CORPORATE TAX ACT
1CORPORATE TAX ACT
Wholly Amended by Act No. 5581, Dec. 28, 1998Amended by Act No. 6047, Dec. 28, 1999
Act No. 6259, Feb. 3, 2000
Act No. 6293, Dec. 29, 2000
Act No. 6558, Dec. 31, 2001
Act No. 6852, Dec. 30, 2002
Act No. 7005, Dec. 30, 2003 Act No. 7117, Jan. 29, 2004
Act No. 7289, Dec. 31, 2004
Act No. 7317, Dec. 31, 2004
Act No. 7838, Dec. 31, 2005
Act No. 7908, Mar. 24, 2006
Act No. 8141, Dec. 30, 2006
Act No. 8519, Jul. 19, 2007
Act No. 8631, Aug. 3, 2007
Act No. 8831, Dec. 31, 2007
Act No. 8852, Feb. 29, 2008
CHAPTER GENERAL PROVISIONS Ⅰ
Article 1 (Definitions)
Article 2 (Tax Liability)
Article 3 (Scope of Taxable Income)
Article 4 (Real Taxation)
Article 5 (Trust Income)
Article 6 (Business Year)
Article 7 (Change of Business Year)
Article 8 (Legal Fiction of Business Year)
Article 9 (Place of Tax Payment)
Article 10 (Designation of Place of Tax Payment)
Article 11 (Change of Place of Tax Payment)
Article 12 (Jurisdiction of Taxation)
CHAPTER CORPORATE TAX ON INCOME OF DOMESTIC Ⅱ
CORPORATIONS FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Sub-Section 1 Common Provisions
Article 13 (Tax Base)

CORPORATE TAX ACT
2Article 14 (Income for Each Business Year)
Sub-Section 2 Calculation of Gross Income
Article 15 (Scope of Gross Income)
Article 16 (Legal Fiction of Dividends or Distributions)
Article 17 (Non-Inclusion of Proceeds from Capital Transac tions in Gross Income)
Article 18 (Non-Inclusion of Evaluation Marginal Profits, etc. in Gross Income)
Article 18-2 (Non-Inclusion of Holding Company ’s Received Dividend Amount in Gross
Income)
Article 18-3 (Non-Inclusion of Received Dividend Amount in Gross Income)
Sub-Section 3 Calculation of Deductible Expenses
Article 19 (Scope of Deductible Expenses)
Article 20 (Non-Inclusion of Losses from Capital Transacti ons, etc. in Deductible
Expenses)
Article 21 (Non-Inclusion of Various Taxes and Public Impos ts in Deductible Expenses)
Article 22 (Non-Inclusion of Marginal Losses from Evaluati on of Assets in Deductible
Expenses)
Article 23 (Non-Inclusion of Depreciation Costs in Deducti ble Expenses)
Article 24 (Non-Inclusion of Donations in Deductible Expen ses)
Article 25 (Non-Inclusion of Entertainment Expenses in Ded uctible Expenses)
Article 26 (Non-Inclusion of Excessive Expenses in Deducti ble Expenses)
Article 27 (Non-Inclusion of Non-Business Expenses in Calc ulation of Deductible
Expenses)
Article 28 (Non-Inclusion of Paid Interest in Calculation o f Deductible Expenses)
Sub-Section 4 Inclusion of Reserve Funds and Appropriation Funds in Deductible
Expenses
Article 29 (Inclusion of Reserve Fund for Proper Purpose Bus inesses in Deductible
Expenses)
Article 30 (Inclusion of Liability Reserve Fund, etc. in Cal culation of Deductible Expenses)
Article 31 (Inclusion of Policyholder Dividend Reserve Fun d in Deductible Expenses)
Article 32 Deleted.
Article 33 (Inclusion of Allowance for Severance and Retire ment Benefits in Deductible
Expenses)
Article 34 (Inclusion of Bad Debt Allowance, etc. in Calcula tion of Deductible Expenses)
Article 35 (Inclusion of Allocation for Payment of Claims fo r Compensation in Deductible
Expenses)
Article 36 (Inclusion of Value of Assets for Business Acquir ed by Treasury Subsidies,
etc. in Deductible Expenses)
Article 37 (Inclusion of Value of Fixed Assets Acquired by Co nstruction Charges in
Deductible Expenses)
Article 38 (Inclusion of Value of Fixed Assets Acquired by In surance Marginal Profits
in Deductible Expenses)
Article 39 Deleted.
Sub-Section 5 Period during Which Gross Income and Deductib le Expenses
Accrue

CORPORATE TAX ACT
3Article 40 (Business Year during Which Gross Income and Dedu ctible Expenses Accrue)
Article 41 (Acquisition Value of Assets)
Article 42 (Evaluation of Assets and Liabilities)
Article 43 (Application of Corporate Accounting Standards and Practices)
Sub-Section 6 Special Cases concerning Mergers and Divisio ns, etc.
Article 44 (Inclusion of Appropriate Amount of Marginal Profits from Merger Evaluation
in Deductible Expenses)
Article 45 (Succession to Losses Carried Forward Following Merger)
Article 46 (Inclusion of Appropriate Amount of Marginal Pro fits from Division Evaluation
in Deductible Expenses)
Article 47 (Inclusion of Reasonable Amount for Asset Transf er Marginal Profits Due
to Spin-off in Calculation of Deductible Expenses)
Article 48 (Special Cases of Calculation of Income for Corpo rations which Continue to
Exist After Division)
Article 48-2 (Succession of Loses Carried Forward Followin g Division)
Article 49 (Succession to Assets and Liabilities upon Merge r and Division)
Article 50 (Inclusion of Reasonable Amount for Asset Transf er Marginal Profits due to
Exchange in Calculation of Deductible Expenses)
Sub-Section 7 Tax Exemption and Income Deduction
Article 51 (Non-Taxable Income)
Article 51-2 (Income Deduction for Special Purpose Compani es, etc.)
Sub-Section 8 Special Cases concerning Calculation of Inco me Amount
Article 52 (Repudiation of Wrongful Calculation)
Article 53 (Special Cases on Calculation of Income Amount fr om Transactions with Foreign
Corporations, etc.)
Article 54 (Regulations for Calculation of Income Amount)
SECTION 2 Calculation of Tax Amount
Article 55 (Tax Rates)
Article 55-2 (Special Cases for Taxation on Income Accruing from Land Transfer)
Article 56 Deleted.
Article 57 (Tax Credit, etc. for Tax Amount Paid in Foreign Co untry)
Article 57-2 (Special Case concerning Tax Credit for Foreig n Corporate Tax Amount
Paid in Foreign Country by Indirect Investment Companies, e tc.)
Article 58 (Tax Credit for Losses from Disasters)
Article 58-2 (Tax Credit for Agricultural Income Tax)
Article 58-3 (Tax Credit following Correction due to Wrongf ul Accounting Handling)
Article 59 (Calculation of Amount of Tax Reduction/Exempti on and Tax Deduction)
SECTION 3 Report and Payment
Article 60 (Report on Tax Base, etc.)
Article 61 (Special Cases concerning Appropriation of Rese rve Fund as Deductible
Expenses)
Article 62 (Special Cases concerning Tax Base Report of Non- Profit Domestic Corporations)

CORPORATE TAX ACT
4Article 62-2 (Special Cases concerning Taxation of Income A ccruing from Transfer of
Assets by Non-profit Domestic Corporation)
Article 63 (Interim Prepayment)
Article 64 (Payment)
Article 65 (Payment in Kind)
SECTION 4 Determination, Correction, and Collection
Sub-Section 1 Determination and Correction of Tax Base
Article 66 (Determination and Correction)
Article 67 (Disposal of Income)
Article 68 (Special Cases concerning Estimation of Tax Base and Calculation of Tax
Amount)
Article 69 (Determination of Occasional Imposts)
Article 70 (Notification of Tax Base and Tax Amount)
Sub-Section 2 Collection and Return of Tax Amount
Article 71 (Collection and Return)
Article 72 (Refund by Retroactive Deduction of Deficits)
Article 72-2 (Refund following Correction due to Wrongful A ccounting Handling)
Article 73 (Withholding)
Article 74 (Issuance of Withholding Receipt)
Article 75 (Non-Collection of Small Amounts)
Article 76 (Additional Taxes)
CHAPTER CORPORATE TAX ON INCOME OF FAITHFUL SMALL AND Ⅱ
MEDIUM CORPORATIONS FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Article 76-2 (Application of Faithful Tax Payment Method)
Article 76-3 (Special Example of Calculation of Tax Base)
SECTION 2 Calculation of Tax
Article 76-4 (Calculation of Tax Amount)
Article 76-5 (Standard Tax Deduction)
Article 76-6 (Tax Deduction for Increase in Revenue)
SECTION 3 Report, Payment, etc.
Article 76-7 (Report, Payment, etc.)
CHAPTER CORPORATE TAX ON LIQUIDATION INCOME OF Ⅲ
DOMESTIC CORPORATION
SECTION 1 Tax Base and Its Calculation
Article 77 (Tax Base)
Article 78 (Special Cases for Taxation on Liquidation Incom e Accruing from Restructuring
of Corporation)

CORPORATE TAX ACT
5Article 79 (Calculation of Liquidation Income Accruing fro m Dissolution)
Article 80 (Calculation of Liquidation Income from Merger)
Article 81 (Calculation of Liquidation Income Amount due to Division)
Article 82 (Detailed Rules for Calculation of Liquidation I ncome Amount)
SECTION 2 Calculation of Tax Amount
Article 83 (Tax Rate)
SECTION 3 Report and Payment
Article 84 (Settlement Report)
Article 85 (Interim Report)
Article 86 (Payment)
SECTION 4 Settlement, Correction, and Collection
Article 87 (Settlement and Correction)
Article 88 (Notification of Tax Base and Tax Amount)
Article 89 (Collection)
Article 90 (Exclusion from Application of Additional Amoun ts, etc. to Liquidation Income)
CHAPTER CORPORATE TAX ON INCOME OF FOREIGN Ⅳ
CORPORATION FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Article 91 (Tax Base)
Article 92 (Calculation of Amount of Income Generated from S ources in Korea)
Article 93 (Income Generated from Sources in Korea)
Article 94 (Domestic Place of Business of Foreign Corporati on)
SECTION 2 Calculation of Tax Amount
Article 95 (Tax Rate)
Article 95-2 (Special Cases for Taxation on Income Accruing from Transfer of Land,
etc. by Foreign Corporation)
Article 96 (Special Cases for Taxation on Domestic Place of B usiness of Foreign
Corporation)
SECTION 3 Report, Payment, Settlement, Correction, and Col lection
Article 97 (Report, Payment, Settlement, Correction, and Collection)
Article 98 (Special Cases for Withholding or Collection fro m Foreign Corporations)
Article 98-2 (Special Cases for Report, Payment, etc. on Inc ome Accruing from Transfer
of Securities by Foreign Corporations)
Article 98-3 (Special Cases for Withholding Tax from Bonds, etc. of Foreign Corporations)
Article 98-4 (Application for Non-Taxation on Income Gener ated from Sources in Korea
by Foreign Corporation)
Article 98-5 (Special Case for Procedures for Collecting Wi thholding Taxes from Foreign
Corporations)
Articles 99 through 108 Deleted.

CORPORATE TAX ACT
6CHAPTER SUPPLEMENTARY PROVISIONS Ⅵ
Article 109 (Report on Establishment or Foundation of Corpo ration)
Article 110 (Report on Start of Profit-Making Business by No n-Profit Corporation)
Article 111 (Registration of Business)
Article 112 (Keeping of Account Books)
Article 112-2 (Liability to Prepare and Keep Detailed State ment of Donation Receipt
Issuance)
Article 113 (Separate Accounting)
Article 114 Deleted.
Article 115 (Duty to Submit Combined Financial Statements, etc.)
Article 116 (Receipt and Preservation of Documentary Evide nce of Expenditures)
Article 117 (Duty to Have Credit Card Affiliate Membership a nd to Issue Credit Card
Sales Slips, etc.)
Article 117-2 (Duty to Have Cash Receipt Affiliate Membersh ip and to Issue Cash Receipts,
etc.)
Article 118 (Preparation and Keeping of Stockholder Regist ry, etc.)
Article 119 (Submission of Detailed Statement on Change of S tocks)
Article 120 (Duty to Submit Payment Statements)
Article 120-2 (Special Cases for Duty to Submit Payment Stat ements on Income, etc.
Generated from Sources in Korea by Foreign Corporations)
Article 120-3 (Submission of Aggregate Tax Invoice for Indi vidual Suppliers)
Article 121 (Preparation and Issuance of Invoice)
Article 122 (Inquiry and Investigation)
CHAPTER GENERAL PROVISIONS Ⅰ
Article 1 (Definitions)
The terms used in this Act shall be defined as follows:
1. The term “domestic corporation ”means a corporation with its
headquarters, main office or actual business management pl ace located
in the Republic of Korea;
2. The term “non-profit domestic corporation ”means a domestic
corporation which falls under any of the following items:
(a) A juristic person established under the provisions of Ar ticle 32
of the Civil Act;
(b) A juristic person established under the Private School A ct or other
special Acts for the purposes prescribed in Article 32 of the Civil
Act or similar purposes (excluding juristic persons as pres cribed
by Presidential Decree which are not partnership corporati ons and

CORPORATE TAX ACT
7which can pay profit dividends to stockholders, employees, or
investors); and
(c) Organizations without juristic personality, treated a s corporations
under the provisions of Article 13 (4) of the Framework Act on
National Taxes (hereinafter referred to as “organizations to be
treated as corporations ”);
3. The term “foreign corporation ”means a corporation (limited to a case
where its actual business management place is not located in the Republic
of Korea) with its headquarters or main office in a foreign co untry;
4. The term “non-profit foreign corporations ”means foreign governments
or foreign local governments, and other foreign corporatio ns which are
not operated for profit-making from among foreign corporat ion
(including organizations treated as corporations); and
5. The term “business year ”means one fiscal period for the calculation
of a corporation ’s income.
Article 2 (Tax Liability)
(1) Corporations falling under each of the following subpar agraphs shall
be liable to pay a corporate tax on any income under this Act: 1. Domestic corporations; and
2. Foreign corporations which earn incomes in the Republic o f Korea.
(2) Where domestic corporations and foreign corporations e arn marginal
profits from the transfer of land, etc. provided for in Artic les 55-2 and
95-2, they shall be liable to pay a corporate tax under this Ac t.

(3) Corporate taxes shall not be imposed on such domestic cor porations
as the State and local governments (including local governm ent
associations; hereinafter the same shall apply).

(4) Domestic corporations, foreign corporations, and resi dents and
non-residents under the Income Tax Act shall be liable to pay corporate
taxes to be withheld under this Act.

Article 3 (Scope of Taxable Income)
(1) Corporate taxes shall be imposed on the income falling un der each
of the following subparagraphs:
Provided , That for non-profit domestic
corporations and foreign corporations, corporate taxes sh all be imposed
only on income under subparagraph 1:
1. Income for each business year; and
2. Liquidation income.
(2) Income of non-profit domestic corporations for each bus iness year shall
be income obtained through business or revenue falling unde r each of the

CORPORATE TAX ACT
8following subparagraphs (hereinafter referred to as the “profit-making
business ”):
1. Earnings generated from the businesses prescribed by Pre sidential
Decree such as manufacturing, construction, wholesale or r etail sales, consumer
product repair, real estate, rental, and provision of busin ess services;
2. Interest, discounts, and profits under the provisions of each
subparagraph of Article 16 (1) of the Income Tax Act;
3. Dividends or funds distributed under the provisions of ea ch subparagraph
of Article 17 (1) of the Income Tax Act;
4. Revenue accruing from the transfer of stocks, investment shares, or
preemptive subscription rights;
5. Revenue accruing from the disposal of fixed assets (exclu ding fixed
assets used directly for proper purpose businesses as presc ribed by
the Presidential Decree); and
6. Revenue accruing from continuous activities other than t hat under
subparagraphs 1 through 5 as prescribed by the Presidential Decree.
(3) Income of foreign corporations for each business year sh all be income
earned in the Republic of Korea under the provisions of Artic le 93 (hereinafter
referred to as the “domestic source income ”):
Provided , That for non-profit
foreign corporations, this shall be limited to domestic sou rce income accruing
from profit-making businesses.
Article 4 (Real Taxation)
(1) Where the corporation to which all or part of revenue from assets
or business legally accrues and the corporation to which it a ctually accrues
are different, this Act shall apply to the corporation to whi ch the revenue
actually accrues.
(2) The provisions concerning the calculation of the amount of taxable
income subject to corporate tax shall apply to the real incom e and earnings,
notwithstanding their designation or form.
Article 5 (Trust Income)
(1) With regard to income accruing from a trust property, the beneficiary
to receive the profits of the trust (where no beneficiary is s pecified or
no beneficiary exists, the trustee of the trust or his succes sor) shall be
deemed the owner of the trust property in the application of t his Act.
(2) With regard to revenues and expenditures from a trust pro perty of
a corporation regulated by the Trust Business Act and the Act on Business
of Operating Indirect Investment and Assets (excluding spe cial accounts
of insurance company pursuant to Article 135 of the same Act; hereinafter

CORPORATE TAX ACT
9the same shall apply), the revenues and expenditures shall b e deemed
not to be accrued to the corporation.

Article 6 (Business Year)
(1) The business year shall be one fiscal period prescribed b y Acts and
subordinate statutes or the corporation ’s articles of incorporation:
Provided , That this period shall not exceed one year.
(2) A domestic corporation whose business year is not prescr ibed by Acts
and subordinate statutes or its articles of incorporation s hall separately
determine its business year and report it together with the r eport on
incorporation under the provisions of Article 109 (1) or the registration
of business under the provisions of Article 111 to the chief o f the district
tax office having jurisdiction over the place of tax payment (the chief of
the tax office under the provisions of Article 12; hereinaft er the same
shall apply).
(3) A foreign corporation with a place of business in the Repu blic of Korea
under the provisions of Article 94 (hereinafter referred to as a“domestic
place of business ”) whose business year is not prescribed by the Acts and
subordinate statutes or its articles of incorporation shal l separately
determine its business year and report it together with the r eport on the
establishment of a domestic place of business under the prov isions of Article
109 (2) or the registration of business under the provisions of Article 111
to the chief of the district tax office having jurisdiction o ver the place
of tax payment.
(4) A foreign corporation with no domestic place of business which earns
income under the provisions of subparagraph 3 or 7 of Article 93 shall
separately determine its business year and report it to the c hief of the
district tax office having jurisdiction over the place of ta x payment
within one month from the date on which such income was first g enerated.

(5) Where a corporation which is liable to report under the pr ovisions
of paragraphs (2) through (4) fails to report, the corporati on’s business
year shall be from January 1st to December 31st each year.
(6) Matters necessary for the determination of the beginnin g date of a
corporation ’s first business year in the application of the provisions of
paragraphs (1) through (5) shall be prescribed by the Presid ential Decree.
Article 7 (Change of Business Year)
(1) A corporation which wishes to change its business year sh all report

CORPORATE TAX ACT
10to the chief of the district tax office having jurisdiction o ver the place
of tax payment within 3 months from the last date of the immedi ately
preceding business year under the conditions as prescribed by the
Presidential Decree.
(2) Where a corporation does not report within the time limit under
the provisions of paragraph (1), the corporation ’s business year shall
be deemed not to have been changed:
Provided , That, for a corporation
whose business year is determined by Acts and subordinate st atutes,
its business year shall be deemed to have been changed at the t ime
when the amended provisions concerning the change of the bus iness
year in such Acts and subordinate statutes have effected, ev en though
no report is made pursuant to the provisions of paragraph (1) .

(3) Where a business year is changed pursuant to the provisio ns of
paragraphs (1) and (2) (proviso), the period from the first d ay of the
previous business year to the day before the first day of the n ew business
year shall be deemed to constitute one business year:
Provided , That,
where that period is shorter than one month, it shall be inclu ded in the
new business year.

Article 8 (Legal Fiction of Business Year)
(1) Where a domestic corporation is dissolved during a busin ess year
(excluding dissolution due to merger, division, or divisio n and merger),
the period from the first day of the business year until the da te of registration
of dissolution (referring to the date of bankruptcy registr ation
for any corporation which is dissolved on the grounds of bank ruptcy and
the date of dissolution for any organization treated as corp oration;
hereinafter the same shall apply), and the period from the da y following
the date of registration of dissolution until the last day of the corresponding
business year shall be deemed to be one business year, respec tively; and
where the value of residual assets of a domestic corporation being liquidated
is settled during the business year, the period from the firs t day of the
business year until the date on which the value of residual as sets is settled
shall be deemed to be one business year.

(2) Where a domestic corporation is dissolved during a busin ess year due
to a merger or division (including division and merger; here inafter the
same shall apply), the period from the first day of the busine ss year until
the date of registration of the merger or division shall be de emed to be

CORPORATE TAX ACT
11one business year.
(3) Where a domestic corporation in the process of liquidati on under the
provisions of Article 229, 285, 519, or 610 of the Commercial Act continues
to conduct business, the period from the first day of the busi ness year
until the date of registration of continuation (where regis tration
of continuation is not made, referring to the date of actual c ontinuation
of business; hereinafter the same shall apply) and the perio d from the
day after the date of registration of continuation until the last day of
the business year shall be deemed to be one business year, res pectively.

(4) Where a foreign corporation with a domestic place of business comes
to no longer have the corresponding domestic place of busine ss during
the business year, the period from the first day of the busine ss year until
the date on which it no longer has the corresponding place of b usiness
shall be deemed to be one business year:
Provided , That this shall not
apply where it continues to have another place of business in Korea.
(5) Where a foreign corporation with no domestic place of bus iness reports
to the chief of the district tax office having jurisdiction o ver the place
of tax payment that it is no longer generating income under th e provisions
of subparagraph 3 or 7 of Article 93, the period from the first day of the
business year until the date such report is made shall be deem ed to be
one business year.

Article 9 (Place of Tax Payment)
(1) The place of tax payment for corporate tax of a domestic co rporation
shall be the location of the registered headquarters or main office of the
concerned corporation (in case where the headquarters or th e main office
is not located in the Republic of Korea, the location of the ac tual business
management place):
Provided , That for organizations treated as
corporations, it shall be the place as prescribed by the Pres idential Decree.

(2) The place of tax payment for corporate tax of a foreign cor poration
shall be the location of the domestic place of business:
Provided , That
for a foreign corporation with no domestic place of business which earns
income under the provisions of subparagraph 3 or 7 of Article 93, it shall
be the location of each of its assets.

(3) Where a foreign corporation under paragraph (2) has 2 or m ore domestic
places of business, the location of the place of business pre scribed by the
Presidential Decree shall be the place of tax payment, and wh ere the

CORPORATE TAX ACT
12corporation has 2 or more assets, the place prescribed by the Presidential
Decree shall be the place of tax payment.
(4) The place of tax payment for corporate tax withheld under the provisions
of Articles 73, 98 and 98-3 shall be the location of the concer ned person
responsible for collecting withholding tax as prescribed b y the Presidential
Decree:
Provided , That where the person responsible for collecting
withholding tax under the provisions of Articles 98 and 98-3 does not
have a domestic location, it shall be the place prescribed by the Presidential
Decree.

Article 10 (Designation of Place of Tax Payment)
(1) Where the Commissioner of the competent Regional Tax Off ice (referring
to the Commissioner of the competent Regional Tax Office und er the
provisions of Article 12; hereinafter the same shall apply) or the
Commissioner of the National Tax Service deems that the plac e of tax
payment under the provisions of Article 9 is inappropriate f or a corporation
and the Presidential Decree determines, he may, notwithsta nding the
provisions of Article 9, designate a place of tax payment.
(2) Where the Commissioner of the competent Regional Tax Off ice or the
Commissioner of the National Tax Service designates a place of tax payment
under the provisions of paragraph (1), he shall notify the co ncerned
corporation under the conditions as prescribed by the Presi dential Decree.
Article 11 (Change of Place of Tax Payment)
(1) Where a corporation’s place of tax payment is changed, the corporation
shall report it to the chief of the district tax office having jurisdiction
over the new place of tax payment within 15 days from the date o f the
change under the conditions as prescribed by the Presidenti al Decree. In
this case, where a corporation has made a report on the change of the
place of tax payment under the provisions of Article 5 of the V alue-Added
Tax Act, it shall be deemed to have reported the change of the p lace of
tax payment.

(2) Where there is no report under the provisions of paragrap h (1), the
previous place of tax payment shall be the corporation ’s place of tax payment.
(3) Where a foreign corporation comes to have no domestic pla ce of tax
payment falling under the provisions of Article 9 (2), it sha ll report it
to the chief of the district tax office having jurisdiction o ver the place
of tax payment.
Article 12 (Jurisdiction of Taxation)
Any corporate tax shall be levied by the chief of the district tax office

CORPORATE TAX ACT
13having jurisdiction over the place of tax payment or the Comm issioner
of the competent Regional Tax Office under the provisions of Articles 9
through 11.
CHAPTER CORPORATE TAX ON Ⅱ
INCOME OF DOMESTIC
CORPORATIONS FOR EACH
BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Sub-Section 1 Common Provisions
Article 13 (Tax Base)
The tax base for corporate tax on income of domestic corporat ions for each
business year shall be, within the scope of the income for eac h business
year, the amount calculated by deducting the income falling under each
of the following subparagraphs in that order, from the incom e amount:
1. The amount of deficits accruing during each business year within five
years before the first day of the current business year which were not
thereafter deducted in the calculation of the tax base;
2. Non-taxable income under this Act and other Acts; and
3. The amount of income deduction under this Act and other Act s.
Article 14 (Income for Each Business Year)
(1) The income of a domestic corporation for each business ye ar shall be
the amount calculated by deducting the total amount of deduc tible expenses
accruing during the business year from the total amount of gr oss income
accruing during the business year.
(2) The amount of deficits of a domestic corporation for each business
year shall be the amount calculated by deducting the total am ount of
deductible expenses accruing during the business year from the total amount
of gross income accruing during the business year.
Sub-Section 2 Calculation of Gross Income
Article 15 (Scope of Gross Income)
(1) The gross income shall mean the amount of proceeds genera ted by
transactions which cause an increase of the net assets of a co rporation,
not including capital input or financing and other transact ions as provided

CORPORATE TAX ACT
14for in this Act.
(2) The amount falling under each of the following subparagr aphs shall
be deemed to be the gross income: 1. Where securities are purchased from an individual who is a person
with a special relationship under the provisions of Article 52 (1) at
a price which is below the market price under the provisions o f Article
52 (2), the amount of the difference between the appropriate market
price and the concerned purchase price; and
2. The appropriate amount of tax liability of foreign corpor ations under
the provisions of Article 57 (4) (limited to cases in which th e tax liability
amount has been deducted).
(3) Matters necessary for the scope and classification of pr oceeds under
the provisions of paragraph (1) shall be prescribed by the Pr esidential
Decree.
Article 16 (Legal Fiction of Dividends or Distributions)
(1) The amount falling under any of the following subparagra phs shall
be deemed to be the amount of profits received from a corporat ion as dividends
or surplus funds received from a corporation by distributio n, and shall
be accordingly governed by this Act:

1. The amount of the sum of funds and the value of other assets a cquired
by a stockholder, employee, or investor (hereinafter refer red to as a
“ stockholder, etc. ”) through the retirement of stocks, reduction of
capital, employee retirement or separation, or investment reduction
in excess of the amount necessary for the stockholder, etc. t o acquire
the concerned stocks or investment shares (hereinafter ref erred to as
“ stocks, etc. ”);
2. The value of stocks, etc. acquired through the transfer of all or part
of corporation ’s surplus funds into capital or financing:
Provided , That
this shall not apply where amounts falling under any of the fo llowing
items are transferred to capital:
(a) 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
excess amount provided for in the proviso to Article 17 (1) 1 a nd
marginal profits from the evaluation of a merger and margina l profits
from the evaluation of a division that is prescribed by the Pr esidential
Decree, and in case of the profit from retirement of stocks or
investment shares, it is limited to the transfer of capital a fter 2

CORPORATE TAX ACT
15years have passed from the date of such retirement in case tha t
the market price under Article 52 (2) does not exceed the acqu isition
value at the time stocks or investment shares are retired); a nd
(b) Revaluation reserve fund under the Assets Revaluation A ct
(excluding an appropriate amount for any difference in the
revaluation of land under the provisions of Article 13 (1) 1 o f the
same Act);
3. In case that the equity ratio of stockholders, etc. of a cor poration other
than the relevant corporation is increased by the latter ’s transfer of
capital under the provisions of each item of subparagraph 2 w hile holding
its own stocks and investment shares, the value of stocks, et c.
corresponding to such increased equity ratio;
4. The amount of funds and the value of other assets acquired b y
stockholders, etc. of a dissolved corporation (including m embers of an
organization treated as a corporation) through the distrib ution of the
residual assets of the corporation in excess of the amount ne cessary
for the acquisition of the concerned stocks, etc.;
5. The amount of the sum of the value of stocks, etc., funds, an d other
assets which stockholders, etc. of a corporation which is ex tinguished
through a merger (hereinafter referred to as an “extinguished
corporation ”) receive from a corporation which is established or
survived through the merger (hereinafter referred to as a “merged
corporation ”) in return for the merger (hereinafter referred to as the
“ cost of merger ”) in excess of the amount necessary for the acquisition
of the stocks, etc. of the extinguished corporation; and
6. Where a corporation is divided, the amount of the sum of the value
of stocks, funds, and other assets which stockholders of the divided
corporation (hereinafter referred to as a “divided corporation ”) or
counterpart corporation to a corporation extinguished thr ough division
and merger receive from the corporation established throug h the division
(hereinafter referred to as a “corporation established by division ”) or
the counterpart corporation to the division and merger in re turn for
the division (hereinafter referred to as the “cost of division ”) in excess
of the amount necessary for the acquisition of the stocks of t he divided
corporation or counterpart corporation to the corporation extinguished
through division and merger (where the divided corporation continues
to exist, limited to stocks reduced by retirement).
(2) In the application of the provisions of paragraph (1), ma tters necessary

CORPORATE TAX ACT
16for the period of the distribution of profit dividends or sur plus funds and
the evaluation of the value of stocks, etc. shall be prescrib ed by Presidential
Decree.
Article 17 (Non-Inclusion of Proceeds from Capital Transac tions in Gross
Income)
(1) The proceeds falling under any of the following subparag raphs shall
not be included in gross income in calculating the income amo unt of
a domestic corporation for each business year:

1. Surplus amount of par value of stocks issued: Provided , That in cases
where stocks, etc. are issued by means of the conversion of li ability
to investment, the amount issued in excess of the market pric e of
the relevant stocks, etc. shall be excluded;
1-2. Marginal profits accruing from the all-inclusive exch ange of stocks;
1-3. Marginal profits accruing from the all-inclusive tran sfer of stocks;
2. Marginal profits accruing from capital decrease;
3. Marginal profits accruing from a merger:
Provided , That this shall not
include marginal profits accruing from the evaluation of me rgers
(hereinafter referred to as “marginal profits from the evaluation of
mergers ”) as prescribed by Presidential Decree; and
4. Marginal profits accruing from a division:
Provided , That this shall
not include marginal profits from the evaluation of divisio ns (hereinafter
referred to as “marginal profits from the evaluation of mergers ”) as
prescribed by Presidential Decree.
(2) The amount that is prescribed by Presidential Decree wit h its exclusion
of the application of the provisions of subparagraph 8 of Art icle 18 among
the excess amount referred to in the proviso to paragraph (1) 1 shall not
be included in the gross income of the relevant business year and may be
appropriated for replenishing the amount of loss that is inc urred in the
next business year.

