cell2.title }}
- {{ vm.flyout.cell3.title }} {{ vm.flyout.cell3.newTabAllow }} {{ vm.flyout.cell3.title }}
- {{ vm.flyout.cell1.viewAll.label }} {{ vm.flyout.cell1.viewAll.newTabAllow }} {{ vm.flyout.cell1.viewAll.label }}
Korea: Tax law changes, amendments reflected in “enforcement decrees”
Korea: Tax law changes, amendments
The Ministry of the Economy and Finance announced 21 amendments to the "enforcement decrees" for implementing changes to the tax law as passed by the National Assembly in December 2018.
The enforcement decrees will be effective in February 2019 after certain steps are completed.
Summary
Changes that may affect foreign investors or foreign invested companies include:
- The requirements for the business or commercial rational for international transactions (generally adopting international standards of transfer pricing taxation)
- A basis for the use of open-market pricing when applying comparable uncontrolled price method to open-market products (an option to calculate an arm's length price based on an open-market transaction price by adopting international standards of transfer pricing taxation)
- An improved safe harbor for arm's length price of payment guarantees
- Improved arm's length price calculation methods for intangible asset transactions
- Principles of the arm's length price for intangible asset transactions and for hard-to-value intangible assets
Changes that may affect the corporate income tax include:
- Adding a compromise by a court and a compromise recommended by a court as reasons for a bad debt (thereby reducing a taxpayer's burden) by considering such as having the same effect as a final judgment
- Revising the time for claiming a deduction for a fixed asset impairment loss (generally deductible not only in the business year when the damage or loss occurs but also in the business year when the damage or loss is confirmed)
- Determining when a foreign organization or entity (for instance, a partnership) may be treated as a foreign corporation in order to tax the members of the organization and modifying the criteria for a determination of a foreign corporation
Among the changes with respect to the tax incentive limitation law are measures that concern:
- A special tax provision for accelerated depreciation for capital expenditures
- A system within the National Tax Service for advanced review of research and development (R&D) tax credits
The provisions with respect to value added tax (VAT) concern:
- An extension of the due date for tax invoice receipts with respect to an input VAT deduction
- Allowing an input VAT deduction when a tax invoice was erroneously filed or when there was an error in the determination of consignment sales
- A revised taxable period with respect to a consolidated VAT payment
For individual income taxation, one change relates to an improved foreign tax credit regime, and for the tax procedure measures, there is a change that reduces the scope of secondary tax liability for an acquirer in a transaction.
Read a 2019 report [PDF 653 KB] prepared by the KPMG member firm in South Korea
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
