Korea: Decisions on information returns, holding companies, tax-exempt business income

Korea: Decisions on information returns

The KPMG member firm in South Korea has prepared a report that collects news of recent tax developments, including summaries of decisions of the Supreme Court.

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The topics discussed in this report are:

  • Employment-related tax credits (such as the job creation tax credit, and the tax system for increasing youth employment) are enhanced by recent legislation.
  • An amendment to the commercial law lifts restrictions on the total number of employees and transfers of shares by members (investors) of limited companies, thereby enabling limited companies to operate their businesses like a stock company.
  • A decision of the Supreme Court addresses the filing of information returns under a former tax law measure, and provides that the reference to a “person” charged with an obligation to submit payment statements refers to the withholding agent, and that if a foreign corporation did not file an exemption application, it was not exempt from the requirement to submit payment statements to the competent tax office—even if domestic-sourced income was exempt from corporate income tax.
  • A decision of the Supreme Court provides that if a qualifying holding company is involved in a corporate reorganization and, as such, incorporates a subsidiary by acquiring shares of a domestic company that is not an affiliated company, it is not subject to the deemed acquisition tax.
  • A decision of the Supreme Court addresses how to determine tax-exempt business income and concludes that in calculating the “income generated from business subject to tax exemption” for purposes of the corporate tax exemption on foreign investments, an objective and reasonable method that considers the nature of the business can be used.

 

Read a May 2017 report [PDF 415 KB] prepared by the KPMG member firm in South Korea

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