Article 18 (Non-Inclusion of Evaluation Marginal Profits, etc. in Gross
Income)
The proceeds falling under any of the following subparagrap hs shall not be included
in the gross income in calculating the income amount of a dome stic corporation for
each business year:

1. Marginal profits from the evaluation of assets: Provided , That this
shall not include marginal profits from the evaluation unde r the provisions
of each subparagraph of Article 42 (1);

CORPORATE TAX ACT
172. Gross income carried forward;
3. The amount appropriated for taxes other than corporate ta x not included
in deductible expenses under the provisions of subparagrap h 1 of Article
21 or income-proportional resident tax refunded or to be ref unded;
4. Interest on the refund of national or local taxes mispaid o r overpaid;
5. Output tax amount of value-added tax;
6. Deleted;

7. Deleted; and
8. The amount appropriated for making up for losses carried f orward
as prescribed by Presidential Decree among the value of asse ts received
without compensation, and the amount of the reduction of deb t due to
the exemption from or extinction of financial obligations.
Article 18-2 (Non-Inclusion of Holding Company ’s Received Dividend
Amount in Gross Income)
(1) Where the sum computed pursuant to subparagraphs 1 and 2 e xceeds
the sum computed pursuant to subparagraphs 3 and 4, of profit dividends
or surplus distributions or of the legally fictitious divid ends or distributions
provided by Article 16 (hereafter referred to as the “received dividend
amount ”in this Article and Article 18-3) received by a holding compa ny
prescribed by Presidential Decree among such domestic corp orations that
are classified as holding companies pursuant to the Monopol y Regulation
and Fair Trade Act (including any financial holding compani es under the
Financial Holding Companies Act and industry-academic coo peration
technology holding companies under the Promotion of Indust rial Education
and Industry-Academic Cooperation Act; hereafter referre d to as a“holding
company ”in this Article) from its subsidiary (referring to such dome stic
corporations that have been invested by the corresponding h olding company
and that also meet the criteria prescribed by Presidential D ecree in
consideration of the holding company ’s equity investment ratio in the
subsidiary; hereafter the same shall apply in this Article) , such excess
amount shall not be included in gross income in calculating t he income
amount for each business year:

1. The amount equivalent to the total dividend amount receiv ed from
the subsidiary where a holding company has invested in exces s of 80/100
[referring to 40/100 in case of a stock-listed corporation ( hereinafter
referred to as a “stock-listed corporation ”) or a KOSDAQ-listed
corporation (hereinafter referred to as a “KOSDAQ-listed corporation ”)

CORPORATE TAX ACT
18under the Securities and Exchange Act] of the corresponding subsidiary’s
total issued equity stocks or equity investment shares;
2. The amount computed by multiplying the dividend amount re ceived
from the subsidiary by 80/100 where a holding company has inv ested
in the corresponding subsidiary at a ratio lower than that pr escribed
by subparagraph 1:
Provided , That with respect to the dividend amount
received from the subsidiary during the period from January 1, 2007
through December 31, 2007, it shall be the amount obtained by
multiplying the dividend amount by 70/100;
3. The amount calculated according to Presidential Decree c onsidering
the ratio of non-inclusion of interest on borrowed money int o gross
income pursuant to the provisions of subparagraphs 1 and 2, a nd the
ratio of the amount invested in the subsidiary to the total as set of
the holding company, etc., in cases where interest on borrow ed money
has been paid by the holding company in each business year; an d
4. The amount computed by multiplying the dividend amount re ceived
from the subsidiary by the ratio prescribed by Presidential Decree
considering the corresponding subsidiary ’s equity investment in an
affiliated company in cases where it makes equity investmen t in any
company affiliated therewith under the Monopoly Regulatio n and Fair
Trade Act (hereafter referred to as an “affiliated company ”in this
subparagraph and Article 18-3):
Provided , That cases falling under
any one of the following items shall be excluded:
(a) In cases where a subsidiary pursuant to the provisions of subparagraph 1-3 of Article 2 of the Monopoly Regulation and Fair
Trade Act has invested in a granddaughter company decided by
the Fair Trade Commission;
(b) In cases where a subsidiary pursuant to the provisions of Article
2 (1) 2 of the Financial Holding Companies Act invests in a
granddaughter company pursuant to the provisions of
subparagraph 3 of the same paragraph; and
(c) In case where a subsidiary pursuant to the provisions of A rticle
2 (1) 2 of the Financial Holding Companies Act conforms to the
institutional investor determined by Presidential Decree .
(2) The provisions of paragraph (1) shall not apply to the rec eived dividend
amount falling under any of the following subparagraphs:

1. The received dividend amount that accrues from holding st ocks, etc.

CORPORATE TAX ACT
19that are acquired within 3 months prior to the base date of div idend
distribution; and
2. The received dividend amount that is paid by any corporati on that
is prescribed by Presidential Decree and is entitled to the i ncome
deduction on the received dividend amount, or the non-taxat ion,
exemption, or reduction of the corporate tax pursuant to thi s Act and
the Restriction of Special Taxation Act.
(3) In applying the provisions of paragraphs (1) and (2), nec essary matters
for the method for computing the ratio of equity investment b y a holding
company in its subsidiary, amounts excluded from gross inco me,
submission of a detailed statement of received dividend amo unts, etc.
shall be prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 6047, Dec. 28, 1999] Article 18-3 (Non-Inclusion of Received Dividend Amount in Gross Income)
(1) Where the sum computed pursuant to the provisions of subp aragraphs
1 and 2 exceeds the sum computed pursuant to the provisions of subparagraphs
3 and 4, of the received dividend amount (excluding any recei ved dividend
amount subject to the application of the provisions of Artic le 18-2) by
a domestic corporation (excluding non-profit domestic cor porations in
subparagraph 2 of Article 1; the same shall apply hereafter i n this Article)
from another domestic corporation in which the former has ma de an equity
investment, such excess amount shall not be included in gros s income in
calculating the income amount for each business year:

1. The amount computed by multiplying the dividend amount re ceived
from an invested domestic corporation by 50/100 where an inv esting
domestic corporation has invested in excess of 50/100 (30/1 00 in cases
of stock-listed or KOSDAQ-listed corporations) of the tota l issued equity
stocks or equity investment shares of such invested domesti c corporation:
Provided , That the total number of issued equity stocks or total amoun t
of equity investment shares has been invested, it refers to t he amount
corresponding to the total received dividend from other dom estic
corporations;
2. The amount computed by multiplying the dividend amount re ceived
from an invested domestic corporation by 30/100 where the
corresponding investing domestic corporation has investe d at a ratio
lower than that provided for in subparagraph 1;

CORPORATE TAX ACT
203. The amount that is calculated as prescribed by Presidenti al Decree
by applying
mutatis mutandis the provisions of Article 18-2 (1) 3
where any interest on borrowings has been paid by any domesti c
corporation in each business year; and
4. The amount that is calculated under the conditions as pres cribed by
Presidential Decree by applying
mutatis mutandis the provisions of
Article 18-2 (1) 4 where the domestic corporation concerned that pays
dividends to another domestic corporation (limited to the c ases where
it is an affiliated company of the domestic corporation conc erned) invests
in the latter ’s affiliated company.
(2) The provisions of paragraph (1) shall not apply to the rec eived dividend
amount that is paid pursuant to the provisions of each subpar agraph of
Article 18-2 (2).

(3) In applying the provisions of paragraphs (1) and (2), nec essary matters
for the method for computing the ratio of investment shares, the amount
excluded from gross income, the submission of a detailed sta tement of
received dividend amounts, etc. shall be prescribed by Pres idential Decree.
[This Article Newly Inserted by Act No. 6293, Dec. 29, 2000] Sub-Section 3 Calculation of Deductible Expenses
Article 19 (Scope of Deductible Expenses)
(1) Deductible expenses shall mean the amount of losses gene rated
by transactions which cause a reduction in the net assets of a corporation,
excluding return of capital or financing, disposition of su rplus funds,
and other transactions as provided for in this Act.
(2) The losses under the provisions of paragraph (1) shall be losses or
expenses generated or spent in connection with the business of a corporation
which are generally accepted as normal or directly related t o profit, except
as otherwise prescribed by this Act and other Acts.
(3) Matters necessary for the scope and types of losses under the provisions
of paragraphs (1) and (2) shall be prescribed by Presidentia l Decree.
Article 20 (Non-Inclusion of Losses from Capital Transacti ons, etc. in
Deductible Expenses)
Losses falling under each of the following subparagraphs sh all not be
included in deductible expenses in calculating the income a mount of
a domestic corporation for each business year:

CORPORATE TAX ACT
211. The amount appropriated as deductible expenses in the dis position
of surplus funds:
Provided , That this shall not apply to piece rates
as prescribed by Presidential Decree;
2. Dividends on interest during construction; and
3. Margins from the discount issue of stocks.
Article 21 (Non-Inclusion of Various Taxes and Public Impos ts in Deductible
Expenses)
Taxes and public imposts falling under each of the following subparagraphs
shall not be included in deductible expenses in calculating the income
amount of a domestic corporation for each business year:

1. Corporate taxes or income-proportional resident taxes p aid or payable
for each business year (including the amount of foreign corp orate tax
under Article 57), the tax amount paid or payable (including additional
taxes) due to non-performance of duties as provided by tax-r elated
Acts, and the input tax amount of value-added tax (excluding cases
exempted from value-added tax or cases as prescribed by Pres idential
Decree);
2. The unpaid amount of individual consumption tax, liquor t ax, or traffic,
energy and environment tax on unsold manufactured goods: Pr ovided,
That this shall not apply where the price of the manufactured goods
includes a reasonable tax amount;
3. Deleted;

4. Fines and penalties (including appropriate amounts for f ines or penalties
under noticed dispositions), fines for negligence (includ ing penalties
and fines), additional charges for default, and fees for del inquency
in payment;
5. Public imposts that are not mandatory under Acts and subor dinate
statutes; and
6. Public imposts that are imposed for non-performance of du ties, or
violation of prohibited or restricted acts under Acts and su bordinate
statutes.
Article 22 (Non-Inclusion of Marginal Losses from Evaluati on of Assets
in Deductible Expenses)
In the calculation of the income amount of a domestic corpora tion for each
business year, the marginal losses from the evaluation of as sets in its
possession shall not be included in deductible expenses:
Provided , That

CORPORATE TAX ACT
22this shall not apply to the marginal losses from the evaluati on of assets
under the provisions of Article 42 (2) and (3).
Article 23 (Non-Inclusion of Depreciation Costs in Deducti ble Expenses)
(1) In the calculation of the income amount of a domestic corp oration for
the corresponding business year, depreciation costs of fix ed assets shall
be included in deductible expenses only when they are approp riated as
deductible expenses (referring to the amount appropriated as losses in
the confirmation of the settlement of accounts; hereinafte r the same shall
apply) within the scope of the amount calculated under the co nditions
as prescribed by the Presidential Decree (hereafter referr ed to as the“scope
of depreciation amount ”in this Article), and the portion of the appropriated
amount in excess of the scope of depreciation amount shall no t be included
in the calculation of deductible expenses.
(2) Fixed assets under the provisions of paragraph (1) shall mean buildings
other than land, machinery and equipment, patent rights, an d other assets
as prescribed by the Presidential Decree.
(3) Domestic corporations which appropriate depreciation costs under the
provisions of paragraph (1) as deductible expenses shall su bmit a detailed
statement on depreciation costs to the chief of the district tax office having
jurisdiction over the place of tax payment under the conditi ons as prescribed
by the Presidential Decree.
(4) In the application of the provisions of paragraph (1), ma tters necessary
for the method of appropriation of depreciation costs as ded uctible expenses
and the settlement of the amount in excess of the scope of the d epreciation
amount shall be prescribed by the Presidential Decree.
Article 24 (Non-Inclusion of Donations in Deductible Expen ses)
(1) Of donations made by a domestic corporation in considera tion of social
welfare, culture, arts, education, religion, charity, or l earning as prescribed
by the Presidential Decree (hereinafter referred to as “designated
donations ”) during each business year, the amount in excess of 5% of
the amount obtained by subtracting the amount under subpara graph 2
from the amount under subparagraph 1 (hereafter referred to as the“limit
amount of inclusion into deductible expenses ”in this Article) and donations
other than designated donations shall not be included in ded uctible expenses
in the calculation of the income amount for the concerned bus iness year:
1. The income amount for the concerned business year (the amo unt prior
to the inclusion of donations under the provisions of paragr aph (2)
and designated donations in deductible expenses; hereafte r in this

CORPORATE TAX ACT
23Article the same shall apply); and
2. The sum of the donations included in deductible expenses u nder the
provisions of paragraph (2) and the deficits under the provi sions of
subparagraph 1 of Article 13.
(2) The provisions of paragraph (1) and Article 29 shall not a pply to the
donations falling under any of the following subparagraphs (hereinafter
referred to as the “statutory donations ”):
Provided , That where the
total amount of the statutory donations is in excess of the am ount obtained
by multiplying 50/100 by the amount that accrues after subtr acting the
amount of deficits under subparagraph 1 of Article 13 from th e income
amount for the concerned business year (hereafter referred to as the“limits
of inclusion of the statutory donations into deductible exp enses”in this
Article), the amount in excess shall not be included in deduc tible expenses
in the calculation of the income amount for the concerned bus iness year:

1. Money and other valuables contributed to the State or a loc al government
without consideration:
Provided , That for contributed items under
application of the Donations Collection and Their Use Act, t his shall
be limited to items requisitioned under the provisions of Ar ticle 5 (2)
of the same Act;
2. The value of contributions for national defense and money and other
valuables contributed for the consolation and comfort of so ldiers of
the national armed forces;
3. Money and other valuables contributed for victims of natu ral
disasters; and
4. The donations that are given to the institutions (excludi ng any hospital)
falling under any of the following items for facility expens es, educational
expenses, scholarships or research expenses of:
(a) Private schools provided for in the Private School Act;
(b) Non-profit educational foundations (limited to non-pr ofit
incorporated corporations that are founded for the purpose of building
and expanding a private school, expanding its facilities, a nd
improving the educational environment);
(c) Polytechnic colleges provided for in the Polytechnic Co llege Act;
(d) Lifelong educational facilities in the form of the cyber university
provided for in the Lifelong Education Act;
(e) Foreign educational institutions that are founded purs uant to the
Special Act on Establishment and Management of Foreign

CORPORATE TAX ACT
24Educational Institutions in Free Economic Zones and Jeju Fr ee
International City; and
(f) Industry-academic cooperation groups provided for in t he Promotion
of Industrial Education and Industry-Academic Cooperatio n Act.
(3) The amount in excess of the limits of inclusion of designa ted donations
into deductible expenses and the amount in excess of the limi ts of inclusion
of statutory donations into deductible expenses that are no t included in
the deductible expenses under the provisions of paragraphs (1) and (2)
shall be carried forward and included in the deductible expe nses for each
business year which is completed within 3 years (one year in t he case
of the statutory donations) from the first day of the busines s year following
the concerned business year under the conditions as prescri bed by the
Presidential Decree.

Article 25 (Non-Inclusion of Entertainment Expenses in Ded uctible
Expenses)
(1) Of the amount a domestic corporation spends as entertain ment expenses
(excluding the amounts falling under paragraph (2)) during each business
year, the amount in excess of the sum of the amounts falling un der each
of the following subparagraphs shall not be included in dedu ctible expenses
in the calculation of the income amount for the concerned bus iness year:
1. The amount obtained by multiplying 12,000,000 won (18,00 0,000 won
for small and medium enterprises as prescribed by the Presid ential Decree)
by the number of months for the concerned business year, and t hen
dividing it by 12; and
2. The amount obtained by multiplying the revenue amount for the
concerned business year (limited to the revenue amount as pr escribed
by the Presidential Decree) by the rates under the following table:
Provided , That for revenue amounts generated by transactions with
a person with a special relationship under the provisions of Article
52 (1), the appropriate amount shall be 20% of the amount obta ined
by multiplying the revenue amount by the rates provided for i n the
following table:

CORPORATE TAX ACT
25Revenue Amount Rate
10,000,000,000 won or less 20/10,000
More than 10,000,000,000 won
and up to 50,000,000,000 won 20,000,000 won (10/10,000 of the
＋
amount in excess of 10,000,000,000 won)
More than 50,000,000,000 won 60,000,000 won (3/10,000 of the
＋
amount in excess of 50,000,000,000 won)
(2) Entertainment expenses that are paid by a domestic corpo
ration in
excess of the amount prescribed by the Presidential Decree o n one occasion
and that do not fall under any one of the following subparagra phs shall
not be included in deductible expenses in the calculation of the income
amount for each business year:
Provided , That the same shall apply
to a case where the entertainment expenses falling under any of the following
subparagraphs are disbursed in the areas of foreign countri es that are
prescribed by the Presidential Decree, which make it diffic ult to verify
their spending but the disbursement of such entertainment e xpenses is
objectively unquestionable:

1. Entertainment expenses paid by using those which fall und er any one
of the following items (hereinafter referred to as “credit cards, etc. ”):
(a) Credit cards under the Specialized Credit Financial Bus iness Act
(including items similar to credit cards, as prescribed by t he
Presidential Decree; hereafter the same shall apply in Arti cle 117);
and
(b) Cash receipts under the provisions of Article 126-3 (3) o f the
Restriction of Special Taxation Act (hereinafter referred to as“cash
receipts ”); and
2. Expenses paid by receiving delivery of an invoice under th e provisions
of Article 121 of this Act and Article 163 of the Income Tax Act or
a tax invoice under the provisions of Article 16 of the Value- Added
Tax Act or by delivering a purchaser-issued tax invoice unde r the
provisions of Article 126-4 (1) of the Restriction of Specia l Taxation
Act.
(3) If sales slips, that are issued in the name of a member shop of credit
cards, etc. other than the one that does actually supply the c orresponding
goods or services, are delivered, the corresponding paymen t amounts shall
not be included in the entertainment expenses provided for i n para-
graph (2) 1 in applying the same subparagraph of the same para graph.

CORPORATE TAX ACT
26
(4) Deleted.
(5)“Entertainment expenses ”in paragraphs (1) through (3) shall mean
entertainment expenses and expenses of a similar nature spe nt by a
corporation in connection with its business, regardless wh ether such
expenses are called social expenses, honoraria, or other pr etexts.

Article 26 (Non-Inclusion of Excessive Expenses in Deducti ble Expenses)
Of the losses falling under each of the following subparagra phs, the
amount recognized as excessive or inappropriate under the c onditions as
prescribed by the Presidential Decree shall not be included in deductible
expenses in the calculation of the income amount of a domesti c corporation
for each business year:

1. Personnel/labor expenses;
2. Welfare expenses;
3. Travel expenses and education and training expenses;
4. Deleted;

5. Losses generated or paid by a corporation as a result of the joint operation
or management of an identical organization or business with a person
other than the concerned corporation; and
6. Expenses other than those under subparagraphs 1 through 5 recognized
as having little direct connection to the business of a corpo ration as
prescribed by the Presidential Decree.
Article 27 (Non-Inclusion of Non-Business Expenses in Calc ulation of
Deductible Expenses)
Of the expenditures of a domestic corporation during each bu siness
year, the amounts falling under each of the following subpar agraphs
shall not be included in deductible expenses in the calculat ion of the
income amount of the concerned business year: 1. The amount of expenses as prescribed by the Presidential D ecree
disbursed for the acquisition and management of the assets w hich are
prescribed by the Presidential Decree and which are deemed t o have
no direct connection to the business of the relevant corpora tion; and
2. Expenditures as prescribed by the Presidential Decree ot her than the
amount of subparagraph 1, which are deemed to have no direct c onnection
to the business of the relevant corporation.
Article 28 (Non-Inclusion of Paid Interest in Calculation o f Deductible
Expenses)

CORPORATE TAX ACT
27(1) Interest on loans falling under each of the following sub paragraphs
shall not be included in deductible expenses in the calculat ion of the income
amount of a domestic corporation for each business year:

1. Interest on debentures for which the creditor is unknown;
2. Interest, discount amount, or gains from bonds and securi ties under
the provisions of Article 16 (1) 1, 2, 6, and 9 of the Income Tax Act,
the interest, discount amount, or gains from bonds and secur ities as
prescribed by the Presidential Decree for which the person w ho received
payment is unknown;
3. Interest on loans appropriated for construction capital as prescribed
by the Presidential Decree; and
4. Of interest on loans paid during each business year by a dom estic
corporation which acquires or possesses assets falling und er one of
the following items, the amount calculated under the condit ions as
prescribed by the Presidential Decree (limited to interest on loans
equivalent to the value of the concerned assets):
(a) Assets falling under the provisions of subparagraph 1 of Article
27; and
(b) Provisional payments, etc. to a person with a special rel ationship
under the provisions of Article 52 (1) with no connection to t he
business of the concerned corporation, and which are prescr ibed
by the Presidential Decree.
(2) through (4) Deleted.

(5) In case where the provisions governing the non-inclusio n of the paid
interest in deductible expenses falling under each subpara graph of
paragraph (1) apply simultaneously, their application sha ll be made in
the order that is prescribed by the Presidential Decree.

(6) Matters necessary for the scope and calculation of loans and interest
on payment under the provisions of paragraph (1) shall be pre scribed by
the Presidential Decree.

Sub-Section 4 Inclusion of Reserve Funds and Appropriation
Funds in Deductible Expenses
Article 29 (Inclusion of Reserve Fund for Proper Purpose Bus inesses in
Deductible Expenses)

CORPORATE TAX ACT
28(1) Where a non-profit domestic corporation (limited to org anizations
prescribed by the Presidential Decree in case of organizati ons treated as
corporations) appropriates reserve funds for proper purpo se businesses
as deductible expenses each business year in order to carry o ut the proper
purpose businesses of the corporation or designated donati ons (hereafter
referred to as “proper purpose businesses, etc. ”in this Article), they shall
be included in deductible expenses in the calculation of the income
amount for the concerned business year within the scope of th e amount
of the sum of the amounts falling under each of the following s ubparagraphs:

1. Interest income amount under the provisions of Article 16 (1) 1 through
11 of the Income Tax Act and the investment trust proceeds und er
the provisions of Article 17 (1) 5 of the same Act;
2. Dividend income amount under the provisions of Article 17 (1) 1, 2
and 6 of the Income Tax Act:
Provided , That any dividend income
amount accruing from stocks, etc., which is included in the t axable
value of the inheritance tax or the gift tax or is subject to th e imposition
of the gift tax pursuant to the provisions of Article 16 or 48 o f the
Inheritance Tax and Gift Tax Act shall be excluded;
3. Interest amount accruing from loans to members or associa tes for welfare
projects of non-profit domestic corporations established under special
Acts; and
4. The amount obtained by multiplying the income from profit -making
businesses other than those under subparagraphs 1 through 3 by 50/
100 (80/100 for a corporation which is established under the Act on
the Establishment and Operation of Public-Service Corpora tions and
in which not less than 50/100 of the amount used for the proper purpose
businesses is spent for the purpose of scholarships).
(2) Where a non-profit domestic corporation uses the reserv e fund for
proper purpose businesses appropriated as deductible expe nses under the
provisions of paragraph (1) for proper purpose businesses, etc., it shall
set off the amount in order beginning with the business reser ve funds
for education appropriated for the business year. In this ca se, where
the amount spent for proper purpose businesses in the concer ned business
year exceeds the reserve fund for proper purpose businesses as of the last
day of the immediately preceding business year, the amount i n excess

CORPORATE TAX ACT
29shall be deemed as having been spent from the reserve fund for proper
purpose businesses to be set off for the concerned business y ear, and the
provisions of paragraph (1) shall apply accordingly.
(3) Where a non-profit domestic corporation with a balance i n the reserve
fund for proper purpose businesses included in deductible e xpenses under
the provisions of paragraph (1) comes to fall under one of the following
subparagraphs, the balance shall be included in gross incom e in the
calculation of the income amount for the business year which includes
the date on which such cause occurs:

1. Where it is dissolved;
2. Where the proper purpose businesses are all discontinued ;
3. Where the approval of an organization treated as a corpora tion is
cancelled or it is changed to a resident under the provisions of Article
13 (3) of the Framework Act on National Taxes; and
4. Where the reserve funds for proper purpose businesses, et c. appropriated
as losses are not used for proper purpose businesses by the da te on
which 5 years pass from the last day of the corresponding busi ness
year (limited to the balance not used within 5 years).
(4) Where the balance of reserve funds for proper purpose bus inesses is
included in the gross income under the provisions of paragra ph (3) 4, an
appropriate amount of interest calculated under the condit ions as prescribed
by the Presidential Decree shall be paid in addition to the co rporate tax
for the concerned business year.
(5) The provisions of paragraph (1) shall not apply to a case w here the
reduction and exemption, etc. are applied pursuant to this A ct or other
Acts, which is prescribed by the Presidential Decree.

(6) A non-profit domestic corporation which wishes to be sub ject to the
application of the provisions of paragraph (1) shall keep in custody a detailed
statement on the appropriation and expenditure of the conce rned reserve
fund and submit it to the chief of the district tax office havi ng jurisdiction
over the place of tax payment under the conditions as prescri bed by the
Presidential Decree.

(7) Matters necessary for the scope of proper purpose busine sses and the
calculation of income generated by profit-making business es under the
provisions of paragraph (1) shall be prescribed by the Presi dential Decree.
Article 30 (Inclusion of Liability Reserve Fund, etc. in Cal culation of

CORPORATE TAX ACT
30Deductible Expenses)
(1) Where a domestic corporation operating an insurance bus iness under
the provisions of the Insurance Business Act and other Acts h as appropriated
the liability reserve fund and contingency reserve fund as d eductible
expenses for each business year, they shall be included in de ductible
expenses in the calculation of the income amount for the conc erned business
year within the scope of the amount calculated under the cond itions as
prescribed by the Presidential Decree.

(2) The liability reserve fund included in the deductible ex penses under
the provisions of paragraph (1) shall be included in gross in come in the
calculation of the income amount for the following business year.
(3) A domestic corporation which wishes to be subject to the a pplication
of paragraph (1) shall submit a detailed statement on the con cerned reserve
fund to the chief of the district tax office having jurisdict ion over the place
of tax payment under the conditions as prescribed by the Pres idential
Decree.
(4) Matters necessary for the disposition of the contingenc y reserve fund
included in the deductible expenses under the provisions of paragraph
(1) shall be prescribed by the Presidential Decree.
Article 31 (Inclusion of Policyholder Dividend Reserve Fun d in Deductible
Expenses)
(1) Where a domestic corporation operating an insurance bus iness
appropriates a policyholder dividend reserve fund as losse s for each business
year in order to pay dividend to insurance policyholders, th is shall be
included in deductible expenses in the calculation of the in come amount
for the concerned business year within the scope of the amoun t calculated
under the conditions as prescribed by the Presidential Decr ee.
(2) Where a domestic corporation which has included the poli cyholder
dividend reserve funds in the deductible expenses under the provisions
of paragraph (1) pays dividends to insurance policyholders , it shall set
them off in order beginning with the policyholder dividend r eserve funds
appropriated for the business year.
(3) The policyholder dividend reserve funds included in the deductible
expenses under the provisions of paragraph (1) shall be set o ff under the
provisions of paragraph (2) until the date on which 3 years ha ve passed
from the last day of the concerned business year, and the bala nce remaining

CORPORATE TAX ACT
31shall be included in gross income in the calculation of the in come amount
for the business year whereto belongs the date on which 3 year s have
passed.
(4) Where a balance of policyholder dividend reserve funds i s included
in gross income pursuant to the provisions of paragraph (3), an amount
equivalent to the interest computed pursuant to the Preside ntial Decree
shall be paid in addition to the corporate tax for the corresp onding business
year.

(5) Where a domestic corporation that has included a balance of its
policyholder dividend reserve fund in its deductible expen ses pursuant
to the provisions of paragraph (1) comes to fall under any of t he following
subparagraphs, the balance shall be included in its gross in come for the
business year which includes the date on which such events oc cur:
1. Where it is dissolved:
Provided , That where it is dissolved due to a
merger and the balance is taken over by the succeeding corpor ation
that operates the insurance business, this shall not apply; and
2. Where its license for insurance business is revoked.
(6) In applying the provisions of paragraphs (2) through (5) , the amount
taken over by the merged corporation under the provisions of the proviso
to paragraph (5) 1 shall be deemed to have been included in the deductible
expenses by the merged corporation in the business year when the
extinguished corporation has included the same in the deduc tible expenses.

(7) A domestic corporation that wishes to be subject to the ap plication
of paragraph (1) shall submit a detailed statement on the cor responding
reserve to the chief of the district tax office having jurisd iction over the
place of tax payment under the conditions as prescribed by th e Presidential
Decree.
Article 32 Deleted.
Article 33 (Inclusion of Allowance for Severance and Retire ment Benefits
in Deductible Expenses)
(1) Where a domestic corporation appropriates an allowance for severance
and retirement benefits as deductible expenses for each bus iness year in
order to pay severance and retirement benefits to its office rs or employees,
this shall be included in deductible expenses in the calcula tion of the income
amount for the concerned business year within the scope of th e amount
calculated under the conditions as prescribed by the Presid ential Decree.

CORPORATE TAX ACT
32(2) Where a domestic corporation which includes the allowan ce for severance
and retirement benefits in the calculation of deductible ex penses under
the provisions of paragraph (1) pays severance and retireme nt benefits
to an officer or employee, it shall pay them first from the con cerned allowance
for severance and retirement benefits.
(3) Where a domestic corporation which includes the allowan ce for severance
and retirement benefits in the calculation of deductible ex penses under
the provisions of paragraph (1) is merged or divided, the all owance for
severance and retirement benefits of the said corporation a s of the date
of the registration of the merger or the date of the registrat ion of the
division which is transferred to the merged corporation, th e corporation
established by division, or counterpart corporation to the division and merger
(hereinafter referred to as a “merged corporation, etc. ”) shall be deemed
the allowance for severance and retirement benefits of the m erged
corporation as of the date of the registration of the merger o r the date
of the registration of the division.

(4) Where a businessman comprehensively transfers his busi ness to a
domestic corporation, the provisions of paragraph (3) shal l apply
mutatis
mutandis
.
(5) A domestic corporation which wishes to be subject to the p rovisions
of paragraph (1) shall submit a detailed statement on the all owance for
severance and retirement benefits to the chief of the distri ct tax office
having jurisdiction over the place of tax payment under the c onditions
as prescribed by the Presidential Decree.
(6) Matters necessary for the disposition of the allowance f or severance
and retirement benefits under the provisions of paragraphs (1) through (4)
shall be prescribed by the Presidential Decree.
Article 34 (Inclusion of Bad Debt Allowance, etc. in Calcula tion of
Deductible Expenses)
(1) Where a domestic corporation appropriates a bad debt all owance in
order to cover bad debts from credit accounts, loans, and oth er corresponding
debentures as deductible expenses for each business year, t hey shall be
included in deductible expenses in the calculation of the in come amount
for the concerned business year within the scope of the amoun t calculated
under the conditions as prescribed by the Presidential Decr ee.
(2) The amounts of bonds which a domestic corporation posses ses and

CORPORATE TAX ACT
33which cannot be collected due to the obligor ’s bankrupcy and other causes
as prescribed by the Presidential Decree (hereafter referr ed to as“bad
debt expenses ”in this Article) shall be included in deductible expenses
in the calculation of the income amount for the concerned bus iness year.
(3) The provisions of paragraphs (1) and (2) shall not apply t o bonds
falling under any of the following subparagraphs: 1. Claims for compensation arising from guarantees of oblig ation (excluding
guarantees of obligation as prescribed by the Presidential Decree);
and
2. Payments falling under Article 28 (1) 4 (b).
(4) In case that any domestic corporation that appropriates bad debt
allowance on the book as deductible expenses in accordance w ith paragraph
(1) and has bad debt expense accruing thereto under paragrap h (2), such
bad debt expenses shall be offset by its bad debt allowance fi rst and then
the remaining amount of such bad debt allowance after offset ting such
bad debt expenses shall be included in gross income in the cal culation
of the income amount for the next business year.

(5) The amount of bad debt expenses included in the calculati on of deductible
expenses under the provisions of paragraph (2) which is late r collected
shall be included in gross income in the calculation of the in come amount
for the business year which includes the date of the collecti on.
(6) Where a domestic corporation which includes the bad debt allowance
in the calculation of deductible expenses under the provisi ons of paragraph
(1) is merged or divided, the bad debt allowance of the said co rporation
as of the date of the registration of the merger or the date of t he registration
of the division which is transferred to the merged corporati on, etc. shall
be deemed the bad debt allowance of the merged corporation, e tc. as of
the date of the registration of the merger or the date of the re gistration
of the division.

(7) A domestic corporation which wishes to be subject to the p rovisions
of paragraphs (1) and (2) shall submit a detailed statement o n the bad
debt allowance and the bad debt expenses to the chief of the di strict tax
office having jurisdiction over the place of tax payment und er the conditions
as prescribed by the Presidential Decree.

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34(8) Matters necessary for credit accounts, loans, and other corresponding
debentures, the scope of bad debt expenses, and the disposit ion of the
bad debt allowance and bad debt expenses under the provision s of paragraphs
(1) and (2) shall be prescribed by the Presidential Decree.
Article 35 (Inclusion of Allocation for Payment of Claims fo r Compensation
in Deductible Expenses)
(1) Where a corporation prescribed by the Presidential Decr ee among
domestic corporations operating the credit guarantee busi ness under Acts
appropriates an allocation for payment of claims for compen sation as
deductible expenses for each business year, this shall be in cluded in deductible
expenses in the calculation of income amount for the corresp onding business
year within the scope of the amount calculated under the cond itions as
prescribed by the Presidential Decree.

(2) The allocation for payment of claims for compensation in cluded in the
deductible expenses under the provisions of paragraph (1) s hall be
included in gross income in the calculation of the income amo unt for
the following business year.
(3) A domestic corporation which wishes to be subject to the a pplication
of paragraph (1) shall submit a detailed statement on the all ocation for
payment of claims for compensation to the chief of the distri ct tax office
having jurisdiction over the place of tax payment under the c onditions
as prescribed by the Presidential Decree.
(4) Matters necessary for the disposition of the allocation for payment
of claims for compensation under the provisions of paragrap h (1) shall
be prescribed by the Presidential Decree.
Article 36 (Inclusion of Value of Assets for Business Acquir ed by Treasury
Subsidies, etc. in Deductible Expenses)
(1) Where a domestic corporation receives assets, includin g the payment
of subsidies, under the Act on Budgeting and Management of Su bsidies,
the Local Finance Act and other Acts prescribed by the Presid ential Decree
(hereafter referred to as the “National Treasury subsidies, etc. ”in this
Article) and uses them to acquire or improve assets used for b usiness
as prescribed by Presidential Decree (hereafter referred t o as the“assets
for business ”in this Article) not later than the last day of the business
year which includes the date of said payment, an appropriate amount
for the value of the National Treasury subsidies, etc. used f or the acquisition

CORPORATE TAX ACT
35or improvement of the assets for business may be included in d eductible
expenses in the calculation of the income amount for the conc erned
business year as prescribed by Presidential Decree.

(2) Where a domestic corporation which has failed to acquire or improve
the assets for business by the last day of the business year, t o which
the date of receiving the National Treasury subsidies belon gs, intends to
do so within 1 year of the first day of the following business y ear, the
amount of National Treasury subsidies, etc. intended for us e for acquisition
or improvement may be included in the deductible expenses by applying
paragraph (1)
mutatis mutandis . In this case, where National Treasury
subsidies, etc. could not have been used within time limit du e to a reason
prescribed by Presidential Decree such as delay, etc. of per mission or
authorization, the closing date of the business year to whic h the date when
the relevant reason terminates shall be deemed as the time li mit.

(3) Where a domestic corporation which has included an appro priate
amount for the National Treasury subsidies, etc. in the dedu ctible
expenses under the provisions of paragraph (2) fails to use s uch amount
for the acquisition or improvement of assets used for busine ss within
the time limit, or discontinues its business or goes bankrup t before using
it, the unused amount shall be included in gross income in the calculation
of the income amount for the business year which includes the date when
such cause occurs:
Provided , That the same shall not apply to a case
where such domestic corporation is merged or divided and the merged
corporation, etc. succeeds the amount. In this case, the amo unt shall
be deemed to have been included in deductible expenses by suc h merged
corporation, etc. under the provisions of paragraph (2).

(4) In the application of paragraph (1), if any domestic corp oration receives
the National Treasury subsidies, etc. in kind, not in money a nd uses
them for its business operations, they shall be deemed to hav e been
acquired and used for business improvements.

(5) A domestic corporation which wishes to be subject to the a pplication
of paragraphs (1) and (2) shall submit a detailed statement o n the National

CORPORATE TAX ACT
36Treasury subsidies, etc., and on the assets for business acq uired by the National
Treasury subsidies, etc. (in case of paragraph (2), a plan fo r use of the National
Treasury subsidies, etc.) to the chief of the district tax of fice having jurisdiction
over the place of tax payment under the conditions as prescri bed by Presidential
Decree.

(6) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the amount included in the deductible expenses,
the amount included in the gross income, and the method of cal culation
shall be prescribed by Presidential Decree.
Article 37 (Inclusion of Value of Fixed Assets Acquired by Co nstruction
Charges in Deductible Expenses)
(1) Where a domestic corporation operating a business falli ng under one
of the following subparagraphs is offered fixed assets whic h make up the
facilities such as land by the persons who utilize electrici ty, gas, heating,
etc., or by the persons who receive benefit from the faciliti es in order to
operate the facilities necessary for the business, or where it receives money,
etc. (hereafter referred to as “construction charges ”in this Article) and
uses it for the acquisition of fixed assets which constitute the concerned
facilities by the last day of the business year which include s the date
of receiving the money, etc., the value of the fixed assets (w here they
are acquired by construction charges, the appropriate amou nt of the
construction charges used for the acquisition of the fixed a ssets) may be
included in deductible expenses in the calculation of the in come amount
for the concerned business year under the conditions as pres cribed by
Presidential Decree:

1. Electricity service business under the Electric Utility Act;
2. Urban gas business under the Urban Gas Business Act;
3. Liquefied petroleum gas charging business, collective l iquefied
petroleum gas providing business, and liquefied petroleum gas sales
business under the Safety Control and Business of Liquefied Petroleum
Gas Act;
4. Integrated energy providing business under the provisio ns of
subparagraph 2 of Article 2 of the Integrated Energy Supply A ct; and
5. Business similar to those under subparagraphs 1 through 4 and as

CORPORATE TAX ACT
37prescribed by Presidential Decree.
(2) The provisions of Article 36 (2) and (3) shall apply
mutatis mutandis
with regard to the inclusion of the value of fixed assets acqu ired by construction
charges in the deductible expenses.

