International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Korea’s new government extends APA programme

ak3.jpg

It will reform transfer pricing agreements, report DJ Yeo and Stefan Moller of TP Week correspondent Kim & Chang

ak2.jpg

Key transfer pricing law changes are expected under the newly elected administration, which will come into office in February. Heading the list, the advance pricing agreements (APA) system is expected to become more accessible. An advance ruling programmes, under which a taxpayer and the tax authority may enter into an agreement on the interpretation and application of the law to a certain transaction, will be introduced to reduce potential tax disputes.

President-Elect MB Lee has repeatedly emphasised business friendly policies and tax related aspects include a reduction of tax rates and a general mprovement of the tax environment in Korea. There are not yet any specific details of Lee's plans, but one suggested change would reduce the corporate income tax rate from the current 25% (not including resident surtax) to 20% for general corporations and further lowering the tax rate to 8% for corporations qualifying under the Small and Medium Size Enterprise Act.

In early January, in response to Lee’s statements, the new commissioner of the National Tax Service in his 2008 New Year message to NTS officials said that the NTS will make all efforts to create a "business-friendly tax environment” and in order for tax audits not to be an obstacle to inducement of foreign investment.

The NTS will identify bottlenecks and improper standards to be revised through contacts with the foreign business community. It is widely expected that the NTS will establish, within its national office, a division that will be fully devoted to the processing and administration of the APA programme. Currently, the NTS does not have a separate organisation for the APA programme, which has caused delays in processing of APA applications.

In late January, the NTS commissioner visited the American Chamber of Commerce and again stated that the NTS will minimise audits on foreign companies operating in Korea and help creating a more business-friendly tax environment. The commissioner also said that the NTS is considering adopting an advance ruling system' under which businesses can settle potential tax issues in advance of a potential transaction to provide better certainty at an earlier stage of an investment or other transaction. The details of such advance ruling programme are not publicly known, but it appears that a taxpayer and the tax authority would be able to enter into an agreement with regard to the interpretation and application of the law to a specific transaction, all in an effort to reduce potential tax disputes between taxpayers and the tax authorities.

more across site & bottom lb ros

More from across our site

Two months since EU political agreement on pillar two and few member states have made progress on new national laws, but the arrival of OECD technical guidance should quicken the pace. Ralph Cunningham reports.
It’s one of the great ironies of recent history that a populist Republican may have helped make international tax policy more progressive.
Lawmakers have up to 120 days to decide the future of Brazil’s unique transfer pricing rules, but many taxpayers are wary of radical change.
Shell reports profits of £32.2 billion, prompting calls for higher taxes on energy companies, while the IMF warns Australia to raise taxes to sustain public spending.
Governments now have the final OECD guidance on how to implement the 15% global minimum corporate tax rate.
The Indian company, which is contesting the bill, has a family connection to UK Prime Minister Rishi Sunak – whose government has just been hit by a tax scandal.
Developments included calls for tax reform in Malaysia and the US, concerns about the level of the VAT threshold in the UK, Ukraine’s preparations for EU accession, and more.
A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.