(3) A domestic corporation which wishes to be subject to the a pplication
of paragraphs (1) and (2) shall submit a detailed statement o n the fixed
assets and construction charges received and the fixed asse ts acquired
by construction charges (in case of paragraph (2), a plan for use of construction
charges) to the chief of the district tax office having juris diction over
the place of tax payment under the conditions as prescribed b y Presidential
Decree.
(4) In the application of the provisions of paragraphs (1) an d (2), matters
necessary for the amount included in the deductible expense s, the amount
included in the gross income, and the method of calculation s hall be prescribed
by Presidential Decree.
Article 38 (Inclusion of Value of Fixed Assets Acquired by In surance
Marginal Profits in Deductible Expenses)
(1) Where a domestic corporation is paid insurance money due to the
destruction or damage of fixed assets and uses the money for t he acquisition
of fixed assets of the same type to replace the destroyed fixe d assets or
for the improvement of the damaged fixed assets (including t he improvement
of acquired fixed assets) by the last day of the business year which includes
the date of the payment, an appropriate amount for the insura nce marginal
profits used for the acquisition or improvement of fixed ass ets may be
included in deductible expenses in the calculation of the in come amount
for the concerned business year under the conditions as pres cribed by
Presidential Decree.
(2) The provisions of Article 36 (2) and (3) shall apply
mutatis mutandis
with regard to the inclusion of the value of fixed assets acqu ired or improved
by insurance marginal profits in deductible expenses. In th is case,“1 year ”
in Article 36 (2) shall be deemed “2 years ”.
(3) A domestic corporation which wishes to be subject to the a pplication
of paragraphs (1) and (2) shall submit a detailed statement o n the insurance
money received and the fixed assets acquired or improved by t he

CORPORATE TAX ACT
38insurance money (in case of paragraph (2), a plan for use of in surance marginal
profits) to the chief of the district tax office having juris diction over the
place of tax payment under the conditions as prescribed by th e Presidential
Decree.
(4) In the application of the provisions of paragraphs (1) an d (2), matters
necessary for the amount included in deductible expenses, t he amount
included in gross income, and the method of calculation shal l be prescribed
by the Presidential Decree.
Article 39 Deleted.
Sub-Section 5 Period during Which Gross Income and
Deductible Expenses Accrue
Article 40 (Business Year during Which Gross Income and Dedu ctible
Expenses Accrue)
(1) The business year during which gross income and deductib le expenses
of a domestic corporation accrue shall be the business year w hich includes
the date on which the concerned gross income and deductible e xpenses
are settled.
(2) Matters necessary for the scope of the business year duri ng which
gross income and deductible expenses accrue under the provi sions of
paragraph (1) shall be prescribed by the Presidential Decre e.
Article 41 (Acquisition Value of Assets)
(1) The acquisition value of assets acquired by a domestic co rporation
through purchase, production, exchange, and donation shal l be the amounts
falling under each of the following subparagraphs: 1. For assets purchased from another person, the amount of th e total
of the purchase price and any incidental costs;
2. For assets acquired through the corporation ’s own manufacture,
production, construction, or other corresponding method, the amount
of the total of the cost of production and any incidental cost s; and
3. For assets acquired other than those under subparagraphs 1 and 2,
the amount as prescribed by the Presidential Decree.
(2) Matters necessary for the calculation of the acquisitio n value of assets,
such as the scope of purchase price and incidental costs, und er the provisions
of paragraph (1) shall be prescribed by the Presidential Dec ree.
Article 42 (Evaluation of Assets and Liabilities)

CORPORATE TAX ACT
39(1) Where the book value of assets and liabilities possessed by a domestic
corporation increases or decreases (excluding depreciati on; hereafter
referred to as “evaluation ”in this Article), the book value of the concerned
assets and liabilities in the calculation of the income amou nt for the business
year which includes the date of the evaluation and each subse quent business
year shall be the value before the evaluation:
Provided , That this shall
not apply to cases falling under any of the following subpara graphs:

1. Deleted;
2. Evaluation of fixed assets under the Insurance Business A ct and
other Acts (limited to amount of increase); and
3. Evaluation of inventory and other assets and liabilities as prescribed
by the Presidential Decree.
(2) Assets and liabilities under the provisions of paragrap h (1) 3 shall
be separated and evaluated by the method as prescribed by the Presidential
Decree.
(3) The book value of assets falling under any of the followin g subparagraphs
may be reduced by the method as prescribed by the Presidentia l Decree,
notwithstanding the provisions of paragraphs (1) and (2):

1. Inventory which cannot be sold at the normal price due to da mage,
spoilage, or other causes;
2. Fixed assets which are damaged or broken due to natural dis asters,
fires, or other causes as prescribed by the Presidential Dec ree;
3. Stocks, etc. that are prescribed by the Presidential Decr ee in case
where the issuing corporation goes dishonored, receives an
authorization for its rehabilitation plan under the Debtor
Rehabilitation and Bankruptcy Act and reveals signs of its p oor
corporate governance under the Corporate Restructuring Pr omotion Act;
and
4. In case where any corporation that has issued stocks, etc. goes bankrupt,
the relevant stocks, etc.
(4) A domestic corporation which evaluates assets and liabi lities under
the provisions of paragraphs (2) and (3) shall submit a detai led statement
on the evaluation of the concerned assets and liabilities to the chief of the
district tax office having jurisdiction over the place of ta x payment under

CORPORATE TAX ACT
40the conditions as prescribed by the Presidential Decree.
(5) Matters necessary for the disposition of marginal profi ts and marginal
losses arising from the evaluation of assets and liabilitie s under the
provisions of paragraphs (2) and (3) shall be prescribed by t he Presidential
Decree.
Article 43 (Application of Corporate Accounting Standards and Practices)
In the calculation of the income amount of a domestic corpora tion for
each business year, where the concerned corporation applie s corporate
accounting standards which are generally acknowledged as f air and
proper with respect to the business year during which gross i ncome and
deductible expenses accrue, and to the acquisition and eval uation of assets
and liabilities, or continuously applies the practices, th e concerned corporate
accounting standards or practices shall be governed except as otherwise
provided in this Act and the Restriction of Special Taxation Act.

Sub-Section 6 Special Cases concerning Mergers and Divisions, etc.
Article 44 (Inclusion of Appropriate Amount of Marginal Pro fits from
Merger Evaluation in Deductible Expenses)
(1) For mergers which meet the conditions falling under each of the following
subparagraphs, where a merged corporation evaluates and su cceeds to
the assets of an extinguished corporation, an appropriate a mount for marginal
profits from the merger evaluation on the value of the assets acquired by
succession (limited to assets prescribed by the Presidenti al Decree) may
be included in deductible expenses in the calculation of the income amount
for the business year which includes the date of the registra tion of the
merger, under the conditions as prescribed by the President ial Decree:

1. Where a merger occurs between domestic corporations whic h have
continued to operate their businesses for one year or more as of the
date of registration of the merger;
2. Where the total amount of the price that the merged corpora tion pays
the stockholders of an extinguished corporation in return f or such
merger is 95% or more of the value of the stocks; and
3. Where the merged corporation continues to operate the suc ceeded

CORPORATE TAX ACT
41business until the last day of the business year whereto belo ngs the
date of the registration of the merger.
(2) Where a merged corporation which includes an appropriat e amount
for marginal profits from the merger evaluation in the deduc tible expenses
under the provisions of paragraph (1) discontinues the succ eeded business
within 3 years from the first day of the business year followi ng the business
year which includes the date of the registration of the merge r, the amount
included in the deductible expenses shall be included in the gross income
in the calculation of income for the business year which incl udes the date
the business was discontinued.
(3) A merged corporation which wishes to be subject to the app lication
of paragraph (1) shall submit a detailed statement on margin al profits
from the merger evaluation to the chief of the district tax of fice having
jurisdiction over the place of tax payment under the conditi ons as
prescribed by the Presidential Decree.
(4) In the application of the provisions of paragraphs (1) an d (2), matters
necessary for criteria for judgements regarding the contin uance or
discontinuance of the succeeded businesses, calculation o f the amounts
included in gross income and deductible expenses, and the me thod for
the calculation shall be prescribed by the Presidential Dec ree.
Article 45 (Succession to Losses Carried Forward FollowingMerger)
(1) For mergers which meet the conditions falling under each of the following
subparagraphs, where a merged corporation succeeds to the a ssets of an
extinguished corporation at book value, as of the date of the registration
of the merger, the deficits of the extinguished corporation under the provisions
of subparagraph 1 of Article 13 shall be deemed the deficits o f the merged
corporation, and shall be deducted from the income amount ac cruing from
the succeeded business (in the case of any merged corporatio n that does
not perform the separate accounting on the grounds that it fa lls under
the provisions of the proviso to subparagraph 3, the amount o btained
by proportionally calculating the income amount according to the ratio
of the asset value that is set by the Presidential Decree) in t he calculation
of tax base of the merged corporation for each business year u nder the
conditions as prescribed by the Presidential Decree:

1. Where a merger falls under each subparagraph of Article 44 (1);

CORPORATE TAX ACT
422. Where the stocks, etc. which the stockholders, etc. of the extinguished
corporation receive from the merged corporation are 10% or m ore of
the total issued stocks of the merged corporation or equity i nvestment
shares as of the date of registration of the merger; and
3. Where the merged corporation maintains separate account ing under
the provisions of Article 113 (3):
Provided , That in case where a
merger is effected between small and medium enterprises or b etween
corporations that run the same type of business pursuant to t he provisions
of Article 25 (1) 1, the separate accounting may not be perfor med.
(2) Where a merged corporation which deducted the deficits o f an extinguished
corporation under the provisions of paragraph (1) disconti nues the
business acquired by succession from the extinguished corp oration within
3 years from the first day of the business year following the b usiness year
which includes the date of the registration of the merger, th e total amount
deducted as deficits shall be included in the gross income in the calculation
of the income amount for the business year whereto belongs th e date
on which the business was discontinued.
(3) Where a merger is deemed to be undertaken for the purpose o f unjustly
reducing tax burden, which is prescribed by the Presidentia l Decree,
the merged corporation may not deduct the deficits under the provisions
of subparagraph 1 of Article 13 in the calculation of the tax b ase for each
business year.
(4) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the criteria for judging the disconti nuation of
the succeeded businesses and corporations that run the same type of
business, the calculation of deficits to be deducted, and th e inclusion of
deducted deficits in the gross income in the calculation of t he tax base
for each business year shall be prescribed by the Presidenti al Decree.

Article 46 (Inclusion of Appropriate Amount of Marginal Pro fits from
Division Evaluation in Deductible Expenses)
(1) For divisions which meet the conditions falling under ea ch of the following
subparagraphs (excluding spin-off), where the corporatio n established
through division or the corporation which is the counterpar t of the division
and merger evaluates and succeeds to the assets of the divide d corporation
or the counterpart corporation extinguished through divis ion and merger,

CORPORATE TAX ACT
43an appropriate amount for marginal profits from the divisio n evaluation
on the value of the assets acquired by succession (limited to assets prescribed
by the Presidential Decree) may be included in the deductibl e expenses
in the calculation of the income amount for the business year which includes
the date of the registration of the division, under the condi tions as
prescribed by the Presidential Decree:
1. Where a domestic corporation which has continuously oper ated a business
for 5 years or more as of the date of the registration of the div ision
is divided under the conditions as prescribed by the Preside ntial Decree;
2. Where the full amount of the cost of division received from the corporation
established through division or the corporation which is th e counterpart
of the division and merger by the stockholders of a divided co rporation
or counterpart corporation extinguished through division and merger
(in case of division and merger, not less than the rate provid ed in Article
44 (1) 2) is paid in stocks, and said stocks are allocated in pr oportion
to the stocks in the divided corporation or counterpart corp oration
to a corporation extinguished through division and merger h eld by each
stockholder; and
3. Where the corporation established by division or the coun terpart
corporation to a division and merger continues to operate th e business
acquired from the divided corporation or the counterpart co rporation
extinguished through division and merger by succession unt il the last
day of the business year which includes the date on which the d ivision
was registered.
(2) Where any corporation established by a division or any co unterpart
corporation to a division and merger (referring to a merged c orporation
in case any corporation established by a division or any coun terpart corporation
to a division and merger is merged with another corporation) which includes
an appropriate amount for marginal profits from the divisio n evaluation in
the calculation of deductible expenses under the provision s of paragraph (1)
discontinues a business it acquired through succession fro m a divided
corporation or a counterpart corporation to a corporation e xtinguished
through division and merger within 3 years from the first day of the business
year following the business year which includes the date of t he registration
of the division, the amount included in deductible expenses (referring to
an amount equivalent to the amount of deductible expenses in case that

CORPORATE TAX ACT
44any corporation established by a division or a counterpart c orporation to
a division and merger is merged with another corporation and the merged
corporation succeeds the amount included in deductible exp enses under
paragraph (1) from such corporation established by a divisi on or such
counterpart corporation to the division and merger) shall b e included as
gross income in the calculation of income for the business ye ar which includes
the date the business was discontinued. In this case, if the m erged
corporation succeeds again the business that the corporati on established
by a division or the counterpart corporation to the division and merger
has succeeded from the divided corporation or the counterpa rt corporation
to the extinguished corporation that is merged through a div ision, such
business shall not be deemed discontinued.

(3) A corporation established by division or a counterpart c orporation to
a division and merger which wishes to be subject to the applic ation of
the provisions of paragraph (1) shall submit a detailed stat ement on division
evaluation marginal profits to the head of the district tax o ffice having
jurisdiction over the place of tax payment under the conditi ons as prescribed
by the Presidential Decree.
(4) In the application of the provisions of paragraphs (1) an d (2), matters
necessary for criteria for judgements regarding the contin uance or
discontinuance of businesses acquired by succession, calc ulation of the
amounts included in gross income and deductible expenses, a nd the method
for inclusion of income and deductible expenses in the calcu lation of
income shall be prescribed by the Presidential Decree.
Article 47 (Inclusion of Reasonable Amount for Asset Transf er Marginal
Profits Due to Spin-off in Calculation of Deductible Expens es)
(1) Where a divided corporation acquires the stocks of a corp oration
established by a division due to spin-off and the conditions under each
subparagraph of Article 46 (1) are met (in case of subparagra ph 2 of the
same paragraph, the full amount must be in stocks), an approp riate amount
for assets transfer marginal profits generated by the spin- off from the
value of the stocks concerned may be included as deductible e xpenses in
the calculation of income for the business year which contai ns the date
of the registration of the spin-off, under the conditions as prescribed by the
Presidential Decree.

(2) Where any corporation established by a division (in case where the
corporation established by a division is merged with any oth er corporation,
it refers to the merged corporation) ceases to run a business it succeeds
from any divided corporation after including an amount equi valent to
transfer marginal profits in deductible expenses under par agraph (1), within
3 years from the date of the commencement of the business year following
the business year that includes the date on which such a divis ion registration
is made, the amount that is included in deductible expenses u nder paragraph
(1) (referring to the amount included in deductible expense s in accordance
with paragraph (3) in case that the amount falls under the sam e paragraph)
shall be included in gross income in the calculation of incom e amount for
the business year that includes the date on which the busines s is
discontinued. In this case, any merged corporation succeed s again the
business that the corporation established by a division has succeeded from
any divided corporation, such business shall not be deemed d iscontinued.

(3) Where any merged corporation succeeds again the business that any
corporation established by a division has succeeded from a d ivided
corporation, such divided corporation may continue to incl ude the amount
included in deductible expenses under paragraph (1) in dedu ctible expenses
without including such amount in gross income under the cond itions as
prescribed by the Presidential Decree.

(4) A divided corporation which wishes to be subject to the pr ovisions
of paragraph (1) shall submit a detailed statement on transf er marginal
profits for assets generated by the division to the head of th e district tax
office having jurisdiction over the place of tax payment und er the conditions
as prescribed by the Presidential Decree.
(5) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the calculation of transfer marginal profits, criteria
for judgement on the discontinuation of businesses acquire d by succession,
calculation of the amounts included in gross income and dedu ctible expenses,
and the method for inclusion of gross income and deductible e xpenses in
the calculation of income shall be prescribed by the Preside ntial Decree.

Article 48 (Special Cases of Calculation of Income for Corpo rations which

CORPORATE TAX ACT
46Continue to Exist After Division)
(1) Where a domestic corporation continues to exist after a d ivision
(excluding spin-off), in the calculation of income for the b usiness year
which includes the date on which the division registration o f the concerned
divided corporation is made, the amount of income generated by the division,
notwithstanding the provisions of Article 14 (1), shall be t he amount
calculated by balancing the amount under subparagraph 1 wit h the amount
under subparagraph 2, under the conditions as prescribed by the Presidential
Decree: 1. The total amount of the cost of division that stockholders of a divided
corporation receive due to the division from the corporatio n established
by division or the counterpart corporation to a division and merger;
and
2. The decrease in the divided corporation ’s equity capital due to division
(limited to divided business category).
(2) In the application of the provisions of paragraph (1), ma tters necessary
for calculation of income amounts generated by the division such as the
total cost of the division and the calculation of the reducti on of equity
capital shall be prescribed by the Presidential Decree.
Article 48-2 (Succession of Loses Carried Forward Followin g Division)
(1) Where any corporation established by a division (exclud ing spin-off)
or any counterpart corporation to a division and a merger (he reafter referred
to as the “corporation established by a division, etc. ”in this Article), which
meets the requirements of the following subparagraphs, suc ceeds the assets
of any divided corporation that is extinguished after its di vision or any
extinguished counterpart corporation to the division and m erger (hereafter
referred to as the “divided corporation, etc. ”in this Article) at the book
value, the amount that belongs to the business that the corpo ration
established by a division, etc. succeeds from among the amou nt of deficits
provided for in the provisions of subparagraph 1 of Article 1 3 of the divided
corporation, etc. as of the date on which a division registra tion is made
shall be deemed the amount of deficits of the corporation est ablished
by a division, and the amount of deficits shall be deducted fr om the
calculation of the tax base of each business year of the corpo ration established
by a division, etc. under the conditions as prescribed by the Presidential
Decree: 1. It is required to fall under each subparagraph of Article 4 6 (1);

CORPORATE TAX ACT
472. In the case of division and merger, the stocks, etc. that ar e taken
by the stockholders, etc. of the divided corporation, etc. f rom the
corporation established by a division, etc. are required to be in excess
of 10/100 of the total number of stocks issued or the total amo unt
of the investment as of the date on which the division registr ation
of the relevant corporation established by a division, etc. is made;
and
3. The corporation established by a division, etc. is requir ed to perform
the separate accounting provided for in the provisions of Ar ticle 113
(3):
Provided , That in the case of division and merger, in case where
the division and merger are made between small and medium ent erprises
and corporations that run the same type of business, the sepa rate
accounting may not be performed.
(2) Where any corporation established by a division, etc. su cceeds the
amount of deficits of any divided corporation, etc. pursuan t to the provisions
of paragraph (1) and discontinues running the business that it succeeds
from such divided corporation, etc. within 3 years from the b eginning date
of the business year after the business year to which the date on which
the division registration is made belongs, the total deduct ed amount of
deficits shall be included in the gross income in the calcula tion of the
income amount of the business year to which the date on which c orporation
discontinues running the business belongs.
(3) In the application of the provisions of paragraphs (1) an d (2), necessary
matters concerning the calculation of the amount of deficit s of the business
that is succeeded, the criteria for judging the discontinua tion of the business
that is succeeded, the corporations that run the same type of business,
the calculation of the amount of deficits that is deducted fr om the tax
base of each business year and the inclusion of the deducted a mount of
deficits in the gross income, etc. shall be prescribed by the Presidential
Decree.
[This Article Newly Inserted by Act No. 7838, Dec. 31, 2005] Article 49 (Succession to Assets and Liabilities upon Merge r and Division)
In case of the merger or division of domestic corporations, e xcept where
provided for in this Act or other Acts, in the calculation of t he income
amount and the tax base for each business year of a corporatio n extinguished
due to a merger, divided corporation, or counterpart corpor ation to a
corporation extinguished through division and merger (her einafter

CORPORATE TAX ACT
48referred to as an “extinguished corporation, etc. ”), matters necessary for
dispositions of the amounts included or not included in gros s income or
deductible expenses in the calculation of the amount and the succession
to that amount and other assets and liabilities by the merged corporation,
etc. shall be prescribed by the Presidential Decree.
Article 50 (Inclusion of Reasonable Amount for Asset Transf er Marginal
Profits due to Exchange in Calculation of Deductible Expens es)
(1) Where assets as prescribed by the Presidential Decree wh ich are fixed
assets used directly for a business as prescribed by the Pres idential Decree
by a domestic corporation which operates the concerned busi ness for 2
years or more (hereafter referred to as the “fixed assets for business use ”
in this Article) are exchanged for the same type of fixed asse ts for business
use directly used for the concerned business for 2 years or mo re by another
domestic corporation (hereafter referred to as the “assets acquired by
exchange ”in this Article) other than a person with a special relations hip
under the provisions of Article 52 (1) (including exchange a mong many
corporations as prescribed by the Presidential Decree), an appropriate
amount for transfer marginal profit of the fixed assets for b usiness use
generated by the exchange from the value of assets acquired b y exchange
may be included as deductible expenses in the calculation of the income
amount for the concerned business year under the conditions as prescribed
by the Presidential Decree.
(2) The provisions of paragraph (1) shall apply to a case wher e any domestic
corporation uses assets acquired by exchange for using them for the
concerned domestic corporation until the last day of the bus iness year
to which the date of the exchange belongs.

(3) A domestic corporation which wishes to be subject to the p rovisions
of paragraph (1) shall submit a detailed statement on the exc hange of
assets to the head of the district tax office having jurisdic tion over the
place of tax payment under the conditions as prescribed by th e Presidential
Decree.
(4) In the application of the provisions of paragraph (1), ma tters necessary
for the amount included in deductible expenses and the metho d for inclusion
of such amount in the calculation of gross income shall be pre scribed by
the Presidential Decree.
Sub-Section 7 Tax Exemption and Income Deduction
Article 51 (Non-Taxable Income)

CORPORATE TAX ACT
49Of the incomes of a domestic corporation for each business ye ar, incomes
accruing from the trust estate of a charitable trust shall no t be subject
to the corporate taxation.
Article 51-2 (Income Deduction for Special Purpose Compani es, etc.)
(1) Where any domestic corporation falling under any one of t he following
subparagraphs pays not less than 90/100 of profits availabl e for dividends
prescribed by the Presidential Decree, such amount shall be deducted from
the income amount for the relevant business year:

1. A special purpose company under the Asset-Backed Securit ization Act;
2. An investment company, private equity fund, and special p urpose
company under the Act on Business of Operating Indirect Inve stment
and Assets;
3. A corporate restructuring investment company under the C orporate
Restructuring Investment Companies Act;
4. A real estate investment company for corporate restructu ring and
real estate investment company for consigned-management u nder the
Real Estate Investment Company Act;
5. A ship investment company under the Ship Investment Compa ny Act;
5-2. A corporation that is prescribed by the Presidential De cree as a
special-purpose corporation, etc. under the Rental Housin g Act;
5-3. A specialized cultural industry company under the Fram ework Act
on the Promotion of Cultural Industries;
5-4. An overseas resources development investment company and a
specialized overseas resources development investment co mpany
under the Overseas Resources Development Business Act; and
6. An investment company similar to those as provided for in s ubparagraphs
1 through 5 and 5-2 through 5-4 which meets the following requ irements:
(a) Its assets shall be used for an investment in plants and infrastructures, the development of resources, or a specif ic business
requiring a considerable time and money, whose profits are t o be
distributed to its stockholders;
(b) It shall have no business office, other than the headquar ters, and
no staff member and full-time officer;
(c) It shall exist for a limited period of not less than 2 years ;
(d) It shall be a stock company under the Commercial Act or any other Act which is established in the form of incorporation b y
promoters;

CORPORATE TAX ACT
50(e) Its promoters shall not fall under any subparagraph of Ar ticle 4
(2) of the Corporate Restructuring Investment Companies Ac t and
shall meet the requirements as set by the Presidential Decre e;
(f) Its directors shall not fall under any subparagraph of Ar ticle 12
of the Corporate Restructuring Investment Company Act;
(g) Its auditor shall meet Article 17 of the Corporate Restru cturing
Investment Company Act. In this case, the “corporate restructuring
investment company ”in the said Article shall be deemed the
“ company ”; and
(h) It shall satisfy the requirements as set by the President ial Decree
for the size of the capital and the report, etc. of the entrust ment
and establishment of the asset management business and fund
management business.
(2) The provisions of paragraph (1) shall not apply to a case w here the
income tax or the corporation tax is not levied on dividends t hat are paid
to stockholders, etc. pursuant to this Act and the Restricti on of Special
Taxation Act and any domestic corporation that pays the rele vant dividends
to its stockholders is a corporation that falls under the sta ndards that
are set by the Presidential Decree, in consideration of the n umber of its
stockholders, etc.

(3) Any person who intends to be subject to the application of the provisions
of paragraph (1) shall file an application for income deduct ion under
the conditions as prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 6047, Dec. 28, 1999] Sub-Section 8 Special Cases concerning Calculation of
Income Amount
Article 52 (Repudiation of Wrongful Calculation)
(1) Where the head of the district tax office having jurisdic tion over the
place of tax payment or the Commissioner of the competent Reg ional Tax
Office deems that the tax burden of a domestic corporation ha s been unjustly
reduced through the wrongful calculation of the income amou nt of the
corporation in transactions with a person with a special rel ationship as
prescribed by the Presidential Decree (hereinafter referr ed to as a“person
with a special relationship ”), he may calculate the income amount for each

CORPORATE TAX ACT
51business year of the concerned corporation without regard t o the wrongful
calculation of the income amount of the corporation (herein after referred
to as “wrongful calculation ”).
(2) In the application of the provisions of paragraph (1), th e standard
for judgement shall be the prices applied or to be applied in s ound and
generally-accepted practice and related activities in nor mal transactions
between persons without a special relationship (including premium rates,
interest rates, rental rates, and exchange rates and other c orresponding
rates; hereafter referred to as the “market price ”in this Article).
(3) A domestic corporation shall submit a detailed statemen t reporting the
particulars of transactions with a person with a special rel ationship for each
business year to the head of the district tax office having ju risdiction over
the place of tax payment under the conditions as prescribed b y the Presidential
Decree.
(4) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the forms of wrongful calculation and the assessment
of market price shall be prescribed by the Presidential Decr ee.
Article 53 (Special Cases on Calculation of Income Amount fr om
Transactions with Foreign Corporations, etc.)
(1) Where treaties are concluded between Korea and other cou ntries in
order to prevent double taxation (hereinafter referred to a s“tax treaties ”)
on the transaction amount of transactions with foreign bran ches of domestic
corporations or non-resident or foreign corporations, the head of the district
tax office having jurisdiction over the place of tax payment or the
Commissioner of the competent Regional Tax Office may adjus t and calculate
the income amount for each business year of the corporation i n accordance
with the provisions of the mutual agreed treaties.
(2) In the application of the provisions of paragraph (1), ma tters necessary
for the application for settlement of the income amount of a d omestic
corporation and the settlement procedures shall be prescri bed by the
Presidential Decree.
Article 54 (Regulations for Calculation of Income Amount)
Matters necessary for the calculation of the income amount f or each business
year of a domestic corporation which are not provided for in t his Act shall
be prescribed by the Presidential Decree.

CORPORATE TAX ACT
52SECTION 2 Calculation of Tax Amount
Article 55 (Tax Rates)
(1) The corporate tax amount on the income for each business y ear of
a domestic corporation shall be the amount calculated by app lying the
following tax rates to the tax base under the provisions of Ar ticle 13
(hereinafter referred to as the “calculated tax amount ”, and in case that
there is the corporate tax to be levied on the income accruing from the
transfer of land, etc. under Article 55-2, it shall be the sum of the amounts):

Tax Base Tax Rate
100,000,000 won or less 13/100 of tax base
More than 100,000,000 won 13,000,000 won 25/100 of the amount
＋
in excess of 100,000,000 won
(2) For corporate tax on the income for each business year of a
domestic
corporation less than one year old, the amount obtained by di viding the
amount calculated for the business year by application of th e provisions
of Article 13 by the number of months in the business year and m ultiplying
by 12 shall be the tax base for the business year, and the tax am ount
obtained by multiplying the tax amount calculated under the provisions
of paragraph (1) by the number of months in the business year d ivided
by 12 shall be the tax amount. In the case, the calculation of t he number
of months shall be prescribed by the Presidential Decree.
Article 55-2 (Special Cases for Taxation on Income Accruing from Land
Transfer)
(1) In case where a domestic corporation has transferred the land and
building (including any facilities and structures attache d to such building;
hereafter referred to as “land, etc. ”in this Article and Article 95-2) falling
under any of the following subparagraphs, it shall pay the ta x amount
calculated pursuant to the following subparagraphs as corp orate tax on
the transfer income of land, etc. in addition to the corporat e tax amount
calculated by applying the tax rate pursuant to the provisio ns of Article
55 to the tax base pursuant to the provisions of Article 13. In this case,
when one asset falls under two or more of the following subpar agraphs,
the highest tax amount shall apply thereto:

1. In case the average price of land during the immediately pr eceding
quarter in the area prescribed by Presidential Decree, whic h was
investigated by the Minister of Land, Transport and Maritim e Affairs
in accordance with the provisions of Article 125 of the Natio nal Land
Planning and Utilization Act, rises by not less than 3/100 co mpared
with that during the quarter before the immediately precedi ng quarter,
or rises by not less than 10/100 compared with that during the same
quarter of the preceding year, and any land, etc. located in s uch area
are transferred, a tax amount calculated by multiplying any income
accruing from such transfer by 10/100 (20/100 for any income accruing
from the transfer of unregistered land, etc.);
2. In case a house (including annexed land) prescribed by Pre sidential
Decree is transferred, a tax amount calculated by multiplyi ng the
transfer income of land, etc. by 30/100 (40/100 for any incom e accruing
from the transfer of unregistered land, etc.); and
3. In case any idle land is transferred, a tax amount calculat ed by
multiplying the transfer income of land, etc. by 30/100 (40/ 100 for
any income accruing from the transfer of unregistered land, etc.).
(2) The term “idle land ”in paragraph (1) 3 means the land falling under
any of the following subparagraphs during the holding perio d that is set
by Presidential Decree:

1. The dry field, the paddy field and the orchard (hereafter r eferred to
as the “farmland ”in this Article), which fall under any of the following
items:
(a) The land that is owned by any corporation whose principle business
is not farming:
Provided , That any farmland that is prescribed
by Presidential Decree as being permissible to be owned by an y
corporation pursuant to the Farmland Act and other Acts shal l be
excluded; and
(b) The farmland in any urban area (excluding the urban area t hat
is designated by the Presidential Decree; hereafter the sam e shall
apply in this item) under subparagraph 1 of Article 6 of the Na tional
Land Planning and Utilization Act among the area of the Speci al
Metropolitan City, the area of the Metropolitan City (exclu ding
the
Gun area in the Metropolitan City; hereafter the same shall

CORPORATE TAX ACT
54apply in this paragraph) and the area of the Si (excluding the areas
of the
Eup /Myeon in the Si of the combined form of urban and rural
communities under Article 3 (4) of the Local Autonomy Act; he reafter
the same shall apply in this paragraph):
Provided , That any farmland
for which the period that is set by the Presidential Decree do es
not lapse from the date on which such farmland is included in a n
urban area shall be excluded;
2. The forests and fields:
Provided , That those falling under any of the
following items shall be excluded:
(a) The forest gene resource protection forest, the forest r eserve, the
seed-gathering forest, and the experimental forest design ated
under the Forestry Act and other forests and fields that are p rescribed
by the Presidential Decree as being necessary for the protec tion
and fosterage of mountains and trees and for the public inter est;
(b) The forests and fields, prescribed by the Presidential D ecree, which
are owned by the corporations whose main business is the fore stry
or the corporations which are silviculturists provided for in the
Forestry Act; and
(c) The forests and fields that are prescribed by the Preside ntial
Decree as being directly involved in the business of any corp oration
in view of their owners, location, utilization, holding per iod, size
of area, etc.;
3. The ranch area falling under any of the following items:
Provided ,
That any ranch area that is prescribed by the Presidential De cree as
being directly involved in the business of any corporation i n view of
its owner, location, utilization, holding period, size of a rea, etc. shall
be excluded:
(a) The ranch area which is owned by any corporation that runs the livestock business as its main business, of which the siz e
of area is in excess of the standard size of the livestock area
prescribed by the Presidential Decree, or which is located i n the
urban areas (excluding any urban area that is prescribed by t he
Presidential Decree; hereafter the same shall apply in this item)
of the Special Metropolitan City, the Metropolitan City and the
Si (excluding a case where the period that is set by the Presidential
Decree does not lapse from the date on which the ranch area

CORPORATE TAX ACT
55is included in the urban area); and
(b) The ranch area that is owned by any corporation that does n ot
run the livestock business as its main business;
4. The land, other than the farmlands, the forests and fields , and the
ranch areas, that excludes the land falling under any of the f ollowing
items:
(a) The land for which the property tax is not levied or exempt ed pursuant
to the Local Tax Act or the provisions of Acts concerned;
(b) The land that is subject to the aggregate taxation of only property
tax or the separate taxation pursuant to the provisions of Ar ticle
182 (1) 2 and 3 of the Local Tax Act; and
(c) The land that is prescribed by the Presidential Decree as being
directly involved in the business of any corporation in view of its
current utilization, the fulfillment of duties imposed by r elevant Acts,
the amount of revenues, etc.;
5. The land whose area is in excess of the area that is obtained by multiplying
the multiple rate that is set by the Presidential Decree by th e area
of land on which housing is built, among lands to which housin g is
attached under the provisions of Article 182 (2) of the Local Tax Act;
6. The residental building that is not used for permanent res idental
purpose, but for recreational, summering or amusement purp oses
(hereafter referred to as “resort villa ”in this subparagraph) and lands
attached thereto:
Provided , That the housing of rural or fishing
communities and lands attached thereto that are located in t he
Eup
or the Myeon provided for in the provisions of Article 3 (3) and (4)
of the Local Autonomy Act and are in conformity with the scope and
standards that are prescribed by the Presidential Decree sh all be
excluded, and when the boundary of the land attached to any re sort
villa is unclear, the land ten times the floor area of the buil ding shall
be deemed the land attached to such resort villa; and
7. The land that is similar to the land referred to in the provi sions of
subparagraphs 1 through 6 and is prescribed by the President ial Decree
as being not directly involved in the corporation business.
(3) In the application of the provisions of paragraph (1) 3, i n case where
any land becomes an idle land on the grounds of the prohibitio n of its
use provided for in the provisions of Acts and subordinate st atutes or on

CORPORATE TAX ACT
56other grounds of inevitability that are prescribed by the Pr esidential Decree
after its acquisition, the land in question may not be deemed an idle land
under the conditions as prescribed by the Presidential Decr ee.

(4) The provisions of paragraph (1) shall not apply to any tra nsfer income
of the land, etc. falling under any of the following subparag raphs:
Provided ,
That the same shall not apply to any transfer income of any unr egistered
land, etc.:

1. Income accruing from the disposal of land, etc. that is mad e by the
adjudication of bankruptcy;
2. Income accruing from the exchange, separation, or integr ation of
farmland that is cultivated by a corporation and prescribed by the
Presidential Decree; and
3. Income accruing from the grounds prescribed by the Presid ential Decree,
including any land substitution disposition taken in accor dance with
the Act on the Maintenance and Improvement of Urban Areas and
Dwelling Conditions for Residents or other Acts.
(5) The term “unregistered land, etc. ”in paragraphs (1) and (4) means
the land, etc. that any corporation has acquired without reg istering its
acquisition:
Provided , That the land, etc. which is acquired on the condition
of long-term installment and of which the contract term make s it impossible
to register its acquisition at the time when it is acquired, a nd other land,
etc. prescribed by the Presidential Decree shall be exclude d.

(6) The transfer income of land, etc. shall be an amount obtai ned by
subtracting the book value thereof at the time of transfer fr om the transfer
amount of land, etc.
(7) In the application of paragraphs (1) through (6), necess ary matters
concerning the scope of farmland, forests and fields, and ra nch area, the
criteria for judging main business, the method of calculati ng the transfer
income of land, etc. in the case of any loss from the transfer o f such land,
etc. during the relevant business year, and the business yea r of accrual
of any profit or loss from the transfer of land, etc. shall be p rescribed
by the Presidential Decree.

[This Article Newly Inserted by Act No. 6558, Dec. 31, 2001] Article 56 Deleted.

CORPORATE TAX ACT
57Article 57 (Tax Credit, etc. for Tax Amount Paid in Foreign Co untry)
(1) Where the tax base of a domestic corporation for each busi ness year
includes any income generated in a foreign country, and an am ount of
foreign corporate tax on the income generated in a foreign co untry as
prescribed by the Presidential Decree (hereafter referred to as the“foreign
corporate tax amount ”in this Article) is paid or payable, the corporation
may be subject to the application of the method that it has cho sen out
of the following methods, notwithstanding the provisions o f subparagraph
1 of Article 21:

1. Method of deducting the amount of the foreign corporate ta x up to
the limit (hereafter referred to as the “deduction limit ”in this Article)
of the amount obtained by multiplying the corporate tax amou nt for
the corresponding business year (excluding any corporate t ax amount
on any income accruing from the transfer of land, etc.) calcu lated under
the provisions of Article 55 by the percentage of the tax base for the
corresponding business year constituted by income generat ed in a foreign
country (where the tax amount is reduced or exempted under th e
Restriction of Special Taxation Act and other Acts and subor dinate
statutes, the percentage as prescribed by the Presidential Decree) from
the corporate tax amount for the corresponding business yea r; and
2. Method of including the foreign corporate tax amount paid or to be
paid on income generated in a foreign country in deductible e xpenses
in the calculation of the income amount for each business yea r.
(2) Where a foreign corporate tax amount in excess of the dedu ction limit
is paid or payable to a foreign government, the amount in exce ss may
be carried forward in each business year within 5 years from t he first
day of the business year following the corresponding busine ss year, and
may be deducted within the scope of the deduction limit for ea ch business
year in which it is carried forward
(3) The appropriate amount of the reduced or exempted amount of corporate
tax on income a domestic corporation generates in a foreign c ountry which
is a party to a tax treaty shall be deemed the foreign corporat e tax amount
for which the tax credit or the inclusion in deductible expen ses under
the provisions of paragraph (1) is allowable, within the sco pe as prescribed
by the relevant tax treaty.
(4) Where the income amount of a domestic corporation for eac h business

CORPORATE TAX ACT
58year includes profits from dividend or distribution of surp lus funds from
a foreign subsidiary (hereafter referred to as “revenue dividends ”in this
Article), the foreign corporate tax amount levied on the cor responding
revenue dividends calculated as prescribed by Presidentia l Decree shall
be deemed the foreign corporate tax amount for which the tax c redit or
inclusion in deductible expenses is allowable under the pro visions of
paragraph (1), within the scope as prescribed by the tax trea ty.
(5) The term “foreign subsidiary ”in paragraph (4) means a foreign corporation
with 20% (referring to 5% in case of a foreign corporation whi ch carries
on the overseas resources development business under Artic le 22 of the
Restriction of Special Taxation Act) or more of the total num ber of
outstanding stocks with voting right issued by a domestic co rporation or
total amount of financing invested by a domestic corporatio n, which meets
the requirements as prescribed by Presidential Decree.

(6) Matters necessary for the tax credit or inclusion in dedu ctible expenses
under the provisions of paragraphs (1) through (4) shall be p rescribed
by Presidential Decree.
Article 57-2 (Special Case concerning Tax Credit for Foreig n Corporate
Tax Amount Paid in Foreign Country by Indirect Investment Co mpanies,
etc.)
(1) In cases where any investment company, any private equit y fund and
any specific purpose company provided by the Act on Business of Operating
Indirect Investment and Assets and any corporate restructu ring real estate
investment company and any consigned-management real esta te
investment company referred to in the Real Estate Investmen t Company
Act (hereafter referred to as the “indirect investment company, etc. ”in
this Article) pay the amount of foreign corporate tax (refer ring to the
amount of foreign corporate tax referred to in the provision s of Article
57 (1)) on their incomes that are generated from their invest ment in foreign
assets, they shall each pay a tax amount obtained by subtract ing the tax
amount paid abroad in the corresponding business year (it sh all be up to
the tax amount obtained by multiplying the tax rate pursuant to the provisions
of Article 129 (1) 2 of the Income Tax Act by the income that is g enerated
from the investment in assets abroad, and the amount in exces s shall be
deemed nonexistent) from the amount of the corporate tax of t he
corresponding business year when they each file a return of t he tax base

CORPORATE TAX ACT
59of the business year during which the relevant income is gene rated,
notwithstanding the provisions of Article 57.

(2) Where any indirect investment company, etc. pays the for eign corporate
tax amount for the relevant business year provided for in the provisions
of paragraph (1) in excess of the corporate tax for the corres ponding business
year, it may have the excess amount refunded under the condit ions as
prescribed by the Presidential Decree.
(3) In the case of an investment trust company pursuant to the provisions
of Article 17 (1) 5 of the Income Tax Act, the relevant trust in vestment
company shall be deemed the domestic corporation and then th e provisions
of paragraphs (1) and (2) shall apply thereto. In this case, t he
“business
year
” in the provisions of paragraph (1) shall be deemed the “accounting
period of the investment trust
” and the “time when the return of the tax
base is filed
” shall be deemed the “time when the settlement of accounts
is performed
”.
(4) In the application of the provisions of paragraph (3), th e amount of
the corporate tax of the relevant business year shall be deem ed non-existent
and then the provisions of paragraph (2) shall apply thereto .
(5) In the application of the provisions of paragraphs (3) an d (4), the
asset management company that operates any investment trus t property
provided for in the Act on Business of Operating Indirect Inv estment and
Assets shall be deemed to act on behalf of the relevant invest ment trust
company.
[This Article Newly Inserted by Act No. 7838, Dec. 31, 2005] Article 58 (Tax Credit for Losses from Disasters)
(1) Where a domestic corporation loses 30% or more of the tota l amount
of assets for each business year as prescribed by Presidenti al Decree (hereafter
referred to as the “total amount of assets ”in this Article) due to natural
disasters or other accidents (hereinafter referred to as “disasters ”) and
it is deemed difficult for it to pay taxes, the amount (limite d to the value
of lost asset) calculated by multiplying the corporate tax a mount falling
under the following subparagraphs by the percentage of the t otal amount
of assets prior to the loss constituted by the value of the los t assets shall
be deducted from the tax amount. In this case, the value of lan d shall

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60not be included in the value of the assets:1. Corporate tax which has not yet been imposed, or which has n ot yet
been paid after imposition (including additional charges) as of the
date of occurrence of disaster; and
2. Corporate tax on income for the business year which includ es the date
of the occurrence of the disaster.
(2) A domestic corporation which wishes to be subject to the t ax credit
under the provisions of paragraph (1) shall apply to the chie f of the district
tax office having jurisdiction over the place of tax payment under the
conditions as prescribed by Presidential Decree.
(3) Where the chief of the district tax office having jurisdi ction over the
place of tax payment receives an application for corporate t ax credit referred
to in paragraph (1) 1 under the provisions of paragraph (2) (e xcluding
those whose time limit for reporting has not passed), he shal l determine
the amount to be deducted from tax amount and notify the relev ant
corporation thereof.
(4) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the tax credit for disasters such as th e calculation
of the percentage of lost assets shall be prescribed by Presi dential Decree.
Article 58-2 (Tax Credit for Agricultural Income Tax)
(1) The agricultural income tax amount paid by a domestic cor poration
for each business year shall be deducted from its corporate t ax amount
payable for the corresponding business year:
Provided , That where the
agricultural income tax amount exceeds its corporate tax am ount, such
excess amount shall not be refunded.
(2) A domestic corporation that intends to be subject to the t ax credit
pursuant to paragraph (1) shall apply to the chief of the dist rict tax office
having jurisdiction over the place of tax payment under the c onditions
as prescribed by the President Decree.
[This Article Newly Inserted by Act No. 6293, Dec. 29, 2000] Article 58-3 (Tax Credit following Correction due to Wrongf ul Accounting
Handling)
(1) If a domestic corporation has received correction pursu ant to the
provisions of Article 66 (2) 4, the overpaid tax amount shall be orderly

CORPORATE TAX ACT
61deducted from the corporate tax amount of each business year that concludes
within 5 years from the starting date of the business year to w hich the
correction date belongs.
(2) In applying the provisions of paragraph (1), in case the d omestic
corporation has payable tax for a business year before the bu siness year
where the correction date belongs according to a revised rep ort pursuant
to the provisions of Article 45 of the Framework Act on Nation al Taxes,
the overpaid tax pursuant to the provisions of paragraph (1) shall be
deducted from the payable tax beforehand.
(3) The concrete methods and procedures relating to tax dedu ction pursuant
to paragraphs (1) and (2) shall be prescribed by the Presiden tial Decree.
[This Article Newly Inserted by Act No. 7005, Dec. 30, 2003] Article 59 (Calculation of Amount of Tax Reduction/Exempti on and Tax
Deduction)
(1) In the application of this Act and other Acts, where the pr ovisions
on the reduction and exemption of corporate tax and the provi sions on
the tax deduction amount apply simultaneously, they shall a pply in the
order of the following subparagraphs, except where provide d otherwise.
In this case, where the amount of the sum of subparagraphs 1 an d 2 excesses
the corporate tax amount (excluding the corporate tax on inc ome accruing
from the transfer of land, etc. and additional tax) to be paid by the
corporation, the amount in excess shall be deemed not to exis t:

1. Reduction and exemption (including exemption) of the tax amount
on income for each business year;
2. Unconfirmed tax deduction amount of the deduction carrie d forward;
3. Confirmed tax deduction amount of the deduction carried f orward.
In this case, where the tax deduction amount generated durin g the
concerned business year and the carried forward amount not d educted
are together, the carried forward amount not deducted shall be deducted;
and
4. Tax deduction pursuant to the provisions of Article 58-3. In cases
there are tax deduction concerned and tax deduction carried forward,
the tax deduction carried forward shall be deducted beforeh and.
(2) Where taxes are reduced or exempted under the provisions of paragraph
(1) 1, the amount of the tax reduction or exemption shall be th e amount
obtained by multiplying the calculated tax amount (excludi ng the corporate

CORPORATE TAX ACT
62tax on income accruing from the transfer of land, etc.) by the percentage
(where it is in excess of 100%, it shall be 100%) of the tax base under
the provisions of Article 13 constituted by the reduced or ex empted income
(in cases of reduction and exemption, the amount obtained by multiplying
such amount by the percentage of the concerned reduction and exemption),
except where provided otherwise.

(3) Matters necessary for the method for application to exti nguished
corporations, etc. which received tax reduction and exempt ion and tax
deduction under each subparagraph of paragraph (1) in cases of merger
or division and the calculation of tax reduction and exempti on and the
amount of tax deduction under the provisions of paragraphs ( 1) and (2)
shall be prescribed by Presidential Decree.
SECTION 3 Report and Payment
Article 60 (Report on Tax Base, etc.)
(1) A domestic corporation with a duty to pay taxes shall repo rt the corporate
tax base and tax amount on income for the concerned business y ear within
3 months from the last day of the month to which the closing dat e of
each business year belongs to the chief of the district tax of fice having
jurisdiction over the place of tax payment under the conditi ons as prescribed
by Presidential Decree.

(2) The documents under each of the following subparagraphs shall be
attached to the report under the provisions of paragraph (1) :
1. The balance sheet, profits and losses invoice, and profit s surplus funds
disposition invoice (or deficits settlement statement) pr epared by applying
corporate accounting standards
mutatis mutandis ;
2. The tax settlement invoice prepared under the conditions as prescribed
by the Presidential Decree (hereinafter referred to as the “tax settlement
invoice ”); and
3. Other documents as prescribed by the Presidential Decree .
(3) The provisions of paragraph (1) shall also apply where a d omestic
corporation has no income or has deficits for each business y ear.
(4) Where the documents under paragraph (2) 1 and 2 are not att ached
to a report under the provisions of paragraph (1), it shall no t be deemed
a report under this Act:
Provided , That this shall not apply to a nonprofit

CORPORATE TAX ACT
63domestic corporation which is not operating a profit-makin g business under
the provisions of Article 3 (2) 1 and 6.
(5) Where there are errors or omissions in the report and othe r documents
submitted under the provisions of paragraphs (1) and (2), th e chief of
the district tax office having jurisdiction over the place o f tax payment
and the Commissioner of the competent Regional Tax Office ma y request
that they be corrected.
Article 61 (Special Cases concerning Appropriation of Rese rve Fund as
Deductible Expenses)
(1) Where any domestic corporation appropriates a reserve f und under
the Restriction of Special Taxation Act in the tax settlemen t invoice or
any non-profit domestic corporation which is subject to aud it performed
by auditors under the provisions of Article 3 of the Act on Ext ernal Audit
of Stock Companies appropriates a reserve fund for proper pu rpose
businesses under Article 29 in the tax settlement invoice, a nd the relevant
reserve fund is accumulated as reserves in settling the prof its accruing
during the corresponding business year, that amount shall b e deemed to
be included in deductible expenses.

(2) Matters necessary for the appropriation of a reserve fun d as deductible
expenses and the settlement of the amount under the provisio ns of paragraph
(1) shall be prescribed by the Presidential Decree.
Article 62 (Special Cases concerning Tax Base Report of Non- Profit
Domestic Corporations)
(1) For interest, discount amounts, and profits (excluding profits from
no-business loans under Article 16 (1) 12 of the Income Tax Ac t, and
including investment trust proceeds; hereafter referred t o as“interest
income ”in this Article) pursuant to the provisions of Article 3 (2) 2 , a
non-profit domestic corporation may choose not to submit a t ax base report
on withheld interest income pursuant to the provisions of Ar ticle 73,
notwithstanding the provisions of Article 60 (1). In this ca se, the interest
income not reported as tax base shall not be included in the ca lculation
of the income amount for each business year pursuant to the pr ovisions
of Article 14.

(2) Matters necessary for the tax base report on corporate ta x on the

CORPORATE TAX ACT
64interest income of a non-profit domestic corporation and th e collection
of it under the provisions of paragraph (1) shall be prescrib ed by the
Presidential Decree.
Article 62-2 (Special Cases concerning Taxation of Income A ccruing from
Transfer of Assets by Non-profit Domestic Corporation)
(1) In case where any non-profit domestic corporation (excl uding any
non-profit domestic corporation that runs the profit-maki ng business in
accordance with Article 3 (2) 1; hereafter the same shall app ly in this
Article) earns income accruing from the transfer of assets ( hereafter referred
to as the “income accruing from the transfer of assets ”in this Article)
falling under any of the following subparagraphs, as the rev enue provided
for in Article 3 (2) 4 and 5, a return of tax base may not be filed ,
notwithstanding the provisions of Article 60 (1). In this ca se, any income
on which no return of tax base is filed shall not be included in the calculation
of income amount for each business year provided for in Artic le 14:

1. Stocks or investment shares falling under the provisions of Article
94 (1) 3 of the Income Tax Act or stocks and investment shares p rescribed
by the Presidential Decree; and
2. Land or buildings (including facilities or structures at tached to such
buildings).
(2) With respect to any income accruing from the transfer of a ssets on
which no return of tax base is filed in accordance with paragr aph (1),
an amount calculated by applying the rates falling under eac h subparagraph
of Article 104 (1) of the Income Tax Act to the tax base calcula ted by
applying
mutatis mutandis Article 92 of the same Act shall be paid as
the corporate tax. In this case, if tax rates weighted under A rticle 104
(4) of the Income Tax Act are applied, the provisions of Artic le 55-2 shall
not be applied.

(3) In the application of paragraph (2), the tax base calcula ted by applying
mutatis mutandis the provisions of Article 92 of the Income Tax Act shall
be the amount calculated by deducting necessary expenses fr om the total
income accruing from the transfer of assets (hereafter refe rred to as“transfer
value ”in this Article) and then deducting the amounts provided for in
Articles 95 (2) and 103 of the Income Tax Act from the deducted amount

CORPORATE TAX ACT
65(hereinafter referred to as “transfer marginal profits ”).
(4) The provisions of Articles 96, 97, 98 and 100 of the Income Tax Act
shall apply
mutatis mutandis to the calculation of the transfer value,
necessary expenses and transfer marginal profits under par agraph (3):
Provided , That in case where any non-profit corporation that has rece ived
any property in contribution, which is not included in the ta xable value
of the inheritance tax or the taxable value of the gift tax und er the Inheritance
Tax and Gift Tax Act transfers any assets prescribed by the Pr esidential
Decree, the acquisition value of the relevant assets by the c ontributor
thereof shall be the acquisition value of the relevant corpo ration and in
the case of an organization treated as a corporation under Ar ticle 13 (2)
of the Framework Act on National Taxes, the acquisition valu e prior to
obtaining approval therefor in accordance with the same par agraph shall
be deemed the acquisition value.

(5) The provisions of Articles 101 and 102 of the Income Tax Ac t shall
apply
mutatis mutandis to the calculation of a tax base on the income
accruing from the transfer of assets, and the provisions of A rticle 93 of
the same Act shall apply
mutatis mutandis to the calculation of a tax
amount on the income accruing from the transfer of assets.

(6) The provisions concerning the return for tax base, payme nt, decision,
correction and collection of the corporate tax on the income of each business
year to which the date of transfer of assets belongs shall app ly
mutatis
mutandis
to those of the corporate tax under paragraph (2), and such
corporate tax shall be returned, paid, decided, corrected a nd collected jointly
with other corporate tax. In this case, the provisions of Art icle 76 (1)
shall apply
mutatis mutandis .
(7) The corporate tax calculated in accordance with paragra ph (2) shall
be paid by self-return after filing a provisional return on t he tax base
of transfer income by applying
mutatis mutandis the provisions of Articles
105 through 108 of the Income Tax Act. In this case, the provis ions of
Articles 112 and 112-2 of the Income Tax Act shall apply
mutatis mutandis .

(8) In case where any non-profit domestic corporation files a provisional

CORPORATE TAX ACT
66return on the tax base of transfer income in accordance with p aragraph
(7), it shall be deemed to file a return on the tax base provide d for in
paragraph (6):
Provided , That if any non-profit domestic corporation falls
under the provisions of the proviso to Article 110 (4) of the I ncome Tax
Act, it shall file a return on the tax base provided for in para graph (6).

(9) Necessary matters concerning the application methods o f the special
cases to the income accruing from the transfer of assets, etc . provided
for in paragraphs (1) through (8) shall be prescribed by the P residential
Decree.
[This Article Newly Inserted by Act No. 6558, Dec. 31, 2001] Article 63 (Interim Prepayment)
(1) Domestic corporations with a business year (excluding t he first business
year after the establishment of a corporation which is newly established
without a merger or division) in excess of 6 months shall use t he period
of 6 months from the first day of the corresponding business y ear as the
prepayment period, and shall pay the amount obtained by mult iplying
6 by the amount obtained by dividing the tax amount (includin g additional
taxes, but excluding the corporate tax on the income accruin g from the
transfer of land, etc.) determined as the corporate tax for t he business
year immediately preceding the corresponding business yea r less the
following amounts by the number of months in the immediately preceding
business year (hereinafter referred to as the “interim prepaid tax amount ”)
within 2 months from the date when the interim prepayment per iod expires
to the district tax office having jurisdiction over the plac e of tax payment,
the Bank of Korea (including its agents), or government post al office
(hereinafter referred to as the “district tax office having jurisdiction over
the place of tax payment, etc. ”) under the conditions as prescribed by
Presidential Decree:
Provided , That where a domestic corporation
(excluding corporations falling under the subparagraphs o f Article 51-2
(1)) liable to make interim prepayment of tax has no calculat ed tax amount
determined as corporate tax in the immediately preceding bu siness year
or where its corporate tax amount for the immediately preced ing business
year is not determined by the last day of the corresponding in terim
prepayment period, or where a corporation established thro ugh a division

CORPORATE TAX ACT
67or the counterpart corporation to a division and merger ente rs the first
business year after such a division, such a corporation shal l compute and
pay the interim prepayable tax amount under the provisions o f paragraph
(4):

1. The corporate tax amount reduced and exempted in the busin ess year
immediately preceding the concerned business year (exclud ing the
amount deducted from income);
2. The amount of withholding tax paid as corporate tax in the b usiness
year immediately preceding the concerned business year; an d
3. The amount of occasionally levied tax paid as corporate ta x in the
business year immediately preceding the concerned busines s year.
(2) Where the interim prepaid tax amount under the provision s of paragraph
(1) for the first business year after the establishment of a m erged corporation
established through merger is paid, the business year immed iately preceding
the business year which includes the date of the registratio n of the merger
of the extinguished corporation shall be deemed the immedia tely preceding
business year under the provisions of paragraph (1).
(3) Where a merged corporation which continues to exist afte r a merger
pays the interim prepaid tax amount under the provisions of p aragraph
(1) for the first business year after the merger, the immedia tely preceding
business year of the merged corporation and the business yea r immediately
preceding the business year which includes the date of the re gistration of
the merger of the extinguished corporation shall both be dee med as the
immediately preceding business year under the provisions o f paragraph (1).
(4) A domestic corporation which shall make interim prepaym ent under
the provisions of paragraph (1) may use the concerned interi m prepayment
period as 1 business year, and use the amount obtained by dedu cting the
amounts under each of the following subparagraphs from the c orporate
tax amount calculated by application of the tax rates under t he provisions
of Article 55 to the tax base calculated under the provisions of Articles
13 through 54 as the interim prepaid tax amount and pay it at th e district
tax office having jurisdiction over the place of tax payment , etc.,
notwithstanding the provisions of the same paragraph. In th is case, with
the exception of the case falling under the proviso to other p ortion than

CORPORATE TAX ACT
68each subparagraph of paragraph (1), the same shall not apply to a case
where the time limit for the interim prepayment under the pro visions of
the same paragraph lapses:

1. The reduced or exempted tax amount falling under the conce rned interim
prepayment period (excluding the amount deducted from inco me);
2. The withholding tax amount paid as corporate tax during th e concerned
interim prepayment period; and
3. The occasionally levied tax amount levied as corporate ta x during the
concerned interim prepayment period.
(5) Deleted.

(6) Where the chief of the district tax office having jurisdi ction over the
place of tax payment deems it necessary, he may determine the interim
prepaid tax amount not to exceed the scope of the corporate ta x amount
for the immediately preceding business year of the concerne d corporation
(in cases falling under the provisions of paragraph (4), the amount of
the concerned interim prepaid tax amount divided by 6 and mul tiplied
by the number of months in the concerned business year) under the conditions
as prescribed by the Presidential Decree, notwithstanding the provisions
of paragraphs (1) through (5).
(7) Where the tax amount to be paid by a domestic corporation u nder
paragraphs (1) and (4) is in excess of 10,000,000 won, the pro visions
of Article 64 (2) shall apply
mutatis mutandis and payments may be
made in installments.

Article 64 (Payment)
(1) A domestic corporation shall pay the corporate tax amoun ts under
each of the following subparagraphs (excluding additional taxes) deducted
from the calculated tax amount of corporate tax on income for each business
year as corporate tax on income for each business year within the time
period for report under the provisions of Article 60 at the di strict tax
office having jurisdiction over the place of tax payment, et c.:
1. The reduced and exempted tax amount for the concerned busi ness
year;
2. The interim prepaid tax amount for the concerned business year under
the provisions of Article 63;
3. The occasionally levied tax amount for the concerned busi ness year

CORPORATE TAX ACT
69under the provisions of Article 69; and
4. The withheld tax amount for the concerned business year un der the
provisions of Article 73.
(2) Where the tax amount to be paid by a domestic corporation u nder
the provisions of paragraph (1) is in excess of 10,000,000 wo n, part of
the tax amount to be paid may be paid in installments within 1 m onth
of the date of the expiration of the payment period (45 days fo r small
and medium enterprises under the provisions of Article 25 (1 ) 1) under
the conditions as prescribed by the Presidential Decree.
Article 65 (Payment in Kind)
(1) Where it is deemed difficult for a domestic corporation t o pay in
cash corporate taxes on income accruing from the transfer of land, etc.
for a public business under the Act on the Acquisition of Land , etc. for
Public Works and the Compensation Therefor to the operator o f the concerned
public business or from the expropriation of land under the s ame Act and
other Acts, it may pay the corporate taxes with the bonds whic h were received
as payment for the concerned land, etc.:
Provided , That this shall not apply
to the cases as prescribed by the Presidential Decree.

(2) Matters necessary for the objects of payment with bonds, the evaluation
of the bonds, and the procedures for payment under the provis ions of
paragraph (1) shall be prescribed by Presidential Decree.
SECTION 4 Determination, Correction, and Collection
Sub-Section 1 Determination and Correction of Tax Base
Article 66 (Determination and Correction)
(1) Where a domestic corporation does not make a report under the provisions
of Article 60, the chief of the district tax office having jur isdiction over
the place of tax payment or the Commissioner of the competent Regional
Tax Office shall determine the tax base and tax amount of corp orate tax
on income of the relevant corporation for each business year .
(2) Where a domestic corporation that has filed a report purs uant to the
provisions of Article 60 falls under any one of the following subparagraphs,
the chief of the district tax office having jurisdiction ove r the place of

CORPORATE TAX ACT
70tax payment or the Commissioner of the competent Regional Ta x Office
shall determine the tax base and tax amount of corporate tax o n income
of the relevant corporation for each business year:

1. Where it has made errors or omissions in the contents of the report;
2. Where it has failed to submit all or parts of payment statem ents under
Article 120 or 120-2, or aggregate invoices for individual s uppliers
or purchasers or aggregate tax invoices for individual supp liers or
purchasers under the provisions of Article 121 are not submi tted;
3. Where it is judged that the contents of the report are disho nest, taking
the scope of facilities or the business conditions into cons ideration,
as provided by any one of the following items:
(a) Where a corporation falling under the requirements for c redit card
affiliate membership pursuant to Article 117 fails to becom e a credit
card affiliate member under the Specialized Credit Financi al
business Act (limited to a corporation; hereinafter referr ed to as
the “credit card affiliate member ”), without a reasonable cause;
(b) Where a credit card affiliate member refuses to issue a cr edit card
sales slip under the provisions of Article 117 (2) of this Act without
a reasonable cause or issues it differently from the actual f acts;
(c) Where a corporation subject to cash receipt affiliate me mbership
pursuant to the provisions of Article 117-2 (1) of this Act or a
corporation designated as the object of cash receipt affili ate
membership pursuant to the provisions of Article 32-2 of the
Value-Added Tax Act fails to become a cash receipt affiliate member
under the provisions of Article 126-3 of the Restriction of S pecial
Taxation Act (hereinafter referred to as the “cash receipt affiliate
member ”), without a reasonable cause; and
(d) Where a cash receipt affiliate member refuses to issue a c ash receipt
without a reasonable cause or issues it differently from the actual
facts; and
4. Where the relevant domestic corporation, its auditor, or its certified
public accountant has been subject to the disposition of war ning,
attention, etc. prescribed by Presidential Decree because it overstated
revenue or assets, understated loss or liability, etc., or s ettles an account

CORPORATE TAX ACT
71differently from the actual facts when submitting a busines s report
pursuant to Article 186-2 of the Securities and Exchange Act and an
audit report under Article 8 of the Act on External Audit of St ock
Companies, and the relevant domestic corporation has appli ed for
correction of the overstated tax base and tax amount pursuan t to Article
45-2 of the Framework Act on National Taxes.
(3) Where the chief of the district tax office having jurisdi ction over the
place of tax payment or the Commissioner of the competent Reg ional Tax
Office determines or corrects the tax base and tax amount of c orporate
tax under the provisions of paragraphs (1) and (2), it shall b e based on
the account book or other documentary evidence:
Provided , That where
the income amount cannot be calculated in accordance with th e account
book or other documentary evidence due to causes as prescrib ed by
Presidential Decree, it may be estimated as prescribed by Pr esidential
Decree.
(4) Where errors or omissions are discovered after the chief of the district
tax office having jurisdiction over the place of tax payment or the
Commissioner of the competent Regional Tax Office determin es or corrects
the tax base and tax amount of corporate tax, he shall correct them again
without delay.
Article 67 (Disposal of Income)
In making the report on the tax base for corporate tax on incom e for each
business year under the provisions of Article 60 or determin ing or correcting
the tax base of corporate tax under the provisions of Article 66 or 69, the
amount included in the calculation of gross income shall be d isposed of as
bonus, dividends, or other outflows from or reserves held by the company
to the persons, etc. to whom it reverts as prescribed by Presi dential Decree.

Article 68 (Special Cases concerning Estimation of Tax Base and
Calculation of Tax Amount)
Where the tax base and tax amount of corporate tax is estimate d under
the provisions of the proviso to Article 66 (3), the provisio ns of subparagraph
1 of Articles 13 and 57 shall not apply:
Provided , That where the account
book or other documentary evidence is destroyed by natural d isaster, etc.
and then the amounts are estimated under the conditions as pr escribed
by Presidential Decree, this shall not apply.

CORPORATE TAX ACT
72Article 69 (Determination of Occasional Imposts)
(1) Where the chief of the district tax office having jurisdi ction over the
place of tax payment or the Commissioner of the competent Reg ional Tax
Office deems that it is likely that a domestic corporation wi ll evade payment
of corporate taxes in the business year due to causes (referr ed to as the
“ cause for occasional impost ”hereafter in this Article) as prescribed by
Presidential Decree, he may levy occasional corporate tax o n the concerned
corporation (hereinafter referred to as “occasional imposts ”). In this case
also, the corporation shall make report on income for each bu siness year
under the provisions of Article 60.

(2) The occasional impost period shall be from the first day o f the business
year until the date on which the cause for occasional impost o ccurs, and
the provisions of paragraph (1) shall apply accordingly:
Provided , That
a cause for occasional impost has occurred before the time li mit of report
of tax base, etc. under Article 60 for the immediately previo us business
year (excluding the cases the tax base for the immediately pr evious year
is returned), the period of occasional impost shall be from t he first day
of the immediately previous business year until the day the c ause for
occasional impost has occurred.

(3) Matters necessary for occasional imposts under the prov isions of paragraph (1)
shall be prescribed by Presidential Decree.
Article 70 (Notification of Tax Base and Tax Amount)
Where the chief of the district tax office having jurisdicti on over the
place of tax payment or the Commissioner of the competent Reg ional
Tax Office determines or corrects the tax base and tax amount of corporate
tax on income for each business year of a domestic corporatio n under
the provisions of Article 53 or 66, he shall notify the concer ned domestic
corporation thereof under the conditions as prescribed by P residential
Decree.
Sub-Section 2 Collection and Return of Tax Amount
Article 71 (Collection and Return)
(1) Where a domestic corporation fails to pay all or part of th e tax amount
which shall be paid as corporate tax on income for each busine ss year
under the provisions of Article 64, the chief of the district tax office

CORPORATE TAX ACT
73having jurisdiction over the place of tax payment shall coll ect the unpaid
corporate tax amount within 2 months of the date of the expira tion of
the payment period.
(2) Where a domestic corporation fails to pay all or part of th e interim
prepaid tax amount which shall be paid under the provisions o f Article
63, the chief of the district tax office having jurisdiction over the place
of tax payment shall collect the unpaid interim prepaid tax a mount within
2 months of the date of the expiration of the payment period:
Provided ,
That where the corporation which has not paid the interim pre paid tax
amount falls under the proviso to Article 63 (1), the interim prepaid tax
amount shall be determined under the provisions of paragrap h (4) of the
same Article and paid within 3 months of the date of the expira tion of
the payment period.
(3) Where a person responsible for collecting withholding t axes under the
provisions of Article 73 does not withhold the tax amount or d oes not
pay the withheld tax amount within the time limit, the chief o f the district
tax office having jurisdiction over the place of tax payment shall without
delay collect from the person responsible for collecting wi thholding taxes
the sum of the tax amount to be withheld and paid and the additi onal
tax amount under the provisions of Article 76 (2):
Provided , That where
the person responsible for collecting withholding taxes ha s not withheld
the taxes and where the person liable to pay taxes has already paid the
corporate tax amount, the chief of such district tax office s hall collect
only additional tax from the person responsible for collect ing withholding
taxes.

(4) Where the interim prepaid, occasional levied, or withhe ld corporate
tax amount under the provisions of Article 63, 69, or 73 (incl uding the
additional tax) is in excess of the corporate tax amount on in come for
each business year, the chief of the district tax office havi ng jurisdiction
over the place of tax payment shall return the amount in exces s or appropriate
it as national taxes, additional charges, or disposition co sts for the collection
of taxes in arrears under the provisions of Article 51 of the F ramework
Act on National Taxes.

Article 72 (Refund by Retroactive Deduction of Deficits)

CORPORATE TAX ACT
74(1) Where a small and medium enterprise under the provisions of Article
25 (1) 1 has deficits for each business year under the provisi ons of Article
14 (2), it may apply for the refund of the amount calculated as prescribed
by the Presidential Decree up to the limit of the corporate ta x amount
(referring to the corporate tax amount as prescribed by the P residential
Decree) levied on income during the business year immediate ly preceding
the business year in which the deficits occurred. In this cas e, in the
application of the provisions of subparagraph 1 of Article 1 3 to the relevant
deficits, they shall be deemed to have been deducted.
(2) A domestic corporation which wishes to have a corporate t ax amount
refunded under the provisions of paragraph (1) shall apply t o the chief
of the district tax office having jurisdiction over the plac e of tax payment
within the time limit for report under the provisions of Arti cle 60 under
the conditions as prescribed by the Presidential Decree.
(3) Where the chief of the district tax office having jurisdi ction over the
place of tax payment receives an application under the provi sions of
paragraph (2), he shall without delay determine the refunda ble tax
amount and refund it under the provisions of Articles 51 and 5 2 of the
Framework Act on National Taxes.
(4) The provisions of paragraphs (1) through (3) shall apply only when
the relevant domestic corporation makes a report on the tax b ase and
tax amount of the corporate tax on income for the business yea r in which
the deficits occur and for the immediately preceding busine ss year within
the time limit for report under the provisions of Article 60.
(5) Where the deficits are reduced after the chief of the dist rict tax office
having jurisdiction over the place of tax payment grants a re fund under
the provisions of paragraph (3) due to a correction in the tax base and
tax amount of corporate tax for the business year in which the deficits
occurred, the tax amount corresponding to the reduced defic its and the
interest amount as prescribed by the Presidential Decree sh all be collected
as corporate tax for the business year in which such deficits occurred.
(6) The calculation of the tax amount to be refunded by retroa ctive deduction
of deficits and other necessary matters shall be prescribed by the Presidential
Decree.
Article 72-2 (Refund following Correction due to Wrongful A ccounting

CORPORATE TAX ACT
75Handling)
(1) If there remains an amount after making the tax credit pur suant to the
provisions of Articles 58-3 and 59 in the process of correcti on pursuant
to the provisions of Article 66 (2) 4 by the chief of the distri ct tax office
having jurisdiction over the place of tax payment or the Comm issioner of
the competent Regional Tax Office, he shall pay the refund an d the additional
refund immediately.
(2) In applying the provisions of paragraph (1), in case the r elevant domestic
corporation dissolves (excluding dissolution by merger or division), the
payable corporate tax on the liquidation income pursuant to the provisions
of Article 77 shall be deducted from the refund beforehand, a nd the
remaining amount shall be refunded immediately.
[This Article Newly Inserted by Act No. 7005, Dec. 30, 2003] Article 73 (Withholding)
(1) Any person who pays the interest income amount under Arti cle 127 (1)
1 of the Income Tax Act (including the revenue amount of finan cial insurance
businesses as prescribed by the Presidential Decree) and th e investment
trust proceeds under Article 17 (1) 5 of the same Act to a domes tic corporation
(hereinafter referred to as the “person responsible for collecting withholding
taxes ”) shall withhold the appropriate corporate tax amount calcu lated by
applying the tax rate falling under each of the following sub paragraphs
to the amount paid and pay it to the district tax office having jurisdiction
over the place of tax payment, etc. by the 10th day of the month following
the month which includes the withholding date:

1. 14/100 for interest income (25/100 for profits from non-b usiness loans
under Article 16 (1) 12 of the Income Tax Act); and
2. 14/100 for investment trust proceeds.
(2) Notwithstanding the provisions of Article 5, the provis ions of paragraph
(1) shall apply to the interest incomes prescribed by the Pre sidential
Decree that belong to the trust asset of a corporation which i s regulated
under the Trust Business Act and the Act on Business of Operat ing Indirect
Investment and Assets by treating the relevant trust asset a s a domestic
corporation.

CORPORATE TAX ACT
76(3) In the application of the provisions of paragraphs (1) an d (2), where
financial institutions, etc. prescribed by the Presidenti al Decree (hereafter
referred to as “financial institutions, etc. ”in this paragraph) directly operate
or keep and manage a trust asset or investment company ’s asset under
the Trust Business Act and the Act on Business of Operating In direct
Investment and Assets, it shall be deemed that the financial institutions,
etc. have a relationship of representation or commission wi th the parties
paying the interest income amounts that belong to the releva nt trust assets
or investment company ’s asset.

(4) The actions of the person representing or commissioned b y the person
responsible for collecting withholding taxes under the pro visions of
paragraph (1) shall be deemed the actions of the principal or his delegate
within the scope of the delegation or commission, and the pro visions of
paragraphs (1) through (3) shall apply.
(5) Where a financial institution falling under any item of s ubparagraph
1 of Article 2 of the Act on Real Name Financial Transactions a nd Guarantee
of Secrecy (hereafter referred to as the “financial institution ”in this
paragraph) takes over or trades bills or obligation certifi cates which are
issued by a domestic corporation (including a resident; her eafter in this
paragraph the same shall apply) or brokers or carries out suc h transactions
on behalf of it, it shall be deemed that the financial institu tion, etc. has
a relationship of the representation or commission with the domestic
corporation.

(6) Deleted.
(7) The person responsible for collecting withholding taxes as prescribed by
the Presidential Decree considering the number of regular e mployees and
categories of business may pay the withheld corporate tax by the 10th
day of the month following the last month of the semiannual pe riod which
includes the withholding date under the conditions as presc ribed by the
Presidential Decree, notwithstanding the provisions of pa ragraph (1).
(8) Where a domestic corporation sells (including brokerin g, arranging,
or other cases prescribed by the Presidential Decree, but ex cluding trading
of repurchase bond, etc. or other cases prescribed by the Pre sidential Decree;
hereafter the same shall apply in this Article and Article 74 ) the bonds,

CORPORATE TAX ACT
77etc. under Article 46 (1) of the Income Tax Act (excluding any bonds, etc.
that are untaxed or exempted from the corporate tax and other bonds,
etc. prescribed by the Presidential Decree; hereafter refe rred to as“bonds,
etc. ”in this Article) during the calculation period of the intere st and
discounts accrued or generated from such bonds, etc. (herea fter referred
to as “interest, etc. ”in this Article), the corporation concerned shall withhold
the corporate tax from the interest, etc. accruing during th e holding period
of the bonds, etc. in accordance with the Presidential Decre e in place of
the person liable to withhold the corporate tax pursuant to t he provisions
of paragraph (1). In this case, this Act shall apply to the cor poration
concerned since it is deemed as the person liable to collect w ithholding
tax.

(9) In applying the provisions of paragraphs (1) through (5) , (7) and (8),
the period of payment of interest income, scope and calculat ion of the
amount of income subject to withholding corporate tax, calc ulation and
payment of withholding tax amount, scope of persons respons ible for
collecting withholding tax, calculation of the holding per iod of bonds, etc.,
and other related matters shall be prescribed by the Preside ntial Decree.

Article 74 (Issuance of Withholding Receipt)
(1) Where any person responsible for collecting withholding taxes under
the provisions of Article 73 withholds the corporate tax fro m the person
liable to pay taxes, the former shall issue a withholding rec eipt to the
latter under the conditions as prescribed by the Presidenti al Decree.
(2) In applying the provisions of paragraph (1), the corpora tion concerned
shall be deemed as the person liable to pay taxes when the pers on responsible
for collecting withholding taxes has paid the corporate tax on the amount
equivalent to the interest accruing from the sale of bonds, e tc. pursuant
to the provisions of Article 73 (8) in the capacity of the pers on liable to
pay taxes.

(3) Matters necessary for the issue of the withholding recei pt under the
provisions of paragraph (1) shall be prescribed by the Presi dential Decree.
Article 75 (Non-Collection of Small Amounts)
Where the withholding corporate tax amount under the provis ions of Article

CORPORATE TAX ACT
7873 (1) is less than 1,000 won, such corporate tax shall not be c ollected.
Article 76 (Additional Taxes)
(1) In the collection of the corporate tax on income for each b usiness
year under the provisions of Article 71, where the concerned domestic
corporation fails to perform the duty to keep the accounting records on
file under the provisions of Article 112, the chief of the dis trict tax office
having jurisdiction over the place of tax payment shall addi tionally collect,
as the corporate tax, an amount corresponding to 20% of the ca lculated
tax amount (excluding the amount of the corporate tax on the
income accruing from the transfer of land, etc.; hereafter i n this paragraph
the same shall apply) determined by the chief of the district tax office
having jurisdiction over the place of tax payment (where suc h an amount
is less than 7/10,000 of the revenue amount of the concerned c orporation
or there is no calculated tax amount, it refers to the amount c orresponding
to 7/10,000 of the revenue amount):
Provided , That the same shall not
apply to non-profit domestic corporations.

(2) Where any person responsible for collecting withholdin g taxes under
the provisions of Article 73 fails to pay or underpays the tax amount
withheld or to be withheld within the time limit for payment, he shall
pay, as the additional tax, an amount falling under each of th e following
subparagraphs, whichever is larger:
Provided , That where the person
responsible for collecting withholding taxes is the State o r a local government,
this shall not apply:

1. Unpaid tax amount (underpaid tax amount) ×period from the date
following the time limit for payment to the date of voluntary payment
or the date of payment notice ×interest rate prescribed by the
Presidential Decree in consideration of the rate that the fi nancial
institutions apply to overdue loans. In this case, the addit ional tax
amount shall be up to 10/100 of the unpaid tax amount (underpa id
tax amount); and
2. 5/100 of the tax amount not paid (shortage of tax where tax w as paid
less).
(3) Deleted.

(4) Where a domestic corporation which shall submit a group e nterprise

CORPORATE TAX ACT
79combined balance sheet, etc. under the provisions of Articl e 115 fails to
submit it within the time limit, excluding cases as prescrib ed by the
Presidential Decree, the chief of the district tax office ha ving jurisdiction
over the place of tax payment shall collect the bigger one of t he sum of
the amount corresponding to 2% of the calculated tax amount r eported
under the provisions of Article 60 and the settled or correct ed tax amount
calculated under the provisions of Article 66 and the amount corresponding
to 8/100,000 of the revenue amount of the concerned corporat ion in addition
to the corporate tax.
(5) Where a corporation (excluding corporations as prescri bed by
Presidential Decree) is provided with commodities or servi ces in connection
with business from a businessman as prescribed by President ial Decree
and does not receive documentary evidence under any subpara graph of
Article 116 (2), excluding cases which are under the applica tion of the
provisions of the proviso to the same paragraph, the chief of the district
tax office having jurisdiction over the place of tax payment shall collect
the amount corresponding to 2/100 of the amount for which the documentary
evidence is not received in addition to the corporate tax. In this case,
the additional tax shall be collected even if the calculated tax amount
is nonexistent.

(6) Where a domestic corporation which shall submit a detail ed statement
on the state of fluctuation of stocks, etc. under the provisi ons of Article
119 (hereafter referred to as the “detailed statement on the state of
fluctuation ”in this Article) fails to submit a detailed statement on the
state of fluctuation or submits a statement which omits the s tate of
fluctuation, and where the detailed statement on the state o f fluctuation
submitted is unclear as prescribed by Presidential Decree, the chief of
the district tax office having jurisdiction over the place o f tax payment
shall collect the amount corresponding to 2/100 of the face v alue or finance
value of the non-submitted, submitted with omission, and un clearly
submitted stocks, etc. in addition to the corporate tax:
Provided , That
if the detailed statement on the state of fluctuation is subm itted within
one month after the lapse of the time limit for the submission , 2/100 shall
be changed into 1/100, and even if the calculated tax amount i s nonexistent,

CORPORATE TAX ACT
80the additional tax shall be collected.
(7) Where a domestic corporation that is liable to submit a wr itten payment
statement under Articles 120 and 120-2 of this Act or under Ar ticles 164
and 164-2 of the Income Tax Act fails to do so within the time li mit
under the provisions of paragraphs (1) and (3) of the same Art icles of
the same Act, or the written payment statements submitted un der the
provisions of the same Article are unclear as prescribed by P residential
Decree, the chief of the district tax office having jurisdic tion over the
place of tax payment shall additionally collect, as the corp orate tax, an
amount corresponding to 2/100 of the portion for which the st atement
was not submitted or the portion for which the unclear statem ent was
submitted:
Provided , That if the written payment statement is submitted
within one month after the lapse of the time limit for the subm ission,
2/100 shall be changed into 1/100, and even if the calculated tax amount
is nonexistent, the additional tax shall be collected.

(8) Where the contents and the person receiving payment are u nclear
in the written payment statement submitted under Article 12 0 or 120-2,
the additional tax under the provisions of paragraph (7) sha ll be collected
within one year from the lapse of the time limit for return und er the provisions
of Article 60 expires for the business year to which the payme nt date
based on the written payment statement under the same Articl e belongs.

(9) Where a corporation (excluding corporations as prescri bed by
Presidential Decree) falls under any one of the following su bparagraphs,
the chief of the district tax office having jurisdiction ove r the place of
tax payment shall collect the amount corresponding to 1/100 of the supply
value in addition to its corporate tax:
Provided, That in case where it
is submitted within one month after the time limit for submis sion expires,
1/100 shall be changed into 5/1,000, and even if the calculat ed tax
amount is nonexistent, the additional tax shall be collecte d, and the
provisions of subparagraph 1 shall not apply to the case wher e the provisions

CORPORATE TAX ACT
81of subparagraph 2 apply, and this shall not apply to the porti ons on which
additional taxes are levied pursuant to the provisions of Ar ticle 22 (2)
through (4) of the Value-Added Tax Act:

1. Where an invoice under the provisions of Article 121 (1) or (2) is not
delivered or all or part of the matters which shall be recorde d on
the invoice as prescribed by Presidential Decree are not rec orded on
the delivered invoice or they are recorded differently from the actual
facts;
2. Where the aggregate invoices for individual suppliers or purchasers
under the provisions of Article 121 (5) is not submitted with in the
time period under the same Article or all or part of the matter s which
shall be recorded on such an aggregate invoice as prescribed by
Presidential Decree are not recorded on the delivered invoi ce or they
are recorded differently from the actual facts; and
3. Where the aggregate tax invoice for individual suppliers under the
provisions of Article 120-3 (1) is not submitted within the t ime period
under the same Article or all or part of the matters which shal l be
recorded on the aggregate tax invoice for individual suppli ers as prescribed
by Presidential Decree are not recorded or are recorded diff erently from
the actual facts.
(10) Where any non-profit domestic corporation issues any d onation receipt
differently from the actual facts or fails to compile and kee p the details
of the issuance of donation receipts by a donating corporati on in violation
of the provisions of Article 112-2, the chief of the district tax office having
jurisdiction over the place of tax payment shall additional ly collect, as
the corporate tax, the amounts provided for in the classific ation of the
following subparagraphs. In this case, the additional tax s hall be collected
even if the calculated tax amount is nonexistent, and the pro visions of
subparagraph 2 shall not apply to a case where the additional tax is

CORPORATE TAX ACT
82levied on any non-profit corporation for failing to fulfill its obligation to
submit the report pursuant to the provisions of Article 78 (3 ) of the
Inheritance Tax and Gift Tax Act and for failing to fulfill it s obligation
to prepare and keep the book in which properties contributed are entered,
pursuant to the provisions of paragraph (5) of the same Artic le:

1. In the case of the donation receipts: 2/100 of the amount fo r which
the donation receipt is issued differently from the actual f acts; and
2. In the case of the details of the issuance of the donation re ceipts by
donating corporation: 2/1,000 of the amount for which the bo ok is
not prepared and kept.
(11) Where a credit card affiliate member refuses to issue a c redit card
sales slip or issues it differently from the actual facts in v iolation of the
provisions of Article 117 (2), the chief of the competent dis trict tax office
shall additionally collect, as the corporate tax, an amount (where the amount
is less than five thousand won, it shall be five thousands won ) corresponding
to 5/100 of each amount for which the issuance of the sales sli p is refused,
or of each amount for which the sales slip is issued different ly from the
actual facts (referring to the balance between the issued am ount and actually
transacted amount), which is notified by the chief of the com petent district
tax office with respect to the transactions conducted in the relevant business
year pursuant to the latter part of Article 117 (4). In this ca se, the additional
tax shall be collected even if the calculated tax amount is no nexistent.

(12) Where a corporation subject to cash receipt affiliate membership
pursuant to the provisions of Article 117-2 (1) fails to beco me a cash
receipt affiliate member or a cash receipt affiliate member refuses to issue
a cash receipt for an amount of 5,000 won or more for each trans action
or issues it differently from the actual facts, the amount wh ich falls under

CORPORATE TAX ACT
83any one of the following subparagraphs shall be additionall y collected as
the corporate tax. In this case, the additional tax shall be c ollected even
if the calculated tax amount is nonexistent:

1. Where it fails to become a cash receipt affiliate member, a n amount
corresponding to 5/1,000 of a revenue amount in the business year
for which it has failed to become such a member; and
2. Where it refuses to issue a cash receipt or issues it differ ently from
the actual facts, an amount (where the amount is less than fiv e thousand
won, it shall be five thousand won) corresponding to 5/100 of each
amount for which the issuance of the cash receipt is refused, or of
each amount for which the cash receipt is issued differently from the
actual facts (referring to the balance between the issued am ount and
actually transacted amount), which is notified by the chief of the
competent district tax office with respect to the transacti ons conducted
in the relevant business year pursuant to the latter part of A rticle
117-2 (5).
CHAPTER CORPORATE TAX ON Ⅱ
INCOME OF FAITHFUL
SMALL AND MEDIUM
CORPORATIONS FOR EACH
BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Article 76-2 (Application of Faithful Tax Payment Method)
(1) The corporation (hereinafter referred to as the “faithful small and
medium corporations ”) that meets all the requirements in the following
subparagraphs from among domestic corporations (excludin g
corporations prescribed by Presidential Decree, such as th e corporation,
etc. to which the Act on External Audit of Stock Companies app lies) may
report and pay the tax base and tax amount of corporate tax on i ncome

CORPORATE TAX ACT
84for each business year after calculating them by applying a f aithful tax
payment method (hereinafter referred to as the “faithful tax payment
method ”) prescribed in this Chapter, notwithstanding Chapter :
Ⅱ
1. That the amount of revenue shall be 500 million won (herein after
referred to as the “revenue amount standard ”) or less; and
2. That the corporation shall fall under any of the following items, which
shall faithfully keep accounts (including the cases where i t is done
with electronic books) of business dealings by double entry system:
(a) Corporations that have introduced enterprise resource planning
facilities pursuant to Article 4 (1) 2 of the Restriction of S pecial
Taxation Act or point-of-sale information management syst em
pursuant to subparagraph 11 of Article 2 of the Distribution Industry
Development Act;
(b) Corporations that have participated in the consolidate d computer
system of movie theater tickets pursuant to Article 39 of the
Promotion of the Motion Pictures and Video Products Act;
(c) Corporations that pay for a rent of workplace, for uses of trademark,
etc., or collect fee, etc. thereof on the basis of sales volum e or revenue
amount;
(d) Corporations that are supplied with raw materials from s pecific
corporations only (refers to 3 corporations or less; the sam e shall
apply hereafter in this item), or deal in and sell articles, p roducts,
etc. from specific corporations only, or corporations that sell Article
s, products, etc. of its own to specific corporations only;
(e) Corporations that operate electronic commerce busines s for which
settlement of price shall be done only through agency for set tlements
(including accounts for business reported to the chief of di strict
tax office having jurisdiction over the place of tax payment ) in
subparagraph 5 (b) of Article 2 of the Specialized Credit Fin ancial
Business Act;
(f) Corporations that fall under wholesale market corporat ion, market
wholesaler or intermediate wholesaler pursuant to subpara graphs
7 through 9 of Article 2 of the Act on Distribution and Price

CORPORATE TAX ACT
85Stabilization of Agricultural and Fishery Products;
(g) Corporations that operate bus transportation business that manage
and distribute revenue amount jointly under the supervisio n of the
head of local government;
(h) Corporations whose sale is entirely composed of export o f goods
to which zero tax rate applies pursuant to Article 11 (1) 1 of t he
Value-Added Tax Act;
(i) Corporations whose payment is made only through the busi ness
account reported to the chief of district tax office having j urisdiction
over the place of tax payment; or
(j) Other corporations prescribed by Presidential Decree, which
correspond to the corporations in items (a) through (i), and business
dealings of which can be clearly confirmed according to the f acility,
mode of dealing, etc.
(2) Faithful small and medium corporations that intend to ha ve the faithful
tax payment method applied shall apply to the chief of distri ct tax office
having jurisdiction over the place of tax payment and obtain approval
therefrom as prescribed by Presidential Decree.
(3) Where the faithful small and medium corporations that ha ve been
approved pursuant to paragraph (2) fail to apply the faithfu l tax payment
method, they shall not have the faithful tax payment method a pplied for
the relevant business year and the next 3 business years (5 bu siness years
in cases where they fall under paragraph (4)).
(4) Where the faithful small and medium corporations to whic h faithful
tax payment method applies is recognized as not meeting the
requirements in paragraph (1) 2, the chief of district tax of fice having
jurisdiction over the place of tax payment may have the faith ful tax payment
method not applied to them as prescribed by Presidential Dec ree.
(5) In applying the provisions of paragraphs (1) through (4) , matters
necessary for the decision and approval of faithful small an d medium
corporations, calculation of revenue amount, grace period in cases where
revenue amount standard is being exceeded, application of e lectronic
books, etc. shall be prescribed by Presidential Decree.

CORPORATE TAX ACT
86[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] Article 76-3 (Special Example of Calculation of Tax Base)
(1) The tax base of corporate tax on income for each business y ear of
faithful small and medium corporations shall be an amount ga ined by
deducting the amount in subparagraph 1 of Article 13 within t he extent
of income for each business year calculated pursuant to Arti cles 15 through
50, and 52 through 54 except for those prescribed otherwise i n this Chapter.
In this case, subparagraphs 2 and 3 of Article 13 and the Restr iction of
Special Taxation Act shall not apply.
(2) In applying Article 23, depreciation expense to fixed as set of faithful
small and medium corporations for each business year shall b e included
into loss by making the amount calculated as prescribed by Pr esidential
Decree as the allowable limit for depreciation taking no int erest as to
whether the corporation concerned has appropriated loss.
(3) In applying Article 24, the amount that is not counted in t he loss
from among the designated donations and legal donations (in cluding
donations pursuant to Article 73 of the Restriction of Speci al Taxation
Act) disbursed during each business year by faithful small a nd medium
corporations shall be an amount that exceeds the amount gain ed by
multiplying the revenue amount for the relevant business ye ar by 5/1000,
notwithstanding Article 24. In this case, paragraph (3) of t he same Article
shall not apply.
(4) In applying Article 25 (1), the amount that is not include d into loss
from among the reception expenses disbursed by faithful sma ll and medium
corporations during each business year shall be an amount th at exceeds
19 million won.
(5) Articles 26, 27 and 28 (1) 4 shall not apply to the calculat ion of income
of faithful small and medium corporations for each business year:
Provided ,
That to excessive expenses, etc. that are recognized as exce ssive or unjust
as prescribed by Presidential Decree, this shall not apply.
(6) In calculating tax base of corporate tax on income for eac h business
year of faithful small and medium corporations, matters nec essary for the
extent of profit and loss, business year to which profit and l oss belong,
assessment of asset and liability, inclusion of reserve and allowance into

CORPORATE TAX ACT
87loss, method of application in cases where faithful tax paym ent method
is newly applied or has come not to be applied, etc. shall be pr escribed
by Presidential Decree.
[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] SECTION 2 Calculation of Tax
Article 76-4 (Calculation of Tax Amount)
The corporate tax on income for each business year of faithfu l small and
medium corporations shall be an amount obtained by deductin g the
amount in Articles 76-5 and 76-6 from the amount calculated b y applying
Articles 55 through 59 to tax base. In this case, the Restrict ion of Special
Taxation Act shall not apply.
[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] Article 76-5 (Standard Tax Deduction)
(1) As for faithful small and medium corporations (limited t o the
corporations that operate a business type in Article 7 (1) 1 o f the
Restriction of Special Taxation Act), an amount calculated by multiplying
the calculated tax amount of corporate tax on income for each business
year by 25/100 (15/100 for corporations located in the Seoul Metropolitan
area) shall be deducted from the tax amount.
(2) In applying the standard tax deduction pursuant to parag raph (1),
matters necessary for the method of application, etc. in cas es where 2 or
more business types or workplaces are operated shall be pres cribed by
Presidential Decree.
[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] Article 76-6 (Tax Deduction for Increase in Revenue)
(1) Where the amount of revenue for the relevant business yea r reported
at the time when faithful small and medium corporations have made report
of tax base of corporate tax pursuant to Article 60 exceeds 11 5/100 of
the amount of revenue for the immediately previous year, an a mount
calculated according to the following formula shall be dedu cted from the
calculated amount of tax for the relevant business year: Cal culated amount
of tax for the relevant business year ×(amount exceeding 115 / 100 of

CORPORATE TAX ACT
88the amount of revenue for the immediately previous business year / amount
of revenue for the relevant business year).
(2) Paragraph (1) shall not apply to cases where the amount of income
for the relevant business year is less than the amount of inco me for the
immediately previous year, the cases where the amount of rev enue increases
for reasons prescribed by Presidential Decree, such as work place has been
moved, or business type has been changed, etc.
(3) Where corporations to which paragraph (1) applies have r eported too
little amount of revenue or have summed up too much loss for th e relevant
business year, and the deficient amount or excessive amount is 20/ 100
or more of the corrected amount of revenue or corrected loss, the amount
that has been deducted shall be charged additionally.
[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] SECTION 3 Report, Payment, etc.
Article 76-7 (Report, Payment, etc.)
(1) The provisions of Articles 60 through 65 shall apply to th e report
and payment of corporate tax on income for each business year of faithful
small and medium corporations except for the cases prescrib ed otherwise
in this Chapter.
(2) Matters necessary for the papers that shall be attached t o the report
pursuant to Article 60 (2) shall be prescribed by Presidenti al Decree.
(3) As for the interim prepayment of faithful small and mediu m corporations,
the proviso of the portion other than subparagraphs of Artic le 63 (1) and
paragraph (4) of the same Article shall not apply.
(4) As for faithful medium and small corporations that have r eported and
paid tax by faithful tax payment method, corrections pursua nt to Article
66 (2) and (4) shall not be made:
Provided , That in case where it is clear
that they have reported too little judging by objective evid ence, this shall
not apply.
(5) In applying the provisions of Articles 60 through 76, mat ters necessary
for report, payment, decision, correction and collection s hall be prescribed
by Presidential Decree.

CORPORATE TAX ACT
89[This Article Newly Inserted by Act No. 8519, Jul. 19, 2007] CHAPTER CORPORATE TAX ON Ⅲ
LIQUIDATION INCOME OF
DOMESTIC CORPORATION
SECTION 1 Tax Base and Its Calculation
Article 77 (Tax Base)
The tax base of corporate taxes on liquidation income of a dom estic
corporation shall be the amount of liquidation income under the provisions
of Articles 79 through 81.
Article 78 (Special Cases for Taxation on Liquidation Incom e Accruing
from Restructuring of Corporation)
Where a domestic corporation falls under any of the followin g subparagraphs,
the corporate tax shall not be levied on the liquidation inco me:

1. Where a domestic corporation restructures pursuant to th e provisions
of the Commercial Act;
2. Where a corporation established pursuant to a special Act restructures
to a company pursuant to the Commercial Act because the relev ant
special Act has been amended or repealed; and
3. Where a domestic corporation restructures pursuant to ot her Acts,
as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 7005, Dec. 30, 2003] Article 79 (Calculation of Liquidation Income Accruing fro m Dissolution)
(1) Where a domestic corporation is dissolved (excluding di ssolution by
merger or division), the liquidation income (hereinafter r eferred to as the
“ liquidation income from dissolution ”) shall be the amount calculated
by deducting the sum of the paid-in capital or investment fun ds and the
surplus funds (hereinafter referred to as the “total amount of equity capital ”)
as of the date of the registration of the dissolution of corpo ration from

CORPORATE TAX ACT
90the value of the residual assets from dissolution of the corp oration.
(2) Where a domestic corporation in the process of liquidati on due to
dissolution continues to conduct the business under the pro visions of
Article 229, 285, 519, or 610 of the Commercial Act after part of the
residual assets from dissolution are distributed to the sto ckholders, the
liquidation income from dissolution of the concerned corpo ration shall be
the amount calculated by deducting the total amount of equit y capital
as of the date of registration of the dissolution from the tot al amount
of the residual assets distributed from the date of registra tion of the
dissolution to the date of registration of the continuation .

(3) In the calculation of the liquidation income accruing fr om dissolution
of a domestic corporation, the corporate tax amount to be ref unded under
the Framework Act on National Taxes during the period of liqu idation shall
be added to the total amount of equity capital of the corporat ion as of the
date of the registration of the dissolution.

(4) In the calculation of the liquidation income from dissol ution of a
domestic corporation, where the concerned domestic corpor ation registers
any loss carried forward prescribed by Presidential Decree as of the date
of the registration of the dissolution, an appropriate amou nt corresponding
to the losses carried forward shall be set off from the total a mount of the
corporation ’s equity capital as of that date:
Provided , That the amount
to be set off for losses carried forward may not exceed the amo unt of surplus
funds among the total amount of equity capital, and in cases w here the
losses carried forward exceed the surplus funds, they shall be deemed
nonexistent.

(5) In the calculation of the liquidation income from dissol ution of a domestic
corporation, the income for each business year generated du ring the period
of liquidation shall be included in the calculation of the in come amount
for each corresponding business year of the corporation.

CORPORATE TAX ACT
91(6) In the calculation of the liquidation income under parag raph (1) and
the income amount for each business year during the period of liquidation
under paragraph (5), the provisions of Articles 14 through 5 4 shall apply
mutatis mutandis except where provided for in paragraphs (1) through
(5).
(7) In the application of the provisions of paragraphs (1) th rough (6),
matters necessary for the calculation of the value of residu al assets shall
be prescribed by Presidential Decree.
Article 80 (Calculation of Liquidation Income from Merger)
(1) Where a domestic corporation is dissolved due to a merger , the amount
of the liquidation income (hereinafter referred to as the “liquidation income
from merger ”) shall be the amount calculated by deducting the total amoun t
of equity capital of the extinguished corporation as of the d ate of the
registration of the merger from the total merger cost which t he stockholders
of the extinguished corporation receive from the merged cor poration.
(2) In the calculation of the total cost of merger under the pr ovisions
of paragraph (1), where the merged corporation acquires the stocks of
the extinguished corporation (in case of the establishment by merger or
the merger of 3 or more corporations, including the acquisit ion of an
extinguished corporation ’s stocks by another extinguished corporation;
hereafter referred to as the “combined stocks, etc. ”in this Article) within
2 years prior to the date of the registration of the merger, an d such combined
stocks, etc. are not exchanged for stocks of the merged corpo ration, the
total cost of the merger shall be the sum of the acquisition va lue of the
concerned stocks. In this case, where stocks, etc. are excha nged, the value
of the transferred stocks, etc. shall be deducted from the su m of the
acquisition value of the concerned combined stocks, etc.
(3) In the calculation of the liquidation income amount due t o merger,
the provisions of Article 79 (3), (4), and (6) shall apply
mutatis mutandis .
(4) In the application of the provisions of paragraphs (1) th rough (3),
matters necessary for the calculation of the total cost of me rger and other
calculations for the liquidation income amount due to merge r shall be
prescribed by the Presidential Decree.
Article 81 (Calculation of Liquidation Income Amount due to Division)

CORPORATE TAX ACT
92(1) Where a domestic corporation is dissolved through a divi sion, the amount
of the liquidation income (hereinafter referred to as the “liquidation income
due to division ”) shall be the total amount of the cost of the division which
the stockholders of the divided corporation receive from th e corporation
established by division or the counterpart corporation to t he division and
merger minus the total amount of equity capital of the divide d corporation
as of the date of the registration of the division.
(2) In the calculation of the total cost of division under the provisions
of paragraph (1) in the case of division and merger, where the counterpart
corporation to a division and merger or counterpart corpora tion to a
corporation extinguished through division and merger acqu ires stocks of
divided corporation within 2 years prior to the date of the re gistration
of the division (hereafter referred to as the “combined stocks ”in this Article
) and such combined stocks are not exchanged for stocks of the corporation
established by division or counterpart corporation to a div ision and merger,
the total cost of the division shall be the sum of the acquisit ion value
of the concerned combined stocks. In this case, where stocks are exchanged,
the value of the transferred stocks shall be deducted from th e sum of the
acquisition value of the concerned combined stocks.
(3) The provisions of paragraphs (1) and (2) shall apply
mutatis mutandis
to the calculation of liquidation income amount due to divis ion for a
counterpart corporation to a corporation extinguished thr ough division and
merger.
(4) The provisions of Article 79 (3), (4), and (6) shall apply
mutatis
mutandis
to the calculation of liquidation income amount due to divis ion.
(5) In the application of the provisions of paragraphs (1) th rough (4),
matters necessary for the calculation of the total cost of di vision and other
calculations for the liquidation income amount due to divis ion shall be
prescribed by the Presidential Decree.
Article 82 (Detailed Rules for Calculation of Liquidation I ncome Amount)
Matters necessary for the calculation of the liquidation in come amount
of a domestic corporation not provided for in this Act shall b e prescribed
by the Presidential Decree.
SECTION 2 Calculation of Tax Amount

CORPORATE TAX ACT
93Article 83 (Tax Rate)
The corporate tax on liquidation income of a domestic corpor ation shall
be the tax amount calculated by application of the tax rate un der the
provisions of Article 55 (1) to the tax base under the provisi ons of Article
77.
SECTION 3 Report and Payment
Article 84 (Settlement Report)
(1) A domestic corporation liable to pay corporate tax on liq uidation income
shall report the tax base and tax amount of the corporate tax o n liquidation
income within the period under each of the following subpara graphs to
the chief of the district tax office having jurisdiction ove r the place of
tax payment under the conditions as prescribed by the Presid ential Decree:
1. For cases falling under the provisions of Article 79 (1), w ithin three
months of the date the value of the residual assets is settled as prescribed
by the Presidential Decree;
2. For cases falling under the provisions of Article 79 (2), w ithin three
months of the date of the registration of continuation;
3. For cases falling under the provisions of Article 80, with in three months
from the date of the registration of the merger; and
4. For cases falling under the provisions of Article 81, with in three months
from the date of the registration of the division.
(2) The documents falling under each of the following subpar agraphs shall
be accompanied with the report under the provisions of parag raph (1):
1. In cases of paragraph (1) 1 and 2, the balance sheet of the di ssolved
corporation as of the date of the settlement of the value of th e residual
assets or the date of the registration of the continuation;
2. In cases of paragraph (1) 3 and 4, the balance sheet of the ex tinguished
corporation, etc. as of the date of the registration of the me rger or
the date of the registration of the division and a detailed st atement
on the assets and liabilities succeeded to by the merged corp oration,
etc. due to the merger or division; and
3. Other documents as prescribed by the Presidential Decree .
(3) The provisions of paragraphs (1) and (2) shall apply even where there
is no liquidation income amount.

CORPORATE TAX ACT
94Article 85 (Interim Report)
(1) Where a domestic corporation falls under any of the follo wing
subparagraphs, it shall report to the chief of the district t ax office having
jurisdiction over the place of tax payment as prescribed by t he Presidential
Decree within one month from the date as prescribed in the cor responding
subparagraph:
Provided , That in case of a corporation liquidating in
accordance with the liquidation process under the provisio ns of Article 55
of the State Properties Act, the provisions of subparagraph 2 shall not
apply:

1. Where the part of the residual assets from dissolution are distributed
to the stockholders prior to the settlement of the value of th e residual
assets from dissolution, the date of the distribution; and
2. Where the value of the residual assets has not been settled by the
date when one year has passed from the date of the registratio n of
the dissolution, the date when one year has passed.
(2) The balance sheet as of the date of the registration of the dissolution
and the date of distribution or as of the date when one year has passed
from the date of the registration of the dissolution, and oth er documents
as prescribed by the Presidential Decree shall each be accom panied with
the report under the provisions of paragraph (1).
Article 86 (Payment)
(1) A domestic corporation falling under the provisions of A rticle 79 (1)
or (2) which has made the settlement report under the provisi ons of Article
84 shall pay the tax amount calculated by application of the p rovisions
of Article 83 to the amount of liquidation income from dissol ution, minus
the total tax amount paid under the provisions of paragraph ( 3) or (4),
as corporate tax at the district tax office having jurisdict ion over the place
of tax payment, etc. within the time limit for report.
(2) A domestic corporation falling under the provisions of A rticle 80 or
81 which has made the settlement report under the provisions of Article
84 shall pay the tax amount calculated by application of the p rovisions
of Article 83 to the amount of liquidation income from merger or division
as corporate tax at the district tax office having jurisdict ion over the place
of tax payment, etc. within the time limit for report.
(3) For a domestic corporation liable to report under the pro visions of
Article 85 (1) 1, where the value of distributed residual ass ets (where

CORPORATE TAX ACT
95there are residual assets previously distributed, the tota l value amount)
is in excess of the total amount of equity capital as of the dat e of the
registration of the dissolution, the corporation shall pay the tax amount
calculated by application of the provisions of Article 83 to the amount
in excess (where corporate tax has previously been paid on pr eviously
distributed portions of residual assets, the tax amount aft er deducting
the previously paid amount from the total tax amount) at the d istrict
tax office having jurisdiction over the place of tax payment , etc. within
the time limit for report.
(4) For a domestic corporation liable to report under the pro visions of
Article 85 (1) 2, where the predicted value of the residual as sets as prescribed
by the Presidential Decree as of the date on which one year has passed
from the date of the registration of the dissolution is in exc ess of the total
amount of equity capital as of the date of the registration of the dissolution,
the corporation shall pay the tax amount calculated by appli cation of the
provisions of Article 83 to the amount in excess at the distri ct tax office
having jurisdiction over the place of tax payment, etc. with in the time
limit for report.
SECTION 4 Settlement, Correction, and Collection
Article 87 (Settlement and Correction)
(1) Where a domestic corporation does not report under the pr ovisions
of Articles 84 and 85, the chief of the district tax office hav ing jurisdiction
over the place of tax payment or the Commissioner of the compe tent Regional
Tax Office shall determine the tax base and tax amount of corp orate tax
on liquidation income for the concerned corporation.
(2) Where there are errors or omissions in a report by a domest ic corporation
under the provisions of Articles 84 and 85, the chief of the di strict tax
office having jurisdiction over the place of tax payment or t he Commissioner
of the competent Regional Tax Office shall correct the tax ba se and tax
amount of corporate tax on liquidation income for the concer ned corporation.
(3) Where errors or omissions are discovered after the chief of the district
of tax office having jurisdiction over the place of tax payme nt or the
Commissioner of the competent Regional Tax Office determin es or corrects
the tax base and tax amount of corporate tax on liquidation in come, he

CORPORATE TAX ACT
96shall correct them again without delay.
(4) The provisions of Article 66 (3) shall apply
mutatis mutandis to
settlement and correction under the provisions of paragrap hs (1) and (2).
Article 88 (Notification of Tax Base and Tax Amount)
Where the chief of the district tax office having jurisdiction over the place
of tax payment or the Commissioner of the competent Regional Tax Office
determines or corrects the tax base and tax amount of corpora te tax on
liquidation income of a domestic corporation under the prov isions of Article
87, he shall notify the concerned corporation or liquidator thereof:
Provided ,
That where it is not possible to notify the corporation or liq uidator, he
may make public notification instead.
Article 89 (Collection)
(1) Where a domestic corporation fails to pay all or part of th e tax amount
which shall be paid as corporate tax on liquidation income un der the
provisions of Article 86, the chief of the district tax offic e having jurisdiction
over the place of tax payment shall collect the unpaid corpor ate tax amount
within 2 months of the date of the expiration of the payment pe riod.
(2) Where the corporate tax amount paid under the provisions of Article
86 or collected under the provisions of paragraph (1) does no t reach the
corporate tax amount determined or corrected by the chief of the district
tax office having jurisdiction over the place of tax payment or the
Commissioner of the competent Regional Tax Office under the provisions
of Article 87, the chief of the district tax office having jur isdiction over
the place of tax payment shall collect the appropriate corpo rate tax amount
of the deficiency.
Article 90 (Exclusion from Application of Additional Amoun ts, etc. to
Liquidation Income)
(1) Deleted.
(2) In the collection of the corporate tax on liquidation inc ome, the provisions
of Articles 21 and 22 of the National Tax Collection Act shall not apply.

CHAPTER CORPORATE TAX ON Ⅳ
INCOME OF FOREIGN

CORPORATE TAX ACT
97CORPORATION FOR EACH
BUSINESS YEAR
SECTION 1 Tax Base and Its Calculation
Article 91 (Tax Base)
(1) The tax base for corporate tax on the income of a foreign co rporation
with a domestic place of business, and foreign corporations with income
under the provisions of subparagraph 3 of Article 93 for each business
year shall be calculated by deducting, in sequential order, the amount
or income falling under any of the following subparagraphs f rom the total
amount of income generated from sources in Korea (excluding the amount
of income generated from sources in Korea withheld pursuant to the
provisions of Article 98 (1)):

1. The deficits generated during the business year which beg an within
5 years from the first day of each business year (limited to de ficits
generated in Korea) which were not deducted in the calculati on of the
tax base for each business year afterward;
2. Non-taxable income under this Act and other Acts; and
3. Income generated from the navigation of a ship or aircraft to a foreign
country:
Provided , That this shall be limited to where the country
in which the headquarters or main office of the foreign corpo ration
is located affords the same exemption to ships and aircraft o f Korean
corporations.
(2) For foreign corporations which do not fall under the prov isions of
paragraph (1), the tax base of corporate tax on income of the r elevant
corporation for each business year shall be the amount of dom estic source
income under each subparagraph of Article 93.
(3) The tax base of corporate tax on domestic source income of a foreign
corporation falling under the provisions of paragraph (1) w hich was
withheld under the provisions of Article 98 (1) shall be the a mount of
domestic source income under each subparagraph of Article 9 3.
(4) The provisions of paragraph (1) 3 shall also apply to fore ign corporations
which have no domestic place of business.

CORPORATE TAX ACT
98Article 92 (Calculation of Amount of Income Generated from S ources in
Korea)
(1) The total amount of income generated from sources in Kore a by a foreign
corporation falling under the provisions of Article 91 (1) f or each business
year shall be the amount calculated by applying
mutatis mutandis the
provisions of Articles 14 through 54 of this Act and Articles 104 and 138
of the Restriction of Special Taxation Act under the conditi ons as prescribed
by the Presidential Decree.

(2) The amount of the income generated from sources in Korea o ther than
the income in accordance with the provisions of subparagrap h 7 of Article
93 by a foreign corporation pursuant to the provisions of Art icle 91 (2)
and (3) for each business year shall be the amount falling und er each
of the following subparagraphs:

1. Deleted;
2. The income generated from sources in Korea under the provi sions of
subparagraphs 1 through 6 and 9 through 11 of Article 93 shall be
the revenue amount by income under each subparagraph (exclu ding
subparagraph 7) of the same Article:
Provided , That the income
generated from sources in Korea in accordance with the provi sions of
subparagraph 10 of Article 93 may be replaced by an amount cal culated
by deducting the acquisition value and expenses incurred fo r the transfer
of the relevant securities confirmed under the Presidentia l Decree from
the revenue amount; and
3. Where the income generated from sources in Korea under the provisions
of subparagraph 10 of Article 93 by a foreign corporation wit hout any
domestic place of business meets the conditions falling und er each of
the following items, the normal price as prescribed by the Pr esidential
Decree (hereafter referred to as the “normal price ”in this subparagraph)
shall be the revenue amount of the foreign corporation, notw ithstanding
the provisions of subparagraph 2:
(a) Income accruing from the transactions between a foreign corporation
without any domestic place of business and a foreign corpora tion

CORPORATE TAX ACT
99(including non-residents) having a special relationship a s
prescribed by the Presidential Decree with the former forei gn
corporation; and
(b) Income accruing from the transactions falling under ite m (a) the
price of which falls short of the normal price.
(3) The amount of transfer income provided for in subparagra ph 7 of Article
93 that is generated from sources in Korea by a foreign corpor ation pursuant
to the provisions of Article 91 (2) shall be an amount calcula ted by deducting
the amount falling under each of the following subparagraph s from the
transfer value of income-generating assets (hereafter ref erred to as the
“ land, etc. ”in this Article) under subparagraph 7 of the same Article:

1. The acquisition value: Provided , That in case any foreign corporation,
that is given any property in donation which is not included i n the
taxable value of the inheritance tax or the taxable value of t he gift
tax under the Inheritance Tax and Gift Tax Act, transfers the land,
etc. prescribed by Presidential Decree, the acquisition va lue of the
contributor who gives such property in contribution shall b e deemed
the acquisition value of such foreign corporation; and
2. Expenses directly disbursed to transfer the land, etc.
(4) In application of paragraph (3), the acquisition value a nd the transfer
value shall be based on the value of actual transaction and if the value
of actual transaction is unclear, such value shall be a value computed
by applying
mutatis mutandis the provisions of Articles 99, 100 and
114 (7) of the Income Tax Act.

(5) In application of paragraph (3), the provisions of Artic le 98 of the
Income Tax Act shall apply
mutatis mutandis to the transfer time and
the acquisition time of the relevant assets.

(6) The provisions of Article 101 of the Income Tax Act shall a pply mutatis
mutandis
to any act of unfairly calculating such a transfer income as
prescribed by paragraph (3). In this case, the “person with a special
relationship ”in Article 101 of the same Act shall be deemed the “person

CORPORATE TAX ACT
100with a special relationship provided by Article 52 (1) ”.
Article 93 (Income Generated from Sources in Korea)
The income generated from sources in Korea by a foreign corpo ration shall be classified
as follows:

1. Income falling under each of the following items which is i nterest income
under the provisions of Article 16 (1) of the Income Tax Act (e xcluding
income under subparagraph 8 of the same paragraph) and other interest
on loans and profits from trusts:
Provided , That this shall not apply
to the interest on loans which are directly borrowed by the fo reign place
of business for the foreign place of business:
(a) Income received as payment from the State, a local govern ment,
a domestic place of business of a resident, domestic corpora tion
or foreign corporation, or a domestic place of business of a n on-resident
under the provisions of Article 120 of the Income Tax Act; and
(b) Income received as payment from a foreign corporation or non-resident which is substantially related to the domesti c place
of business of the foreign corporation or non-resident and i s included
in deductible expenses or necessary expenses in the calcula tion of
the income amount of such domestic place of business;
2. The dividend income provided for in Article 17 (1) of the In come Tax
Act (excluding any income provided for in subparagraph 6 of t he same
paragraph) that is paid in Korea by any domestic corporation or any
organization treated as a corporation and the amount dispos ed of as
a dividend under Articles 9 and 14 of the Adjustment of Intern ational
Taxes Act;
3. Income generated from domestic real estate or real estate rights and
domestically-acquired mining rights, mining concessions , rights
concerning gathering earth, sand, and rock, or the developm ent, transfer
or lease of usage rights or other management of underground w ater:
Provided , That the transfer income under the provisions of subparagraph
7 shall be excluded;
4. Income generated from the rental of ship, aircraft, regis tered

CORPORATE TAX ACT
101automobiles, construction machinery, or
machinery/facility/equipment for industry/commerce/sc ience, and
other tools prescribed by the Presidential Decree to a domes tic place
of business of a resident, a domestic corporation, a foreign corporation,
or a domestic place of business of a non-resident under the pr ovisions
of Article 120 of the Income Tax Act;
5. Income generated from a business operated by a foreign cor poration
(including income which can be taxed as domestic source busi ness
income under tax treaties) as prescribed by Presidential De cree:
Provided , That income under the provisions of subparagraph 6 shall
be excluded;
6. Income generated from the offer of human services as presc ribed by
Presidential Decree in Korea. In this case, where anyone who is offered
with the relevant human services bears expenses, including airfares,
which are prescribed by Presidential Decree, in connection with the
offer of such human services, it means the amount with the exc eption
of such expenses;
7. Transfer income as prescribed by Presidential Decree fro m among those
under the provisions of Article 94 of the Income Tax Act (excl uding
income under the provisions of paragraph (1) 3 of the same Art icle):
Provided , That this shall be limited to cases where the assets which
generate the income are situated in Korea;
8. Deleted;

9. Where assets, information, or rights falling under any of the following
items are used or the price thereof is paid in Korea, the conce rned price
and the income generated from the transfer of such assets, in formation,
or rights:
Provided , That where the standards for use are determined
in treaties for the prevention of double taxation on income a nd there
are provisions therein to determine whether the concerned i ncome falls
under domestic source income, the price of assets, informat ion, or rights
used abroad shall not be deemed as domestic source income, re gardless
of whether it was paid in Korea:
(a) Copyrights, patent rights, trademark rights, designs, forms, and
sketches of works of learning or fine art (including movie fi lm) or
secret formulae or processes, film and tape for radio and tel evision

CORPORATE TAX ACT
102broadcasts and other similar assets or rights; or
(b) Information or know-how related to industrial, commerc ial, or scientific
knowledge and experience;
10. Such income as prescribed by Presidential Decree among i ncome
generated from the transfer of stocks, subscription certif icates
(including certificates of deposit issued on the basis of st ocks and
subscription certificates; the same shall apply hereafter in this Chapter),
or other securities falling under any of the following items (other assets
under the provisions of Article 94 (1) 4 of the Income Tax Act a re
excluded, however, such other assets shall be included wher e they
are stocks or subscription certificates of stock-listed co rporations or
KOSDAQ-listed corporations; hereafter the same shall appl y in this
subparagraph):
(a) Stocks or subscription certificates, and other securit ies issued by
a domestic corporation; or
(b) Stocks or subscription certificates issued by a foreign corporation
(limited to those listed on the securities market or registe red to
the KOSDAQ market under the Securities and Exchange Act), or
other securities issued by a foreign corporation ’s domestic place
of business; and
11. Income falling under any one of the following items, othe r than those
provided for in the provisions of subparagraphs 1 through 10 :
(a) Insurance money, compensatory payment, or punitive dam ages paid
in connection with real property or other assets situated in Korea,
or businesses carried on in Korea;
(b) Penalties or compensation for damages paid in Korea as pr escribed
by Presidential Decree;
(c) Income generated from the inheritance of assets in Korea ;
(d) Prize, reward, compensation, other similar income paid in Korea;
(e) Income generated from underground deposits discovered in Korea;
(f) Income generated from licenses, approval, or rights est ablished by
other similar administrative disposal under the domestic l aws, and
from the transfer of domestic assets other than real propert ies;
(g) Prize received based on lottery, gift tickets, or other d rawing tickets,
refunds or premiums paid on or to the purchasers of horse-rac e

CORPORATE TAX ACT
103tickets, or refunds paid on or to the purchasers of bullfight ing tickets
or sports promotion tickets, all issued in Korea;
(h) Amount disposed of as other income in disposal of income r eferred
to in Article 67 of this Act and the amount adjusted under Arti cle
9 of the Adjustment of International Taxes Act, which is disp osed
of as other income;
(i) Income accruing from increase of the value of the stocks a nd investment
shares of a domestic corporation that are possessed by the pe rson
in special relationship as prescribed by the Presidential
Decree (hereafter referred to as the “specially related person abroad ”
in Article 98) that results from capital transactions presc ribed by
the Presidential Decree; and
(j) Income from businesses operated in Korea, from personal services
rendered in Korea, or from economic benefits received in rel ation
to assets located in Korea (excluding the difference, if any , between
the amount received for redemption of foreign currency-den ominated
bonds issued by the State or financial institutions establi shed under
special laws and the issue prices of such bonds), or other sim ilar
income as prescribed by the Presidential Decree, other than those
falling under any of items (a) through (i).
Article 94 (Domestic Place of Business of Foreign Corporati on)
(1) Where a foreign corporation has a fixed place where it con ducts all
or part of its domestic business, it shall be deemed to have a d omestic
place of business.
(2) The domestic place of business under the provisions of pa ragraph (1)
shall include places falling under any of the following subp aragraphs:

1. Branches, offices, or business offices;
2. Shops and other fixed places for selling;
3. Workshops, factories, or storage areas;
4. Places used for building, construction and assembly sites, foundation
construction sites, or places used for management and direc tion of such
sites continuously for more than 6 months;
5. Places falling under any of the following items where serv ices are provided

CORPORATE TAX ACT
104by employees:
(a) Place where services are provided for not less than 6 mont hs in
total during a period of 12 months in which such services cont inue
to be provided; and
(b) Place where services are provided for not more than 6 mont hs in
total during a period of 12 months in which such services cont inue
to be provided, and similar services are repeatedly provide d for not
less than 2 years; and
6. Places for exploration and gathering of mining, quarry, o r marine natural
resources and other natural resources (including places wh ere there
are seas and low-lying lands of marine areas adjacent to the c oast
of Korea outside its territorial waters where Korea exercis es
sovereignty under international laws).
(3) Where a foreign corporation without any fixed place unde r the provisions
of paragraph (1) runs the business in Korea through a person w ho has
the authority to repeatedly conclude contracts on its behal f or a similar
person as prescribed by the Presidential Decree, the locati on of that person’s
place of business (where he does not have any place of busines s, it shall
be his address, and where he does not have any address, it shal l be the
location of his residence) shall be deemed the domestic plac e of business
of the foreign corporation.
(4) The domestic place of business under the provisions of pa ragraph (1)
shall not include the places falling under each of the follow ing
subparagraphs: 1. Fixed places used by a foreign corporation only for the pur chase of
assets;
2. Fixed places used by a foreign corporation only for storag e and holding
of assets not for the purpose of selling;
3. Fixed places used by a foreign corporation for advertisem ent, publicity,
gathering and providing information, market research, and other places
used in order to conduct such preparatory and supporting
business activities; and
4. Fixed places used by other persons only for processing a fo reign
corporation ’s own asset.

CORPORATE TAX ACT
105SECTION 2 Calculation of Tax Amount
Article 95 (Tax Rate)
The corporate tax on income for each business year of foreign corporations
under the provisions of Article 91 (1) and foreign corporati ons under the
provisions of paragraphs (2) and (3) of the same Article whic h have income
generated from sources in Korea under the provisions of subp aragraph
7 of Article 93 shall be the amount calculated by application of the provisions
of Article 55 to the tax base under the provisions of Article 9 1 (in case
the amount of the corporate tax on the income accruing from th e transfer
of land, etc. under Article 95-2 exists, such amount of the co rporate tax
shall be added up in the above-referenced corporate tax).

Article 95-2 (Special Cases for Taxation on Income Accruing from Transfer
of Land, etc. by Foreign Corporation)
The provisions of Article 55-2 shall apply mutatis mutandis to the payment
of the corporate tax on the income accruing from the transfer of land,
etc., earned by any foreign corporation provided for in Arti cle 91 (1) and
any foreign corporation provided for in paragraph (2) of the same Article.
In this case, the income accruing from the transfer of land, e tc., earned
by any foreign corporation provided for in Article 91 (2) sha ll be an amount
calculated by applying
mutatis mutandis the provisions of Article 92 (3).
[This Article Newly Inserted by Act No. 6558, Dec. 31, 2001] Article 96 (Special Cases for Taxation on Domestic Place of B usiness of
Foreign Corporation)
(1) The domestic place of business of a foreign corporation ( excluding
non-profit foreign corporations) shall add the amount calc ulated by
application of the tax rate under the provisions of paragrap h (3) to the
income amount subject to taxation (in the event that any tax t reaty concluded
between Korea and any foreign country where the relevant for eign corporation
is based makes taxable the amount of profit remittance, the i ncome amount
subject to taxation shall be the amount of remittance prescr ibed by
Presidential Decree) under the provisions of paragraph (2) to the corporate
tax under the provisions of Article 95 and pay it under the pro visions of
tax treaties concluded between Korea and the country of resi dence of the
concerned foreign corporation.

CORPORATE TAX ACT
106(2) The income amount subject to taxation under paragraph (1 ) shall be
the income amount from the concerned domestic place of busin ess for each
business year less the amount under each of the following sub paragraphs:

1. The amount of corporate tax under the provisions of Articl e 95 less
the amount under item (a) but with the amount under item (b) ad ded:
(a) Tax amount deducted under the provisions of Article 57 (1 ) 1,
and Articles 58 and 58-2 that are applied
mutatis mutandis pursuant
to the provisions of Article 97 (1), and tax amount deducted o r
exempted under other Acts; and
(b) Additional tax under the provisions of Article 76 or tax p aid additionally
under this Act or the Restriction of Special Taxation Act;
1-2. Income-proportional resident tax;
2. The amount as prescribed by the Presidential Decree inclu ding those
that are deemed to be reinvested into business by the corresp onding
domestic place of business; and
3. The amount not included in deductible expenses pursuant t o the provisions
of Article 14 of the Adjustment of International Taxes Act.
(3) The tax rate applied under paragraph (1) shall be the tax r ate under
Article 98 (1) 3, and where there are different provisions in the tax treaties
concluded between Korea and the country of residence of the c oncerned
foreign corporation, the provisions of the treaty shall be o bserved.
SECTION 3 Report, Payment, Settlement, Correction,
and Collection
Article 97 (Report, Payment, Settlement, Correction, and C ollection)
(1) Except as otherwise provided in this Section, the provis ions of Article
s 57 (1) and (2), 58, 58-2, 59, 60 (excluding the profits surpl us disposal
statement or deficits disposal statement pursuant to the pr ovisions of
paragraph (2) 1 of the same Article), 61, 62 and 63 through 76 s hall
apply
mutatis mutandis to report, payment, settlement, correction, and
collection of the corporate tax for each business year of for eign corporations
falling under the provisions of Article 91 (1) and foreign co rporations under
paragraphs (2) and (3) of the same Article that have income ge nerated
in Korea under the provisions of subparagraph 7 of Article 93 . In this
case, in the
mutatis mutandis application of the provisions of Article 64,

CORPORATE TAX ACT
107where the tax base for corporate tax on income of a foreign cor poration
for each business year under the provisions of Article 91 (1) includes
the income withheld under the provisions of Articles 98 and 9 8-3, the
concerned withholding tax amount shall be deemed the tax amo unt
deducted under the provisions of Article 64 (1) 4.

(2) Where a foreign corporation which shall make a report on t he tax
base of corporate tax on the income for each business year und er the
provisions of paragraph (1) fails to do so within the time lim it on such
grounds as prescribed by the Presidential Decree, it may obt ain the approval
of the chief of the district tax office having jurisdiction o ver the place
of tax payment or the Commissioner of the competent Regional Tax Office
and extend the time limit for report under the conditions as p rescribed
by the Presidential Decree, notwithstanding the provision s of paragraph
(1).
(3) Where a foreign corporation which has received approval to extend
the time limit for report under the provisions of paragraph ( 2) pays the
tax amount, it shall add the amount calculated by applying th e interest
rate as prescribed by the Presidential Decree with referenc e to the interest
rates charged by financial institutions to the number of day s of the extension.
(4) In the calculation of the amount to be added under the prov isions
of paragraph (3), the extended time limit shall be from the da y following
the time limit for report under the provisions of Article 60 u ntil the date
when the time limit extended upon approval expires:
Provided , That where
the report and payment is made within the extended time limit , the extended
time limit shall be from the day following the time limit for r eport under
the provisions of Article 60 until the day of such report and p ayment.
Article 98 (Special Cases for Withholding or Collection fro m Foreign
Corporations)
(1) Where any person pays a foreign corporation the amount of domestic
source income pursuant to the provisions of subparagraphs 1 , 2, 4 through
7, and 9 through 11 of Article 93 (excluding any residents and non-residents
who pay the amount of income provided for in the provisions of subparagraph
7 of Article 93) which has no substantial connection with the domestic
place of business of the foreign corporation or does not accr ue to the domestic
place of business of the foreign corporation (including the amount paid

CORPORATE TAX ACT
108to foreign corporations without any domestic place of busin ess), he shall
withhold, as the corporate tax, the amount falling under eac h of the following
subparagraphs from the income of the relevant foreign corpo ration for
each business year, and pay it to the district tax office havi ng jurisdiction
over the place of tax payment, etc. under the conditions as pr escribed
by the Presidential Decree by the 10th day of the month follow ing the
month which included the date of the withholding, notwithst anding the
provisions of Article 97:
Provided , That this shall not apply to income under
the provisions of subparagraph 5 of Article 93 which may be ta xed as
business domestic source income under tax treaties:

1. For income under the provisions of subparagraphs 4 and 5 of Article
93, 2/100 of the amount paid;
2. For income under the provisions of subparagraph 6 of Artic le 93, 20/100
of the amount paid;
3. For income under the provisions of subparagraphs 1, 2, 9, a nd 11
of Article 93, 25/100 of the amount paid:
Provided , That for the interest
income generated from bonds issued by the State, a local gove rnment
and a domestic corporation among the income referred to in th e provisions
of subparagraph 1 of Article 93, 14/100 of the amount paid;
3-2. For income under the provisions of subparagraph 7 of Art icle 93,
10/100 of the amount paid:
Provided , That the acquisition amount
and transfer expenses of the transferred assets are confirm ed, either
an amount equivalent to 10/100 of the amount paid or an amount
equivalent to 25/100 of gains on transfer of such assets, whi chever
is smaller; and
4. For income under the provisions of subparagraph 10 of Arti cle 93,
10/ 100 of the amount paid (for cases falling under the provis ions
of Article 92 (2) 3, this refers to the “normal price ”under the same
subparagraph; hereafter referred to as the “amount paid, etc. ”in this
subparagraph):
Provided , That where the acquisition value and transfer
expenses of the relevant securities are confirmed pursuant to the proviso
to Article 92 (2) 2, either an amount equivalent to 10/100 of t he amount
paid, etc. or an amount equivalent to 25/100 of the amount cal culated
under the proviso to the same subparagraph of the same paragr aph,
whichever is smaller.
(2) Where a person who withholds the corporate tax under the p rovisions

CORPORATE TAX ACT
109of paragraphs (1) and (4) through (7) pays the withheld corpo rate tax
after the time limit for payment has expired, he shall additi onally pay
the amount of additional taxes under the provisions of Artic le 76 (2).
(3) Where a person responsible for collecting the withholdi ng tax fails
to withhold the corporate tax from the income of a foreign cor poration
for each business year pursuant to the provisions of paragra phs (1) and
(4) through (7) or fails to pay the withheld corporate tax wit hin the time
limit for payment, the chief of a district tax office having j urisdiction over
the tax payment, etc. shall additionally collect, as the cor porate tax, the
amount provided for in Article 76 (2) from the person respons ible for
collecting the withholding tax according to the practice of the collection
of national taxes:
Provided , That this shall not apply to the case of the
State or a local government.
(4) Any person who pays the domestic source income amount as p rovided
for in subparagraphs 1, 5, 6, and 9 of Article 93 with foreign l oan funds
to a foreign corporation without any domestic place of busin ess shall
withhold the tax from the relevant income amount pursuant to the provisions
of paragraph (1) whenever he pays the relevant income amount to the
foreign corporation in accordance with the terms of payment in the contract,
even though he does not directly pay the income amount under t he terms
of the concerned contract.
(5) The domestic agency of a foreign corporation operating a ship or aircraft
plying to a foreign country which does not fall under the prov isions of
Article 94 (3) shall withhold the tax from the income amount o f the foreign
corporation generated in Korea under the provisions of para graph (1) when
it pays the foreign corporation the income accruing from the ship or aircraft
plying to a foreign country.
(6) Where securities under the provisions of subparagraph 1 0 of Article
93 are transferred through a securities company under the Se curities
and Exchange Act, the concerned securities company shall wi thhold the
tax under the provisions of paragraph (1):
Provided , That where previously
issued stocks are transferred in case stocks are listed unde r the Securities
and Exchange Act, the corporation which issued the concerne d stocks shall
withhold the tax.

(7) Any person who pays a foreign corporation the domestic so urce income
amount accruing from any building or construction, install ation, assembly
or other work of machines, apparatus, etc., or offer of any se rvice as

CORPORATE TAX ACT
110to direction, control, etc. of such works, or any domestic so urce income
amount as prescribed in Article 93, shall withhold the tax as referred
to in paragraph (1), even though the concerned income accrue s to the
domestic place of business:
Provided , That this shall not apply where
the concerned domestic place of business has registered as a business
operator under the provisions of Article 111.
(8) Where domestic source income under the provisions of par agraph (1)
is paid in a foreign country and the person making the payment has an
address, residence, headquarters, main office, or place of business (including
domestic place of business under the provisions of Article 1 20 of the Income
Tax Act) in Korea, it shall be deemed that the person making th e payment
has paid the concerned domestic source income amount and the provisions
of paragraph (1) shall apply.

(9) Where any person responsible for collecting withholdin g taxes withholds
the corporate tax under the provisions of paragraphs (1) and (4) through
(7), he shall issue a withholding receipt stating the amount of payment
and other necessary matters to a person who is paid the income amount
as prescribed by the Presidential Decree.
(10) With respect to the domestic source income pursuant to t he provisions
of subparagraph 11 (i) of Article 93, the domestic corporati on which issued
the relevant stocks or investment shares shall collect the w ithholding tax
from the specially related person abroad who possesses the s tocks or
investment shares at the time when the Presidential Decree p rescribes.

(11) The concrete methods of withholding pursuant to the provisions of
paragraph (10) shall be prescribed by the Presidential Decr ee.

Article 98-2 (Special Cases for Report, Payment, etc. on Inc ome Accruing
from Transfer of Securities by Foreign Corporations)
(1) Where a foreign corporation without any domestic place o f business
comes to satisfy the taxation criteria provided for in the co rresponding
tax treaty by transferring stocks or subscription certific ates of the same
domestic corporation twice or more times within the same bus iness year
(referring to the business year of the domestic corporation which issues the
stocks or subscription certificates; hereafter the same sh all apply in this
Article), such a foreign corporation shall, within three mo nths from the
closing day of the business year to which the date of transfer belongs,
report and pay to the chief of the district tax office having j urisdiction

CORPORATE TAX ACT
111over the place of tax payment an amount equivalent to the with holding
tax on the income accruing from the transfer (hereafter refe rred to as
“ income ”in this Article) that was not paid at the time of such transfer s,
as prescribed by Presidential Decree.
(2) The provisions of paragraph (1) shall apply
mutatis mutandis to the
income of a foreign corporation with a domestic place of busi ness that
is not substantially related to or does not belong to the dome stic place
of business.
(3) In cases where a foreign corporation without any domesti c workplace
transfers stock, subscription certificates or other secur ities (hereafter
referred to as “the stocks, etc. ”in this paragraph) to a non-resident or
foreign corporation without any domestic workplace, which are prescribed
by Presidential Decree, it shall report an amount gained by m ultiplying
income arising from the transfer by the rate pursuant to Arti cle 98 (1)
4 to the chief of the district tax office having jurisdiction over the place
of tax payment not later than the 10th day of the next month aft er one
to which the day it was paid belong as prescribed by President ial Decree:
Provided , That the person who pays the amount of income following the
transfer of stocks, etc. has paid corporate tax by deducting it from the
domestic income at source generated from the transfer of the relevant
stocks, etc. pursuant to Article 98, this shall not apply.

(4) Where a foreign corporation fails to make a report and pay ment under
paragraphs (1) through (3), makes a report falling short of t he tax base
to report, or underpays a tax amount, the chief of the distric t tax office
having jurisdiction over the place of tax payment shall, by a pplying
mutatis
mutandis
the provisions of Article 66, collect the correct payable am ount.

[This Article Newly Inserted by Act No. 6293, Dec. 29, 2000] Article 98-3 (Special Cases for Withholding Tax from Bonds, etc. of Foreign
Corporations)
(1) Any person who pays interest or discounts (hereafter ref erred to as
the “interest, etc. ”in this Article) on bonds, etc. provided by Article 46 (1)
of the Income Tax Act (hereafter referred to as the “bonds, etc. ”in this
Article) to a foreign corporation (referring to a foreign co rporation that is
subject to the provisions of Article 98 (1); hereafter the sa me shall apply
in this Article), or buys bonds, etc. from a foreign corporat ion before being
paid the interest, etc. on such bonds, etc. shall withhold th e tax taking
into account the holding period of such bonds, etc. under the conditions

CORPORATE TAX ACT
112as prescribed by Presidential Decree.
(2) Deleted.
(3) Any act performed by any person who acts in the capacity of a person
who is liable to withhold taxes at source under paragraph (1) or is
commissioned to act in the capacity of the latter shall be dee med an act
peformed by the latter or the mandator within the scope of the delegation
of power and commissioning, and is subject to the applicatio n of the
provisions of paragraph (1).

(4) In the event that any financial institution falling unde r any item of
subparagraph 1 of Article 2 of the Act on Real Name Financial T ransactions
and Guarantee of Secrecy takes over, trades, brokers or acts by proxy
on bonds, etc. issued by any resident or any foreign corporat ion, the
relationship of agency or delegation shall be deemed to exis t among such
financial institution, a person liable to withhold the tax p rovided for
in paragraph (1) and a foreign corporation that sells bonds, etc., and the
provisions of paragraph (3) shall apply.

(5) In the application of paragraphs (1) through (4), the pro visions of
Article 98 (1) through (3) shall apply
mutatis mutandis to the time limit
for the payment of the withholding tax and the payment and col lection
of the additional tax.

(6) In the application of the provisions of paragraph (1), th e payment
time of interest income, computation of the holding period o f such bonds,
etc., computation and payment of withholding tax amount, sc ope of persons
liable for withholding the tax, issuance of withholding tax receipts, etc.,
and other necessary matters shall be prescribed by Presiden tial Decree.

[This Article Newly Inserted by Act No. 6293, Dec. 29, 2000] Article 98-4 (Application for Non-Taxation on Income Gener ated from
Sources in Korea by Foreign Corporation)
Any foreign corporation that intends to get its income gener ated from
sources in Korea provided for in Article 93 (excluding the in come referred
to in subparagraphs 5 and 6 of the same Article) untaxed or exe mpted
from taxation in accordance with any tax treaty shall file an application
therefor with the chief of district tax office having jurisd iction over the
place of tax payment under the conditions as prescribed by Pr esidential
Decree.
[This Article Newly Inserted by Act No. 6558, Dec. 31, 2001]

CORPORATE TAX ACT
113Article 98-5 (Special Case for Procedures for Collecting Wi thholding Taxes
from Foreign Corporations)
(1) In case where any person who is liable to withhold taxes pr ovided
for in the provisions of Articles 98 and 98-2 through 98-4 wit hholds the
corporate tax from the income provided for in the provisions of subparagraph
1, 2, 9 or 10 of Article 93 for each business year among the dome stic
source income of the foreign corporations that are located i n countries
and regions that are published by the Minister of Strategy an d Finance,
the person liable to withhold taxes at source shall withhold the income
at source by preferentially applying the tax rate provided f or in each
subparagraph of Article 98 (1), notwithstanding the provis ions governing
the non-taxation, the tax exemption and the restricted tax r ates of Article
98-4 and tax treaties:
Provided , That the same shall not apply to a case
where the Commissioner of the National Tax Service approves in advance
the application of the non-taxation, the tax exemption and t he restricted
tax rates pursuant to tax treaties under the conditions as pr escribed by
Presidential Decree.

(2) In case where any corporation (including its agent and th e tax manager
under the provisions of Article 82 of the Framework Act on Nat ional Taxes)
to which the income generated from the domestic sources refe rred to in
paragraph (1) reverts intends to make it eligible for the app lication of
the non-taxation, the tax exemption and the restricted tax r ates pursuant
to any tax treaty, it may file a claim to the head of the distric t tax office
having jurisdiction over the place of tax payment of the pers on liable to
withhold taxes at source for its correction within 3 years fr om the last
day of the month to which the day on which the tax amount is with held
at source pursuant to the provisions of paragraph (1) belong s under the
conditions as prescribed by Presidential Decree.
(3) The head of the district tax office shall, upon receiving a claim filed
for correction pursuant to the provisions of paragraph (2), notify the relevant
claimant of the gist that he corrects the tax base and the tax a mount
or he finds no reasons for correcting the tax base and the tax a mount
within six months from the date on which he receives such clai m.
[This Article Newly Inserted by Act No. 7838, Dec. 31, 2005] CHAPTER Ⅴ Deleted.
Articles 99 through 108 Deleted.

CORPORATE TAX ACT
114CHAPTER SUPPLEMENTARY PROVISIONS Ⅵ
Article 109 (Report on Establishment or Foundation of Corpo ration)
(1) A domestic corporation shall submit a report on incorpor ation with
the items under each of the following subparagraphs indicat ed, along with
such documents as prescribed by Presidential Decree, withi n 2 months
of the date of the incorporation registration (in case where the actual
business management place is put into operation, the date on which the
actual business management place is put into operation) to t he head of
the district tax office having jurisdiction over the place o f tax payment.
In this case, where the business is registered under the prov isions of Article
111, it shall be deemed that the report on such incorporation is submitted:

1. Name of the corporation and its representative;
2. Location of its headquarters, main office or actual busin ess management
place;
3. Purpose of business; and
4. Date of establishment.
(2) Where a foreign corporation comes to have a domestic plac e of business,
it shall submit a report on the establishment of a domestic pl ace of business
with the matters under each of the following subparagraphs n oted within
2 months of the date on which the domestic place of business wa s established,
with the balance sheet as of the day the domestic place of busi ness was
established and other documents as prescribed by President ial Decree
attached, to the head of the district tax office having juris diction over
the place of tax payment. In this case, a foreign corporation which comes
to have a place of business under the provisions of Article 94 (3), it may
only submit a report on establishment of a domestic place of b usiness:
1. Names of the corporation and its representative;
2. Location of its headquarters or main office;
3. Name of the person responsible for management or administ ration of
the business conducted in Korea or the assets located in Kore a;
4. Purpose and type of domestic business, and type and locati on of assets
in Korea; and
5. Date of start of domestic business or date on which assets c ame to
be held in Korea.
(3) Where there are changes in the contents of the report and o ther documents
submitted by domestic corporations and foreign corporatio ns under the

CORPORATE TAX ACT
115provisions of paragraphs (1) and (2), the changed contents s hall be reported
to the chief of the district tax office having jurisdiction o ver the place
of tax payment within 15 days from the date of such changes.

(4) The provisions of paragraph (2) shall apply mutatis mutandis to the
report by a foreign corporation with the income under subpar agraph 3
of Article 93.

Article 110 (Report on Start of Profit-Making Business by No n-Profit
Corporation)
Where a non-profit domestic corporation or a non-profit for eign corporation
(limited to foreign corporations with a domestic place of bu siness) begins
a new profit-making business (limited to profit-making bus inesses under
the provisions of Article 3 (2) 1 and 6), it shall submit a repo rt stating
the matters falling under each of the following subparagrap hs, along
with the balance sheet of the profit-making business as of th e day it
begins such business and other documents as prescribed by Pr esidential
Decree, to the chief of the district tax office having jurisd iction over the
place of tax payment within 2 months from the date of the start of the
business:

1. Title of the corporation;
2. Location of its headquarters, main office or actual busin ess management
place;
3. Name of the representative and the person responsible for management
or administration;
4. Proper purpose businesses;
5. Type of the profit-making business;
6. Date of start of the profit-making business; and
7. Place of business for the profit-making business.
Article 111 (Registration of Business)
(1) A corporation starting a new business shall register its elf with the
chief of the district tax office having jurisdiction over th e place of tax
payment under the conditions as prescribed by Presidential Decree.
(2) A business operator who has registered his business unde r the
Value-Added Tax Act shall be deemed to have registered the co ncerned
business under the provisions of paragraph (1).

(3) The provisions of Article 5 of the Value-Added Tax Act sha ll apply
mutatis mutandis to a corporation registering its business under the
provisions of this Act.

CORPORATE TAX ACT
116(4) Where the report on incorporation under the provisions o f Article 109
has been made, it shall be deemed that application for regist ration of business
has been made.
Article 112 (Keeping of Account Books)
A corporation with tax liability shall keep its account book s by the double
entry system, and keep and preserve important documentary e vidence
related to the account books:
Provided , That for non-profit domestic
corporations, this shall be limited to those operating a pro fit-making
business under Article 3 (2) 1 and 6.
Article 112-2 (Liability to Prepare and Keep Detailed State ment of Donation
Receipt Issuance)
(1) Where anyone in charge of issuing donation receipts (her eafter referred
to as the “donation receipts ”in this Article) that are necessary to include
donations in deductable expenses pursuant to the provision s of Article
24 of this Act and Article 73 of the Restriction of Special Tax ation Act
issues any donation receipt to a domestic corporation pursu ant to the
following subparagraphs, he shall prepare a detailed state ment of donations
by donating corporations (hereafter referred to as the “detailed statement
of donation receipt issuance by donating corporation ”in this Article) and
keep them for 5 years from the date on which donation receipts are issued.

1. Until December 31, 2008: domestic corporations that dona te an
amount exceeding 1 million won a year;
2. From January 1, 2009 until December 31, 2009: domestic cor porations
that donate an amount exceeding 500 thousand won a year; and
3. From January 1, 2010 onward: domestic corporations that m ake
a donation irrespective of the amount.
(2) Anyone in charge of issuing donation receipts shall, upo n the request,
submit a detailed statement of donation receipt issuance by donating
corporation which he keeps pursuant to the provisions of par agraph (1)
to the Commissioner of the National Tax Service, the Commiss ioner of the
competent Regional Tax Office or the chief of the district ta x office having
jurisdiction over the place of tax payment.

(3) Those who issue donation receipts shall submit a detaile d statement
of donation receipt issuance which records the total number of cases of
donation receipt issuance, amount, etc. as prescribed by Or dinance of the
Ministry of Strategy and Finance to the chief of relevant dis trict tax
office by June 30 of the next year after the corresponding bus iness year.

CORPORATE TAX ACT
117
[This Article Newly Inserted by Act No. 7838, Dec. 31, 2005] Article 113 (Separate Accounting)
(1) Where a non-profit corporation operates a profit-makin g business, the
assets, liabilities, and profits and losses of the concerne d profit-making
business and those of the other business which is not a profit -making
business shall be separately accounted and separate accoun ts shall be
maintained.
(2) A corporation subject to the application of the Trust Bus iness Act
and the Indirect Investment Asset Management Business Act s hall keep
separate accounts for the income accruing to the trust estat e and other
income in the calculation of the income amount for each busin ess year.

(3) A merged corporation which wishes to deduct the losses carried forward
of an extinguished corporation under the provisions of Arti cle 45 (1) shall
keep separate accounting of the assets, liabilities, and pr ofits and losses
included in the business succeeded from the extinguished co rporation and
those included in other business.
(4) Matters necessary for the separate accounting method un der the
provisions of paragraphs (1) through (3) and other necessar y matters shall
be prescribed by Presidential Decree.
Article 114 Deleted.
Article 115 (Duty to Submit Combined Financial Statements, etc.)
A company liable to draw up a combined financial statement un der the
Act on External Audit of Stock Companies shall submit the gro up enterprise
combined balance sheet, the group enterprise combined prof its and losses
statement under the same Act, and other documents as prescri bed by
Presidential Decree within 6 months from the last day of the b usiness
year of the relevant company to the chief of the district tax o ffice having
jurisdiction over the place of tax payment under the conditi ons as prescribed
by Presidential Decree.

Article 116 (Receipt and Preservation of Documentary Evide nce of
Expenditures)
(1) A corporation shall prepare or receive documentary evid ence for all
business-related transactions for each business year and k eep them for
5 years from the date when the time limit for report under the p rovisions
of Article 60 expires.
(2) In case of paragraph (1), where a corporation is supplied goods or
services by a businessman as prescribed by Presidential Dec ree and pays

CORPORATE TAX ACT
118for them, it shall receive and keep the documentary evidence falling under
any one of the following subparagraphs:
Provided , That this shall not
apply to the cases as prescribed by Presidential Decree:

1. Credit card sales slip under the Specialized Credit Finan cial business
Act (in case of transactions using things similar to a credit card as
prescribed by Presidential Decree, it shall include the con cerned
documentary evidence; hereafter the same shall apply in Art icle 117);
1-2. Cash receipt;
2. Tax invoice under the provisions of Article 16 of the Value -Added Tax
Act; and
3. Invoice under the provisions of Article 121 of this Act and Article 163
of the Income Tax Act.
(3) In applying the provisions of paragraph (2), where a corp oration fails
to receive the delivery of a tax invoice referred to in the pro visions of
subparagraph 2 of the said paragraph, the duty to receive and keep the
documentary evidence provided by the provisions of paragra ph (2) shall
be deemed to be fulfilled when it issues and keeps a purchaser -issued
tax invoice under the provisions of Article 126-4 (1) of the R estriction
of Special Taxation Act.

(4) In the application of the provisions of paragraphs (1) an d (2), matters
necessary for the receipt and keeping of documentary eviden ce shall be
prescribed by Presidential Decree.

Article 117 (Duty to Have Credit Card Affiliate Membership a nd to Issue
Credit Card Sales Slips, etc.)
(1) Where the Commissioner of the National Tax Service deems it necessary
for tax management of a corporation that meets the requireme nts prescribed
by Presidential Decree in consideration of business type, s cale, etc., which
supplies goods or services mainly to consumers who are not bu siness
operators, he may guide it to join the credit card affiliate m embership.

(2) Where a credit card affiliate member (refers to a credit c ard affiliate
member who has joined as it met the requirements in paragraph (1); the
same shall apply hereafter in this Article, Articles 66 (2) 3 and 76 (11))
is requested by a consumer to issue a credit card sales slip in response
to the settlement of a price by a credit card with respect to th e goods
or services provided in relation to his business, he shall ne ither refuse

CORPORATE TAX ACT
119to issue the credit card sales slip nor issue it differently f rom the actual
facts.

(3) Where a credit card affiliate member refuses to issue a cr edit card
sales slip or issues it differently from the actual facts, th e consumer concerned
may report the details of the transaction concerned to the Co mmissioner
of the National Tax Service, the Commissioner of the compete nt Regional
Tax Office or the chief of the competent district tax office.

(4) Any person who has received a report pursuant to the provi sions of
paragraph (3) shall notify it to the chief of the district tax office having
jurisdiction over the credit card affiliate member ’s place of tax payment.
In this case, the chief of the district tax office having juri sdiction over
the place of tax payment shall notify the credit card affilia te member
concerned of the amount which is reported for the relevant bu siness year.

(5) The Commissioner of the National Tax Service may issue an order
to a credit card affiliate member, who has refused to issue a c redit card
sales slip or issued it differently from the actual facts, wi th respect to
matters necessary to correct it.

(6) The administrative guidance for joining credit card aff iliate membership,
the methods for the report and notification of the refusal to issue a credit
card sales slip or the issuance of a credit card sales slip dif ferent from
the actual facts, and other necessary matters shall be presc ribed by
Presidential Decree.

Article 117-2 (Duty to Have Cash Receipt Affiliate Membersh ip and to Issue
Cash Receipts, etc.)
(1) A corporation which provides goods or services to consum ers who are
not mainly businessmen and meets the requirements determin ed by
Presidential Decree in consideration of the categories, sc ale, etc. of business
shall acquire cash receipt affiliate membership within thr ee months from
the date when the requirements are satisfied.
(2) A corporation which has acquired cash receipt affiliate membership
pursuant to the provisions of paragraph (1) shall put up a mar k indicating
that it is a cash receipt affiliate member under the conditio ns as prescribed
by the Commissioner of the National Tax Service.
(3) Where a cash receipt affiliate member is requested by a co nsumer
to issue a cash receipt in response to the settlement of a pric e by cash
with respect to the goods or services provided in relation to his business,

CORPORATE TAX ACT
120he shall neither refuse to issue the cash receipt nor issue it differently
from the actual facts.
(4) Where a cash receipt affiliate member who has received ca sh in return
for the provision of goods or services refuses to issue a cash receipt or
issues it differently from the actual facts, the consumer co ncerned may
report the details of the cash transaction to the Commission er of the National
Tax Service, the Commissioner of the competent Regional Tax Office or
the chief of the competent district tax office.
(5) Any person who has received a report pursuant to the provi sions of
paragraph (4) shall notify it to the chief of the district tax office having
jurisdiction over the cash receipt affiliate member ’s place of tax payment.
In this case, the chief of the district tax office having juri sdiction over the
place of tax payment shall notify the cash receipt affiliate member concerned
of the amount reported for the relevant business year.
(6) The Commissioner of the National Tax Service may issue an order
to a cash receipt affiliate member, who has refused to issue a cash receipt
or issued it differently from the actual facts, with respect to matters
necessary to correct it.
(7) The acquisition of and withdrawal from cash receipt affi liate
membership, the amount subject to issuance of a cash receipt , the methods
for the report and notification of the refusal to issue a cash receipt or
the issuance of a cash receipt different from the actual fact s, and other
necessary matters shall be prescribed by Presidential Decr ee.
[This Article Newly Inserted by Act No. 8141, Dec. 30, 2006] Article 118 (Preparation and Keeping of Stockholder Registry, etc.)
A domestic corporation (excluding non-profit domestic cor porations) shall
prepare and keep a stockholder registry or employee registr y stating the
names, addresses, and resident registration numbers (in ca ses where
stockholders or employees are juristic persons, they shall mean the names
of the juristic persons, the locations of the headquarters o f the juristic
persons, and the business registration numbers) of the stoc kholders or
employees (referring to the limited partnership employees ; hereafter the
same shall apply in this Article) and other matters as prescr ibed by
Presidential Decree.
Article 119 (Submission of Detailed Statement on Change of S tocks)
(1) A corporation (excluding partnership corporations, etc. as prescribed
by Presidential Decree) with changes in stocks, etc. during the business
year shall submit a detailed statement on change of stocks, e tc. under
the conditions as prescribed by Presidential Decree to the c hief of the district
tax office having jurisdiction over the place of tax payment within the

CORPORATE TAX ACT
121time limit for report under the provisions of Article 60.
(2) The provisions of paragraph (1) shall not apply to the sto cks, etc.
that fall under any of the following subparagraphs:

1. Stocks, etc. held by stockholders, etc. other than the maj ority stockholder
(including specially-related persons thereof) in the case of stock-listed
corporations and KOSDAQ-listed corporations that are pres cribed by
Presidential Decree; or
2. Stocks, etc. held by minority stockholders of the relevan t corporations
in the case of corporations other than those in subparagraph 1.
(3) The extent of majority stockholder and minority stockho lder pursuant
to paragraph (2) and other necessary matters shall be prescr ibed by
Presidential Decree.

Article 120 (Duty to Submit Payment Statements)
(1) Any person responsible for collecting withholding taxe s under the
provisions of Article 73 (1) shall submit the payment statem ents to the
chief of the district tax office having jurisdiction over th e place of tax
payment as prescribed by Presidential Decree.

(2) The provisions of Article 164 of the Income Tax Act shall a pply mutatis
mutandis
to the submission of the payment statements pursuant to
paragraph (1).

Article 120-2 (Special Cases for Duty to Submit Payment Stat ements on
Income, etc. Generated from Sources in Korea by Foreign Corp orations)
(1) Any person who pays the income generated from sources in K orea to
any foreign corporation in accordance with Article 93 shall file a payment
statement with the chief of the district tax office having ju risdiction over
the place of tax payment by the end of February of the year foll owing
the year (in cases of suspension of closure of business, by th e end of the
month 2 months from the month to which such suspension or clos ure belongs)
to which the payment day belongs:
Provided , That the same shall not
apply to a case where the income prescribed by Presidential D ecree is
paid, including non-taxable or tax-exempted income, etc. t hat are confirmed
under Article 98-4.

(2) The provisions of Article 164 of the Income Tax Act shall a pply mutatis
mutandis
to the submission of payment statements pursuant to paragra ph
(1).

[This Article Newly Inserted by Act No. 6293, Dec. 29, 2000]

CORPORATE TAX ACT
122Article 120-3 (Submission of Aggregate Tax Invoice for Indi vidual
Suppliers)
(1) Any corporation which runs a business exempted from paym ent of
the value-added tax pursuant to the provisions of the Value- Added Tax
Act and the Restriction of Special Taxation Act shall, upon r eceipt of a
tax invoice under the provisions of Article 16 (1) and (3) of t he Value-Added
Tax Act with goods or services offered, submit the aggregate tax invoice
for individual suppliers (referring to the aggregate tax in voice for individual
suppliers under the provisions of Article 20 of the Value-Ad ded Tax Act;
hereinafter the same shall apply) to the chief of the distric t tax office
having jurisdiction over the place of tax payment within the period set
by Presidential Decree:
Provided , That the same shall not apply to the
cases where it is submitted pursuant to the provisions of Art icle 20 (4)
of the Value-Added Tax Act.
(2) Necessary matters concerning the submission, etc. of ag gregate tax
invoices for individual suppliers shall be prescribed by Pr esidential Decree.
[This Article Newly Inserted by Act No. 8141, Dec. 30, 2006] Article 121 (Preparation and Issuance of Invoice)
(1) When a corporation provides goods or services, it shall p repare an
invoice or receipt (hereinafter referred to as an “invoice, etc. ”) as prescribed
by Presidential Decree and deliver it to the person receivin g the goods
or services.
(2) Where agricultural products, livestock products, mari ne products, and
forest products exempted from the value-added tax under the provisions
of Article 12 (1) 1 of the Value-Added Tax Act are sold on consi gnment
or by an agent, the consignee or agent shall be deemed to have s old such
goods and shall prepare an invoice, etc. and deliver it to the person buying
the concerned goods:
Provided , That where the invoice is delivered under
the conditions as prescribed by Presidential Decree under t he provisions
of paragraph (1), this shall not apply.

(3) With respect to imported goods, the head of a customshous e shall deliver
an invoice to any corporation that imports such goods under t he conditions
as prescribed by Presidential Decree.

(4) The provisions of paragraphs (1) through (3) shall not be applied to
the cases where an issuance of account statements, etc. is de emed to be
improper, such as the cases, etc. of a sale of real estate, whi ch are prescribed
by Presidential Decree.

(5) A corporation shall submit an aggregate invoice for indi vidual suppliers

CORPORATE TAX ACT
123or purchasers issued or received under the provisions of par agraphs (1)
through (3) (hereinafter referred to as an “aggregate invoices for individual
suppliers or purchasers ”) to the chief of the district tax office having
jurisdiction over the place of tax payment within the time li mit as prescribed
by Presidential Decree:
Provided , That any corporation that is delivered
with the invoice pursuant to the provisions of paragraph (3) may not submit
the aggregate invoices for individual suppliers.

(6) Those who have prepared or issued tax invoices or receipt s or submitted
aggregate tax invoices for individual suppliers or purchas ers under the
Value-Added Tax Act shall be deemed to have prepared or issue d invoices,
etc. or submitted the aggregate invoices for individual sup pliers or purchasers
under the provisions of paragraphs (1) through (3), and (5).

(7) Necessary matters for preparing and issuing the invoice , etc. and
submitting the aggregate invoices for individual supplier s or purchasers
shall be prescribed by Presidential Decree.
Article 122 (Inquiry and Investigation)
Any public official in charge of the corporate tax-related b usiness affairs
may, if it is necessary to perform such business affairs, que stion the persons
falling under any of the following subparagraphs, or examin e the concerned
account books, documents and other items or order them to be s ubmitted:

1. Persons liable to pay taxes or persons deemed to have tax liability;
2. Persons responsible for collecting withholding taxes;
3. Persons liable to submit a payment statement and persons l iable to
submit a sum table of invoices on place of sale and purchase;
4. Persons responsible for management or administration un der the
provisions of Article 109 (2) 3;
5. Persons deemed to have engaged in a transaction with perso ns under
the provisions of subparagraph 1;
6. Trade associations organized by persons liable to pay tax es and
corresponding organizations; or
7. Corporations that have issued donation receipts.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 1999: Provided , That the

CORPORATE TAX ACT
124amended provisions of Articles 8, 16, 17, 33, 34, 36, 46 throu gh 49, 59,
63, 79, 81, 84, 86 and 99 (11) (limited to the sections on divis ions) and
the amended provisions of Article 29 (1) shall enter into for ce on the date
of its promulgation, the amended provisions of Articles 28 ( 2) through
(4) and 76 (5) shall enter into force on January 1, 2000, and th e amended
provisions of Articles 76 (9) 1 and 121 (2) shall enter into fo rce on July
1, 1999.
Article 2 (General Applicable Examples)
This Act shall apply from the business year which starts firs t after the
enforcement of this Act:
Provided , That the amended provisions on the
corporate tax on liquidation income shall apply from the dis solution or
merger which occurs first after the enforcement of this Act o r from the
division of the business year which includes the date of the e nforcement
of this Act, and the amended provisions on the special transf er income
tax shall apply from the transfer which first occurs after th e enforcement
of this Act.
Article 3 (Applicable Examples for Special Cases of Merger a nd Division)
The amended provisions of Article 8, subparagraphs 3 and 4 of Article
17, and Articles 44 through 49, 59 (3), 99 (11) (limited to the section
on divisions) and 113 (3) shall apply from the first merger af ter the
enforcement of this Act or from the division of the business y ear which
includes the date of the enforcement of this Act.
Article 4 (Applicable Examples for Report and Payment)
(1) The amended provisions of Articles 6, 7, 62, and 109 throu gh 111
shall apply from the arrival of the first time limit for repor t or registration
after the enforcement of this Act.
(2) The amended provisions of Articles 60 and 63 through 65 sh all apply
from the first report or payment of corporate tax for the busi ness year
which starts first after the enforcement of this Act:
Provided , That the
amended provisions of Article 63 (1) shall apply to the first interim prepaid
portion after the enforcement of this Act.
(3) The amended provisions of Articles 66 through 70 shall ap ply from
the first report, settlement, or correction after the enfor cement of this
Act.
(4) The amended provisions of Articles 71 and 89 shall apply f rom the
arrival of the first time limit for the payment of corporate t ax after the
enforcement of this Act.

CORPORATE TAX ACT
125(5) The amended provisions of Articles 73 through 75 shall ap ply from
the first payment after the enforcement of this Act.
Article 5 (Applicable Examples for Legal Fiction of Dividen ds or Distributed
Funds)
The amended provisions of Article 16 shall apply from the fir st retirement
of stocks, entry into capital or dissolution after the enfor cement of this
Act:
Provided , That the amended provisions of Article 16 (1) 2 (a) (limited
to merger evaluation marginal profits and division evaluat ion marginal
profits) shall apply from the first merger after the enforce ment of this
Act or the entry into capital of funds generated by a division during the
business year which includes the date of the enforcement of t his Act, and
the amended provisions of subparagraph 6 of the same paragra ph shall
apply from the division of the business year which includes t he date of
the enforcement of this Act.
Article 6 (Applicable Examples for Calculation of Deductib le Expenses)
(1) The amended provisions of Article 28 (2) through (4) shal l apply from
the first business year starting on or after January 1, 2000.
(2) The amended provisions of Articles 29 (excluding paragr aph (1)) through
34 (excluding paragraph (3)), 36 through 38, and 61 shall app ly from
the entry into the calculation of deductible expenses in the business year
beginning first after the enforcement of this Act:
Provided , That the
amended provisions of Article 29 (1) shall apply from the ent ry into
the calculation of deductible expenses in the business year which includes
the date of the enforcement of this Act, the amended provisio ns of Articles
31 (4), 32 (4), 33 (3), 34 (6), and 36 (3) (including where the a mended
provisions of Articles 37 (2) and 38 (2) shall apply
mutatis mutandis )
shall apply from the first dissolution after the enforcemen t of this Act
or from the division of the business year which includes the d ate of the
enforcement of this Act.
(3) The amended provisions of Article 34 (3) shall apply from the first
guarantee of obligation (including guarantee of obligatio n made prior to
the enforcement of this Act for which the time limit has been e xtended)
or payment after the enforcement of this Act:
Provided , That for a corporation
which had been under the application of the previous provisi ons of Article

CORPORATE TAX ACT
12614 (1), the amended provisions of Article 34 (3) 1 shall apply from the
first guarantee of obligation after January 1, 1998 (includ ing guarantee
of obligation made prior to December 31, 1997 for which the ti me limit
has been extended).
(4) The amended provisions of Article 52 shall apply to the fi rst transaction
after the enforcement of this Act.
(5) The amended provisions of Articles 92 (2) 3 and 98 (1) 4 sha ll apply
to the first transfer after the enforcement of this Act.
Article 7 (Applicable Examples for Additional Taxes)
(1) The amended provisions of Article 76 (1) shall apply from the collection
of corporate tax in the first business year starting after th e enforcement
of this Act.
(2) The amended provisions of Articles 76 (4) and 115 shall ap ply from
the combined financial statements submitted in the first bu siness year
starting after the enforcement of this Act. In this case, the time limit
for submission for the business year which starts between th e date of the
enforcement of this Act and December 31, 1999 shall be 7 month s from
the end of the concerned business year, notwithstanding the amended
provisions of Article 115.
(3) The amended provisions of Article 76 (5) shall apply from the first
goods or services provided after January 1, 2000, and the ame nded provisions
of Article 116 shall apply from the first goods or services pr ovided after
the enforcement of this Act.
(4) The amended provisions of Article 76 (6) shall apply from the detailed
statement submitted in the first business year starting aft er the enforcement
of this Act, and the amended provisions of Article 119 (1) (ex cluding the
section on the time limit for report) shall apply from the sta tement first
submitted after the enforcement of this Act.
(5) The amended provisions of Article 76 (8) shall apply from the arrival
of the first time limit for submission after the enforcement of this Act.
(6) The amended provisions of Articles 76 (9) 1 and 121 (2) sha ll apply
from the first provision after July 1, 1999.
(7) The amended provisions of Article 114 shall apply from th e arrival
of the first time limit for public notification after the enf orcement of

CORPORATE TAX ACT
127this Act.
Article 8 (Special Cases concerning Calculation of Income o f Profit-making
Business)
(1) In the application of the amended provisions of Article 3 (2) 4, the
acquisition value of stocks or contribution quotas acquire d before December
31, 1988 may be the higher of the book value or the amounts unde r each
of the following subparagraphs:
1. For stocks or contribution quotas listed on a stock exchan ge, the
higher amount of the stock exchange final market value on Dec ember
31, 1988 (regardless of the existence of any real transactio n) or the
average of the officially announced stock exchange final ma rket value
for each day of December 1988; and
2. For stocks or contribution quotas not listed on a stock exc hange, the
value as of January 1, 1989 as evaluated under the provisions of Article
60 of the Inheritance Tax and Gift Tax Act and Article 63 (1) 1 ( b)
and (c) of the same Act.
(2) In the application of the amended provisions of Article 3 (2) 5, the
acquisition value of land and buildings acquired before Dec ember 31, 1990
(including attached facilities and constructions) may be t he larger amount
of the book value or the value as of January 1, 1991 as evaluate d under
the provisions of Article 60 of the Inheritance Tax and Gift T ax Act and
Article 61 (1) through (3) of the same Act.

Article 9 (Special Cases concerning Application of Non-Inc lusion of
Entertainment Expenses in Calculation of Deductible Expen ses)
(1) In the application of the amended provisions of Article 2 5 (1) 2, for
the business year starting between the date of the enforceme nt of this
Act and December 31, 1999, the rates applied shall be as in the following
table, notwithstanding the table under the amended provisi ons of the table
under the same subparagraph:

CORPORATE TAX ACT
128Revenue Amount Rate
10,000,000,000 won or less 30/10,000
More than 10,000,000,000 won
and up to 50,000,000,000 won 30,000,000 won 15/10,000 of the amount
＋
in excess of 10,000,000,000 won
More than 50,000,000,000 won 90,000,000 won + 4/10,000 of the amount in
excess of 50,000,000,000 won
(2) In the application of the amended provisions of Article 2
5 (2) and (4),
for the business year starting between the date of the enforc ement of this
Act and December 31, 1999, the amount of secret service funds under
the previous provisions of the proviso of Article 18-2 (3) wi thin the scope
of 10% of the sum of the amounts under each subparagraph of Art icle
25 (1) appropriate amount shall be deemed the business-rela ted
entertainment expenses paid, and the amended provisions of Article 25
(2) shall not apply.
Article 10 (Special Cases concerning Time of Acquisition of Land, etc.)
In the application of the amended provisions of Article 99, t he land, etc.
acquired prior to December 31, 1984 shall be deemed as land, e tc. acquired
on January 1, 1985.
Article 11 (General Transitional Measures)
Corporate tax paid or to be paid under the previous provision s prior to
the enforcement of this Act shall be governed by the previous provisions.
Article 12 (Transitional Measures on Non-Taxation of Interest Income)
Corporate Tax shall not be levied on income generated by bond s or savings
under any of the following subparagraphs: 1. National housing bonds issued under the Housing Construc tion
Promotion Act by the Korea Housing and Commercial Bank under the
previous Korea Housing and Commercial Bank Act before Janua ry 1,
1982;
2. Bonds issued before January 1, 1983 which fall under any of the following
items:
(a) National bonds for industrial reconstruction issued by the State
under the previous Industrial Reconstruction Bonds Act;
(b) Bonds issued by the State as compensation for requisitio n under
the Act on Special Measures for Readjustment of Requisition ed
Properties;

CORPORATE TAX ACT
129(c) Bonds issued by the State under the previous Act on Tempor ary
Measures on the Settlement of Communication Facilities;
(d) National housing bonds issued by the State under the Hous ing
Construction Promotion Act;
(e) Subway public bonds, roads public bonds, and waterworks public
bonds issued by local governments under the Local Finance Ac t;
and
(f) Land development bonds issued by the Korea Land Corporat ion under
the Korea Land Corporation Act; and
3. Interest on savings in the National Savings Association g enerated before
December 31, 1990.
Article 13 (Transitional Measures for Inclusion of Reserve Fund, etc. in
Calculation of Gross Income, etc.)
(1) For the inclusion of reserve funds, etc. included in the c alculation
of deductible expenses under the provisions of the previous Article 12 (3)
before the enforcement of this Act in the calculation of gros s income, the
previous provisions shall govern.
(2) The time of accrual of gross income and deductible expens es for
transactions, etc. under the application of the provisions of the previous
Article 17 at the time of the enforcement of this Act shall be g overned
by the previous provisions.
(3) The withholding tax rate on interest income from bonds, e tc. issued
under the provisions of the previous Article 39 (6) before Se ptember 30,
1998 shall be 20%, notwithstanding the amended provisions o f Article
73 (1) 1.
Article 14 Omitted.
Article 15 (Relation with Other Acts and Subordinate Statut es)
Where other Acts and subordinate statutes cite the provisio ns of the previous
Corporate Tax Act at the time of the enforcement of this Act, a nd there
are corresponding provisions in this Act, they shall be deem ed to have
cited the concerned provisions of this Act in lieu of the prev ious provisions.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000.
Article 2 (Applicable Examples)

CORPORATE TAX ACT
130(1) The amended provisions of Article 18-2 shall apply start ing with the
portion of a dividend received first from a subsidiary after the enforcement
of this Act.
(2) The amended provisions of Article 36 shall apply startin g with the
portion of assets acquired and renovated for business using subsidies
provided first after the enforcement of this Act.
(3) The amended provisions of Article 73 (1) and (5) shall app ly starting
with the portion of the payment of interest income accruing f irst after
the enforcement of this Act.
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation.
(2) (General Applicable Examples) This Act shall apply star ting with the
portion of a declaration of tax base filed for the special sur tax and a
determination or an alteration made with respect to the spec ial surtax for
the first time after the enforcement of this Act.

(3) (Applicable Examples to Litigation Cases on Special Sur tax) This Act
shall apply to disposition pursuant to the provisions of Art icle 59-2 (1) (limited
to appeals, requests for review, requests for adjudgment or administrative
lawsuits that have already been filed) under the previous Co rporate Tax
Act (referring to the Act before amendment by Act No. 5581).

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001: Provided , That the
amended provisions of Articles 25 (2) and 98-2 shall enter in to force on
the date of its promulgation, the amended provisions of Arti cles 73 (1),
(6), (8) and (9), 74 (2) and 98-3 shall enter into force on July 1, 2001,
the amended provisions of the main sentence of Article 28 (2) shall en
ter into force on January 1, 2002, and the amended provisions of Article
s 66 (2), 76 (7) and (8) and 120-2 shall enter into force on July 1, 2002.

CORPORATE TAX ACT
131
Article 2 (General Applicable Examples)
This Act shall apply starting with the portion for the busine ss year that
starts first after the enforcement of this Act.
Article 3 (Applicable Examples to Exclusion of Received Div idend Amount
from Gross Income)
The amended provisions of Articles 18-2 (1) and (3) and 18-3 s hall apply
starting with the portion of received dividend amount first received after
the enforcement of this Act.
Article 4 (Applicable Examples to Exclusion of Entertainme nt Expenses
from Deductible Expenses)
The amended provisions of Article 25 (2) shall apply startin g with the
portion of entertainment expenses included in calculation of deductible
expenses for the business year to which the promulgation dat e of this
Act belongs.
Article 5 (Applicable Examples to Exclusion of Paid Interes t from
Deductible Expenses)
The amended provisions of the main sentence of Article 28 (2) shall apply
starting with the portion of paid interest for the business y ear that first
starts on or after January 1, 2002.
Article 6 (Applicable Examples to Inclusion of Policyholde r Dividend
Reserve Fund in Deductible Expenses)
The amended provisions of Article 31 (4) shall apply startin g with the
portion that is included in deductible expenses for the busi ness year to
which the enforcement date of this Act belongs.
Article 7 (Applicable Examples to Securities Trading Reser ve)
The amended provisions of Article 32 shall apply starting wi th the portion
of the business year to which the enforcement date of this Act belongs.
Article 8 (Applicable Examples to Income Deduction for Mutu al Funds,
etc.)
The amended provisions of Article 51-2 (1) 2 and 3 shall apply starting
with the portion first distributed after the enforcement of this Act.
Article 9 (Applicable Examples to Interim Prepayment)
The amended provisions of the proviso of Article 63 (1) shall apply starting
with the portion of the first interim prepayment after the en forcement
of this Act.

CORPORATE TAX ACT
132Article 10 (Applicable Examples to Withholding at Source)
(1) The amended provisions of Article 73 (1) shall apply star ting with
the portion of interest income first accrued or earnings dis tributed from
securities investment trust fund first paid on or after July 1, 2001.
(2) The amended provisions of Articles 73 (6) and (8), 74 (2), and 98-3
shall apply starting with the portion of bonds, etc. first so ld or interest,
etc. first paid on or after July 1, 2001.
(3) The previous provisions of Articles 73 (6) and 74 (2) shal l apply to
bonds, etc. issued before July 1, 2001 until the first paymen t date of interest,
etc. on bonds, etc. on or after July 1, 2001 where the interest computing
period spans over the periods before or on or after July 1, 200 1.
Article 11 (Applicable Examples to Domestic Source Income o f Foreign
Corporations)
(1) The amended provisions of Article 92 (2) 2 (proviso), sub paragraphs
7 and 10 of Article 93, and Article 98 (1) 4 (proviso) shall app ly starting
with the portion first transferred after the enforcement of this Act.
(2) The amended provisions of subparagraph 11 of Article 93 s hall apply
starting with the portion of income first accrued after the e nforcement
of this Act.
Article 12 (Applicable Examples to Special Cases for Report s, etc. on
Securities Transfer Margin by Foreign Corporations)
The amended provisions of Article 98-2 shall apply starting with the portion
that first meets the taxable criteria under the correspondi ng taxation
treaty after the promulgation of this Act.
Article 13 (Applicable Examples to Submission of Written Pa yment
Statements by Foreign Corporations)
The amended provisions of Articles 66 (2) 2, 76 (7) and (8), an d 120-2
shall apply starting with the portion first paid on or after J uly 1, 2002.

Article 14 (Applicable Examples to Special Surtax)
The amended provisions of Articles 99, 102, and 104 shall app ly starting
with the portion first transferred after the enforcement of this Act.
Article 15 (Transitional Measures for Inclusion of Securit ies Trading
Reserve in Gross Income)
The previous provisions shall apply to inclusion, etc. of se curities trading
reserve included in calculation of deductible expenses pur suant to the

CORPORATE TAX ACT
133previous provisions of Article 32 before the enforcement of this Act in
gross income.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2002: Provided , That the
amended provisions of Articles 45 (1), 61 (1), 76 (3) and (5), and 114
shall enter into force on the date of its promulgation, and th e amended
provisions of Articles 98-4 and 120-2 (1) shall enter into fo rce on July
1, 2002.
Article 2 (General Applicable Examples)
This Act shall apply, starting with the portion of the busine ss year that
commences for the first time after the enforcement of this Ac t.
Article 3 (Applicable Examples concerning Legal Fiction of Dividend or
Distribution)
The amended provisions of Article 16 (1) 2 shall apply, start ing with the
portion of equity stocks or contribution quotas that is reti red for the first
time after the enforcement of this Act.
Article 4 (Applicable Examples concerning Non-Inclusion o f Received
Dividend Amount in Gross Income)
The amended provisions of Articles 18-2 (1) 4 and 18-3 (2) sha ll apply,
starting with the portion of dividend that is earned for the f irst time after
the enforcement of this Act.
Article 5 (Applicable Examples concerning Inclusion of Val ue of Assets
for Business Acquired Using National Treasury Subsidies, e tc. in
Deductible Expenses)
The amended provisions of Article 36 (1) and (4) shall apply, starting
with the portion for which the National Treasury subsidies, etc are given
for the first time after the enforcement of this Act.
Article 6 (Applicable Examples concerning Succession of Lo sses Carried
Forward at the Time of Merger)
The amended provisions of Article 45 (1) 1 shall apply, start ing with the
portion of a merger that is effected in the business year to wh ich the date
of promulgation of this Act belongs.
Article 7 (Applicable Examples concerning Inclusion of Amo unt Equivalent
to Transfer Marginal Profit of Assets Accruing from Spin-of f in Deductible
Expenses)

CORPORATE TAX ACT
134The amended provisions of Article 47 shall apply, starting w ith the portion
of any division or any merger that is effected for the first ti me after the
enforcement of this Act.
Article 8 (Applicable Examples concerning Income Deductio n for
Corporate Restructuring Real Estate Investment Company)
The amended provisions of Article 51-2 (1) 4 shall apply, sta rting with
the portion of any dividend that is given for the first time af ter the
enforcement of this Act.
Article 9 (Applicable Examples concerning Special Cases fo r Taxation on
Income Accruing from Transfer of Land, etc.)
The amended provisions of Articles 2 (2), 55, 55-2, 57, 59, 63 (1), 76
(1) 1, 92 (2) through (6), 95 and 95-2 shall apply, starting wi th the
portion that is transferred for the first time after the enfo rcement of this
Act.
Article 10 (Applicable Examples concerning Special Cases f or
Appropriating Reserve Fund as Deductible Expenses)
The amended provisions of Article 61 (1) shall apply, starti ng with the
portion that is appropriated in the statement of tax reconci liation of the
business year to which the date of promulgation of this Act be longs.
Article 11 (Applicable Examples concerning Special Cases f or Taxation
of Income Accruing from Transfer of Assets by Non-profit Dom estic
Corporation)
The amended provisions of Article 62-2 shall apply, startin g with the portion
that is transferred for the first time after the enforcement of this Act.
Article 12 (Applicable Examples concerning Additional Tax)
(1) The amended provisions of Article 76 (1) 3 shall apply, st arting with
the portion whose payment time limit comes due for the first t ime after
the enforcement of this Act.
(2) The amended provisions of Article 76 (5) will apply, star ting with
the portion that is supplied with goods and services in the bu siness year
to which the date of enforcement of this Act belongs.
Article 13 (Applicable Examples concerning Income Generat ed from Source
in Korea by Foreign Corporation)
The amended provisions of subparagraphs 2 and 11 of Article 9 3 shall
apply, starting with the portion that is disposed of as a divi dend or other
income for the first time after the enforcement of this Act.
Article 14 (Applicable Examples concerning Tax Withholdin g of Bonds,

CORPORATE TAX ACT
135etc. of Foreign Corporation)
The amended provisions of Article 98-3 shall apply, startin g with the portion
to which interest, etc. is paid or bonds, etc. are sold for the first time
after the enforcement of this Act.
Article 15 (Applicable Examples concerning Application fo r Non-Taxation,
etc. on Income Generated from Source in Korea by Foreign Corp oration)
The amended provisions of Article 98-4 shall apply, startin g with the portion
that is untaxed or exempted from taxation for the first time a fter July
1, 2002.
Article 16 (Applicable Examples concerning Obligation to P ublish Balance
Sheet)
The amended provisions of Articles 76 (3) and 114 shall apply , starting
with the business year to which the date of promulgation of th is Act belongs.
Article 17 (Applicable Examples concerning Submission of W ritten
Payment Statement on Income Generated from Source in Korea b y
Foreign Corporation)
The amended provisions of Article 120-2 (1) shall apply, sta rting with
the portion that is paid for the first time after July 1, 2002.
Article 18 (Applicable Examples concerning Preparation an d Delivery,
etc. of Invoice)
The amended provisions of Article121 shall apply, starting with the portion
of goods or services that are supplied or imported for the fir st time after
the enforcement of this Act.
Article 19 (Transitional Measures concerning Non-inclusi on of Dividend
Earned in Earnings by Corporation Belonging to Large Busine ss Group)
Notwithstanding the amended provisions of Article 18-3 (2) , the
non-inclusion of the amount of dividend that any domestic co rporation
belonging to a large business group earns from its affiliate in the gross
income shall be governed by the previous provisions.
Article 20 (Transitional Measures concerning Acquisition Tax on
Non-Business Land)
The aquisition tax on the non-business land of any corporati on under
Article 112 (2) of the previous Local Tax Act (referring to th e Local Tax
Act before the Local Tax Act is amended by Act No. 6312) (limit ed to
the amount exceeding the tax amount under paragraph (1) of th e same
Article of the same previous Act) and the non-inclusion of th e refund amount
in deductible expenses and gross income shall be governed by the previous
provisions of subparagraph 7 of Article 18 and subparagraph 3 of Article

CORPORATE TAX ACT
13621.
Article 21 (Transitional Measures concerning Inclusion of Amount
Equivalent to Reappraisal Difference of Land in Deductible Expenses)
The amount that has been included in deductible expenses und er the previous
provisions of Article 39 and is later included in gross incom e, etc. at the
time that this Act enters into force shall be governed by the p revious
provisions.
Article 22 (Transitional Measures concerning Corporate Ta x on Proper
Excess Earned Reserve)
The disposal of the Corporate Development Reserve Fund rais ed under
the previous provisions of Article 56 and the payment, etc. o f the corporate
tax that is incurred by the disposal of such fund for other pur poses at
the time that this Act enters into force shall be governed by t he previous
provisons.
Article 23 (Transitional Measures concerning Abolishment of Special
Surtax)
Any special surtax that is levied or to be levied under the pre vious provisions
at the time that this Act enters into force shall be governed b y the previous
provisions.
Article 24 Omitted.
Article 25 (Transitional Measures concerning Amendments t o Other Acts)
Where the special surtax is levied on the income generated fr om the transfer,
etc. of lands or businesses before the enforcement of this Ac t, the amount
of such special surtax that is deemed to be the development co st shall
be governed by the previous provisions, notwithstanding th e amended
provisions of Article 24 of this Addenda.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of it s promulgation.
Articles 2 through 18 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2004: Provided , That the
amended provisions of Articles 5 (2), 29 (1) 2, 51-2 (1) 2, 62 ( 1), 73

CORPORATE TAX ACT
137(1) through (3), 113 (2) shall enter into force on January 5, 2 004, and
the amended provisions of Article 55 (1) shall enter into for ce on January
1, 2005.
Article 2 (General Applicable Examples)
This Act shall apply beginning with the first business year t hat starts
after the enforcement of this Act.
Article 3 (Applicable Examples regarding Non-Inclusion of Holding
Company ’s Received Dividend Amount in Calculation of Gross Income)
The amended provisions of Article 18-2 (1) 4 shall apply begi nning with
the first dividend from subsidiary after the enforcement of this Act.
Article 4 (Applicable Examples regarding Income Deduction of Dividend
Amount of Ship Investment Company)
The amended provisions of Article 51-2 (1) 5 shall apply begi nning with
the first dividend after the enforcement of this Act.
Article 5 (Applicable Examples regarding Special Cases for Taxation
following Transfer of Land)
The amended provisions of Article 55-2 (1) shall apply begin ning with
the first transfer after the enforcement of this Act.
Article 6 (Applicable Examples regarding Correction, etc. of Corporate
Tax resulting from Wrongful Accounting Handling)
The amended provisions of Articles 58-3, 59 (1) 4, 66 (2) 4 and 72-2
shall apply beginning with the first portion disposed warni ng, attention,
etc. due to wrongful accounting handling after the enforcem ent of this
Act.
Article 7 (Applicable Examples regarding Exemption of Coll ection of
Withholding Tax in case of Non-Execution of Withholding)
The amended provisions of proviso of Article 71 (3) shall app ly beginning
with the first payment after decision or correction after th e enforcement
of this Act.
Article 8 (Applicable Examples regarding Extent of Income G enerated from
Sources in Korea)
(1) The amended provisions of subparagraph 4 of Article 93 sh all apply
beginning with the first lease after the enforcement of this Act.
(2) The amended provisions of subparagraph 6 of Article 93 sh all apply
beginning with the first supply of service after the enforce ment of this
Act.
(3) The amended provisions of subparagraph 11 (i) of Article 93, Article

CORPORATE TAX ACT
13898 (10) and (11) shall apply beginning with the first capital transaction
after the enforcement of this Act.
Article 9 (Applicable Examples regarding Report, etc. of Co rporate Tax
by Foreign Corporation)
The amended provisions of former part of Article 97 (1) shall apply beginning
with the first report of tax base and tax amount after the enfo rcement
of this Act.
Article 10 (Applicable Examples regarding Withholding of T ransfer
Income)
The amended provisions of Article 98 (1) shall apply beginni ng with the
first transfer after the enforcement of this Act.
Article 11 (Applicable Examples regarding Special Cases fo r Responsibility
of Submission of Written Payment Statements on Income, etc. Generated
from Sources in Korea by Foreign Corporation)
The amended provisions of main sentence of Article 120-2 (1) shall apply
beginning with the first payment of income generated from so urces in
Korea after the enforcement of this Act.
Article 12 (Special Cases for Interim Prepayment)
In calculating the amount of interim prepayment tax for the i nterim
prepayment period starting after January 1, 2005, the calcu lated tax amount
as fixed for corporate tax of the immediately preceding busi ness year from
the concerned business year stipulated in Article 63 (1) sha ll be calculated
by applying the amended provisions of Article 55 (1) to the ta x base of
the immediately preceding business year.
Article 13 (Applicable Examples regarding Investment Asse ts, Investment
Company, etc.)
The provisions regarding investment assets, investment co mpany, etc. to
be amended following the enforcement of the Act on Business o f Operating
Indirect Investment and Assets shall apply beginning with t he first created
or established portion after the date of enforcement of the s ame Act, and
for those created or established before the enforcement of t he same Act,
the former provisions shall prevail.
Article 14 (Transitional Measures regarding House Transfe r Income)
In case where a corporation who has a house corresponding to A rticle 55-2
(1) 2 at the time of enforcement of this Act transfers the hous e concerned
before December 31, 2004, the amended provisions of Article 55-2 (1)
2 shall not apply:
Provided , That the corporation concerned acquires

CORPORATE TAX ACT
139another house newly after January 1, 2004, this shall not app ly.
Article 15 (Transitional Measures regarding Extent of Inco me Generated
from Sources in Korea of Industrial/Commercial/Scientifi c Machinery,
Facility, Equipment, etc.)
Income generated from price and transfer in the case of use in the country
of the industrial/commercial/scientific machinery, faci lity, equipment or
the price being paid in the country shall, notwithstanding t he amended
provisions of subparagraph 4 of Article 93, be regarded as in come generated
from price and transfer pursuant to the former provisions of subparagraph
9 (c) of Article 93.
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation:
Provided , That the amended provisions of Article 29 (1)
shall take effect on January 1, 2005.
(2) (General Applicable Examples) This Act shall apply begi nning with the
first business year that starts after the enforcement of thi s Act.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of it s promulgation.
Articles 2 through 5 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2005: Provided , That the
amended provisions of Articles 73 (8), 74 (2), 98-3 (1) throu gh (3) and
(6) shall enter into force on July 1, 2005, and the amended pro visions
of Article 51-2 (1) 4 shall enter into force on April 23, 2005.
Article 2 (Applicable Examples regarding Legal Fiction of D ividend or
Allotment)
The amended provisions of Article 16 (1) 2 (a) shall begin to a pply with
the portion of loan that is converted into investment for the first time
after the enforcement of this Act.
Article 3 (Applicable Examples regarding Non-Inclusion of Received
Dividend Amount in Calculation of Gross Income)
The amended provisions of Articles 18-2 (1) 3, and 18-3 (1) 1 ( proviso)

CORPORATE TAX ACT
140and 3 shall begin to apply with the portion of dividend that is received
for the first time after the enforcement of this Act.
Article 4 (Applicable Examples regarding Deduction of Inco me regarding
Private Equity Funds, etc.)
The amended provisions of Article 51-2 (1) 2 shall begin to ap ply with
the portion of dividend paid for the first time after the enfo rcement of
this Act.
Article 5 (Applicable Examples regarding Deduction of Inco me regarding
Real Estate Investment Company for Consigned-Management)
The amended provisions of Article 51-2 (1) 4 shall begin to ap ply with
the portion of dividend paid for the first time after April 23 , 2005.
Article 6 (Applicable Examples regarding Deduction of Inco me regarding
Loss from Disaster)
The amended provisions of Article 58 (1) shall begin to apply with the
portion of asset lost for the first time after the enforcemen t of this Act.
Article 7 (Applicable Examples regarding Decision and Correction)
The amended provisions of Article 66 (2) 3 shall begin to appl y with the
portion of decision or correction conducted in the first bus iness year after
the enforcement of this Act.
Article 8 (Applicable Examples regarding Withholding)
The amended provisions of Article 73 (1) 1 and 2 shall begin to apply
with the portion of interest income and allotment occurring from trust
fund revenue for the first time after the enforcement of this Act, and the
amended provisions of Articles 73 (8) and 74 (2) shall begin t o apply
with the portion withheld for the first time after July 1, 200 5.
Article 9 (Applicable Examples regarding Additional Tax on Unfaithful
Payment of Withholding Tax)
The amended provisions of Article 76 (2) shall begin to apply with the
portion of interest income amount and allotment from trust f und paid for
the first time after the enforcement of this Act.
Article 10 (Applicable Examples regarding Domestic Withho lding Income)
The amended provisions of subparagraph 10 of Article 93 shal l begin to
apply with the portion transferred for the first time after t he enforcement
of this Act.
Article 11 (Applicable Examples regarding Carried-Forwar d Deduction
of Tax Paid Abroad)
The amended provisions of Article 97 (1) shall begin to apply with the

CORPORATE TAX ACT
141portion reported for the first time after the enforcement of this Act.
Article 12 (Applicable Examples regarding Special Cases of Withholding on
Bonds, etc. of Foreign Corporations)
The amended provisions of Article 98-3 (1) through (3) and (6 ) shall begin
to apply with the portion withheld for the first time after Ju ly 1, 2005.
Article 13 (Applicable Examples regarding Report of Establ ishment or
Installation of Corporation)
The amended provisions of Article 109 (3) shall begin to appl y with the
portion modified in the matters of report on establishment o r installation
for the first time after the enforcement of this Act.
Article 14 (General Examples of Application)
This Act shall begin to apply with the first business year com mencing
after the enforcement of this Act.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2006: Provided , That the
amended provisions of Article 26 and Article 8 (2) of the Adde nda of the
Corporate Tax Act amended by Act No. 5581 shall enter into for ce on
the date of its promulgation, the amended provisions of Arti cle 98-5 shall
enter into force on July 1, 2006, and the amended provisions o f Article
55-2 shall enter into force on January 1, 2007.
Article 2 (General Application Example)
This Act shall apply with the first business year after the en forcement
of this Act.
Article 3 (Application Example concerning Legal Fiction of Dividends or
Distributed Amount)
The amended provisions of Articles 16 (1) 2 (a), and 17 (1) 1 (p roviso)
and (2) shall apply to the portion of the conversion of liabil ity to investment
that is first effected after the enforcement of this Act.
Article 4 (Application Example concerning Exclusion, etc. of Received
Dividend Amount of Holding Companies from Gross Income, etc .)
The amended provisions of Articles 18-2 and 18-3 shall apply to the portion
of dividends that are first paid after the enforcement of thi s Act.
Article 5 (Application Example and Special Application Exa mple
concerning Exclusion of Donations from Deductible Expense s)
(1) The amended provisions of Article 24 (2) and (3) shall app ly to the
portion that is disbursed in the first business year after th e enforcement

CORPORATE TAX ACT
142of this Act.
(2) In the application of the amended provisions of Article 2 4 (2), with
respect to the portion that is disbursed by the business year that comes
to an end within 3 years from the business year that first begi ns after
the enforcement of this Act, “50/100 ”in the proviso to other portion than
each subparagraph of the same paragraph shall be made “75/100 ”,
notwithstanding the amended provisions of the proviso to ot her portion
than each subparagraph of the same paragraph of the same Arti cle.
Article 6 (Application Example concerning Exclusion of Ent ertainment
Expenses from Deductible Expenses)
The amended provisions of the proviso to other portion than e ach
subparagraph of Article 25 (2) shall apply to the portion tha t is first disbursed
after the enforcement of this Act.
Article 7 (Application Example concerning Exclusion of Exc essive
Expenses, etc. from Deductable Expenses)
The amended provisions of Article 26 shall apply to the porti on that is
disbursed in the business year that the date on which this Act enters
into force belongs to.
Article 8 (Application Example concerning Inclusion of Res erve Fund for
Proper Purpose Business in Deductible Expenses)
The amended provisions of Article 29 shall apply to the porti on that is
included in the deductible expenses in the business year tha t first begins
after the enforcement of this Act.
Article 9 (Application Example concerning Inclusion of Val ue of Fixed
Assets Acquired in Use of Construction Work Charges in Deduc tible
Expenses)
The amended provisions of Article 37 (2) shall apply to the po rtion that
is first provided with construction work charges after the e nforcement of
this Act.
Article 10 (Application Example concerning Appraisal of As sets and
Liabilities)
The amended provisions of Article 42 (3) shall apply to the po rtion whose
appraisal is conducted in the first business year after the e nforcement
of this Act.
Article 11 (Application Example concerning Succession of L oss Carried
Forward When Merger and Division Are Effected)
The amended provisions of Articles 45 and 48-2 shall apply to the portion
that is first merged or split after the enforcement of this Ac t.
Article 12 (Application Example concerning Inclusion of Am ount Equivalent
to Asset Transfer Marginal Profit in Deductible Expenses Du e to

CORPORATE TAX ACT
143Exchange)
The amended provisions of Article 50 shall apply to the porti on of assets
that are first exchanged after the enforcement of this Act.
Article 13 (Application Example concerning Income Deducti on for Special
Purpose Company, etc.)
The amended provisions of Article 51-2 shall apply to the por tion of
dividends that are first paid after the enforcement of this A ct:
Provided ,
That in the case of any ship investment company under the Ship Investment
Company Act, the amended provisions shall apply to the porti on of dividends
that are first paid after January 1, 2009.
Article 14 (Application Example concerning Special Case of Taxation of
Transfer Income from Lands, etc.)
The amended provisions of Article 55-2 shall apply to the por tion that
is first transferred after January 1, 2007.
Article 15 (Application Example concerning Special Case of Deduction of
Tax Amount Paid Abroad by Indirect Investment Company, etc. )
The amended provisions of Article 57-2 shall apply to the por tion of the
income that is first generated after the enforcement of this Act.
Article 16 (Application Example concerning Interim Prepayment)
The amended provisions of Article 63 shall apply to the porti on of the
interim prepayment that is first made after the enforcement of this Act.
Article 17 (Application Example concerning Additional Tax)
(1) The amended provisions of Article 76 (1) 3 shall apply to t he portion
of the corporate tax that is first paid or collected after the enforcement
of this Act.
(2) The amended provisions of Article 76 (6), (7) and (9) shal l apply
to the portion whose submission time limit first arrives aft er the enforcement
of this Act.
(3) The amended provisions of Article 76 (10) shall apply to t he portion
of donations that are first received after the enforcement o f this Act.
Article 18 (Application Example concerning Income Generat ed from
Sources in Republic of Korea for Foreign Corporations)
(1) The amended provisions of subparagraph 2 of Article 93 sh all apply
to the portion that is first disposed of for dividends after t he enforcement
of this Act.
(2) The amended provisions of subparagraph 6 of Article 93 sh all apply
to the portion of the income that is first generated after the enforcement

CORPORATE TAX ACT
144of this Act.
Article 19 (Application Example concerning Special Case of Procedures
for Withholding Taxes at Source for Foreign Corporations)
The amended provisions of Article 98-5 shall apply to the por tion that
is first withheld at source after July 1, 2006.
Article 20 (Application Example concerning Obligation to P repare and
Keep, etc. Details of Issuance of Donation Receipts)
The amended provisions of Article 112-2 shall apply to the po rtion that
is first donated after the enforcement of this Act.
Article 21 (Application Example concerning Special Case of Taxation in
Calculation of Income Generated from Profit-Making Busine ss)
The amended provisions of Article 8 (2) of the Addenda of the C orporate
Tax Act amended by Act No. 5581 shall apply to the portion that is first
transferred in the business year that the date on which this A ct enters
into force belongs to.
Article 22 (Transitional Measures concerning Decision to G rant
Authorization for Rehabilitation Plan under Debtor Rehabi litation and
Bankruptcy Act of Amended Provisions of Article 42 (3))
(1) The decision to grant an authorization for the reorganiz ation plan
under the previous Company Reorganization Act, the decisio n to grant
an authorization for the composition plan under the previou s Composition
Act and the decision to grant an authorization for compulsor y composition
under the previous Bankruptcy Act shall be deemed the decisi on to grant
an authorization for the rehabilitation plan under the Debt or Rehabilitation
and Bankruptcy Act according to the amended provisions of Ar ticle 42
(3).
(2) The decision to grant an authorization for the rehabilit ation plan under
the Debtor Rehabilitation and Bankruptcy Act among the amen ded
provisions of Article 42 (3) shall be deemed the decision to g rant an
authorization for the reorganization plan under the Compan y
Reorganization Act, the decision to grant an authorization for composition
under the Composition Act and the decision to grant an author ization
for compulsory composition under the Bankruptcy Act, respe ctively on or
before March 31, 2006.
ADDENDA

CORPORATE TAX ACT
145Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of it s promulgation.
Articles 2 through 5 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007: Provided , That the amended
provisions of Article 18-2 (1) 1 shall take effect on January 1, 2009, and
the amended provisions of Article 25 (2) 2, 66 (2) 3, 76 (11) an d (12),
116 (3) and (4), 117 and 117-2, on July 1, 2007.
Article 2 (General Examples of Application)
This Act shall apply beginning with the first business year t hat starts
after the enforcement of this Act.
Article 3 (Applicable Examples regarding Non-Inclusion of Holding
Company ’s Received Dividend Amount in Calculation of Gross Income)
(1) The amended provisions of Article 18-2 (1) 1 shall apply w ith respect
to the portion of the dividend which is received on or after Ja nuary 1,
2009.
(2) The amended provisions of Article 18-2 (1) 2 shall apply w ith respect
to the portion of the dividend which is received on or after th e enforcement
date of this Act.
Article 4 (Applicable Examples regarding Non-Inclusion of Received
Dividend Amount in Calculation of Gross Income)
The amended provisions of Article 18-3 (2) shall apply with r espect to
the portion of the dividend which is received on or after the e nforcement
date of this Act.
Article 5 (Applicable Examples regarding Non-Inclusion of Entertainment
Expenses in Calculation of Deductible Expenses)
The amended provisions of Article 25 (2) 2 shall apply with re spect to
the portion that is issued in return for goods or services pro vided on or
after July 1, 2007.
Article 6 (Applicable Examples regarding Investment Trust Proceeds)
The amended provisions of Articles 29 (1) 1, 57-2 (3), 62 (1) a nd 73
(1) shall apply with respect to the portion of the investment trust that
is created on or after the enforcement date of this Act.
Article 7 (Applicable Examples regarding Income Deduction for Special
Purpose Company, etc.)

CORPORATE TAX ACT
146The amended provisions of Article 51-2 (1) 5-3, 5-4 and 6 shal l apply
with respect to the portion of the dividend that is paid on or a fter the
enforcement date of this Act.
Article 8 (Applicable Examples regarding Deduction, etc. o f Tax Amount
Paid Abroad)
The amended provisions of Article 57 (5) shall apply with res pect to the
amount of the dividend which is received on or after the enfor cement date
of this Act.
Article 9 (Applicable Examples regarding Special Cases for Deduction of
Tax Amount Paid Abroad by Indirect Investment Company, etc. )
The amended provisions of Article 57-2 (1) shall apply with r espect to
the portion of the income that is generated on or after the enf orcement
date of this Act.
Article 10 (Applicable Examples regarding Correction and D ecision)
The amended provisions of Article 66 (2) 3 shall apply with re spect to
the portion of correction for which the cause concerned is ac crued on or
after July 1, 2007.
Article 11 (Applicable Examples regarding Additional Tax, etc.)
(1) The amended provisions of Articles 76 (9) 3 and 120-3 shal l apply
with respect to the portion of the tax invoice that is deliver ed on or after
the enforcement date of this Act.
(2) The amended provisions of Article 76 (11) and (12) shall a pply with
respect to the portion of goods or services which are provide d, or to a
person subject to cash receipt affiliate membership, who fa ils to hold such
membership, on or after July 1, 2007.
Article 12 (Applicable Examples regarding Domestic Source Income)
The amended provisions of subparagraph 11 (g) of Article 93 s hall apply
with respect to the portion of the income that is generated on or after
the enforcement date of this Act.
Article 13 (Applicable Examples regarding Special Cases fo r Withholding
or Collection for Foreign Corporations)
(1) The amended provisions of Article 98 (1) with the excepti on of its
subparagraphs shall apply with respect to the portion that i s transferred
on or after the enforcement date of this Act.
(2) The amended provisions of the proviso to Article 98 (1) 3 s hall apply
with respect to the portion of the interest income that is gen erated on
or after the enforcement date of this Act.
Article 14 (Applicable Examples regarding Receipt and Keep ing of
Documentary Evidence of Expenditures)

CORPORATE TAX ACT
147The amended provisions of Article 116 (3) and (4) shall apply with respect
to the portion that is issued in return for goods or services p rovided on
or after July 1, 2007.
Article 15 (Applicable Examples regarding Duty to Have Cred it Card
Affiliate Membership and to Issue Credit Card Sales Slips, e tc.)
The amended provisions of Article 117 shall apply with respe ct to the
portion of goods or services which are provided on or after Ju ly 1, 2007.
Article 16 (Applicable Examples regarding Duty to Have Cash Receipt
Affiliate Membership and to Issue Cash Receipts, etc.)
The amended provisions of Article 117-2 shall apply with res pect to the
portion of goods or services which are provided on or after Ju ly 1, 2007.
Article 17 (Applicable Examples regarding Holding of Cash R eceipt Affiliate
Membership)
Notwithstanding the amended provisions of Article 117-2 (1 ), a corporation
which meets the requirements for cash receipt affiliate mem bership not
later than March 31, 2007 after the enforcement date of this A ct may
become a cash receipt affiliate member not later than June 30 , 2007 after
the enforcement date of this Act.
Article 18 (Transitional Measures concerning Non-Inclusi on of Evaluation
Marginal Profits, etc. in Calculation of Gross Income)
Notwithstanding the amended provisions of subparagraph 6 o f Article 18,
with respect to the dividend income amount received prior to the enforcement
of this Act, the previous provisions shall prevail.
Article 19 (Transitional Measures concerning Additional T ax)
Notwithstanding the amended provisions of Articles 76 (1) a nd 90 (1),
with respect to the additional tax imposed or to be imposed in accordance
with the previous provisions of Articles 76 (1) and 90 (1) pri or to the
enforcement of this Act, the previous provisions shall prev ail.
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on Jan uary 1, 2008.
(2) (Applicable Examples concerning Corporate Tax on Incom e for each
Business Year of Faithful Small and Medium Corporations) Th e amended
provisions of Chapter -2 shall apply beginning with the port ion for the
Ⅱ
business year to which the enforcement date of this Act belongs.

CORPORATE TAX ACT
148ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
(Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2008: Provided , That the amended
provisions of Article 76 (12) shall enter into force on July 1 , 2008.
Article 2 (General Applicable Examples)
This Act shall apply beginning with the portion of the busine ss year that
commences for the first time after this Act enters into force .
Article 3 (Applicable Examples concerning Non-Inclusion o f Received
Dividend in Gross Income)
The amended provisions of the portion other than subparagra phs of Article
18-3 (1) and subparagraph 4 of the same paragraph shall apply beginning
with the portion that receives dividend for the first time af ter this Act enters
into force.
Article 4 (Applicable Examples concerning Inclusion of Val ue of Assets
for Business Acquired by National Treasury Subsidies in Ded uctible
Expenses)
The amended provisions of Article 36-2 shall apply beginnin g with the
portion that receives National Treasury subsidies for the f irst time after
this Act enters into force.
Article 5 (Applicable Examples concerning Tax Credit or Tax Amount Paid
in Foreign Country)
The amended provisions of Article 57 (5) shall apply beginni ng with the
portion that receives dividend for the first time after this Act enters into
force.
Article 6 (Applicable Examples concerning Determination a nd Correction)
The amended provisions of Article 66 (2) 3 (a) shall apply beg inning with
the portion for a business year being determined or correcte d, which commences
for the first time after this Act enters into force.
Article 7 (Applicable Examples concerning Determination o f Occasional
Imposts)
The amended provisions of Article 69 (2) shall apply beginni ng with the

CORPORATE TAX ACT
149portion for which a cause for occasional impost occurs for th e first time after
this Act enters into force.
Article 8 (Applicable Examples concerning Additional Tax)
(1) The amended provisions of Article 76 (10) shall apply beg inning with
the portion for which the donation receipt is prepared diffe rently from
the fact, or the detailed statement of issuance by donating c orporation
is not prepared and kept for the first time after this Act ente rs into force.
(2) The amended provisions of Article 76 (12) shall apply beg inning with
the portion for which goods or services are supplied for the f irst time after
this Act enters into force.
Article 9 (Applicable Examples concerning Income Generate d from
Sources in Korea)
The amended provisions of subparagraph 10 of Article 93 shal l apply
beginning with the portion that is transferred for the first time after this
Act enters into force.
Article 10 (Applicable Examples concerning Special Cases f or Report,
Payment, etc. on Income Accruing from Transfer of Securitie s by Foreign
Corporations)
The amended provisions of Article 98-2 (3) and (4) shall appl y beginning
with the portion that is transferred for the first time after this Act enters
into force.
Article 11 (Applicable Examples concerning Liability to Pr epare and Keep
Details of Donation Receipts Issued)
The amended provisions of Article 112-2 (1) shall apply begi nning with
the portion that is donated for the first time after this Act e nters into
force.
Article 12 (Applicable Examples concerning Duties to Join C redit Card
Affiliate Membership and to Issue Credit Card Sales Slips)
The amended provisions of Article 117 (2) shall apply beginn ing with the
portion for which goods or services are supplied for the firs t time after
this Act enters into force.
Article 13 (Applicable Examples concerning Submission of D etailed Statement
on Change of Stocks)
The amended provisions of Article 119 (2) shall apply beginn ing with the
portion that is submitted for the first time after this Act en ters into force.

CORPORATE TAX ACT
150ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgatio n. (Proviso
Omitted.)
Articles 2 through 7 Omitted.