법인세법 시행령

Article 1Purpose

The purpose of this Decree is to prescribe matters mandated by the Corporate Tax Act and matters necessary for the enforcement thereof.[This Article Added on Feb. 12, 2019][Previous Article 1 Moved to Article 2 <Feb. 12, 2019>]

Article 2Definition

(1) "Partnership corporations, etc., prescribed by Presidential Decree" in subparagraph 2b of Article 2 of the Corporate Tax Act (hereinafter referred to as "Act") means the following corporations: <Amended on Dec. 31, 1999; Dec. 31, 2001; Feb. 19, 2005; Feb. 9, 2006; Jun. 3, 2011; Feb. 15, 2013; Feb. 3, 2017; Feb. 12, 2019; Feb. 29, 2024>1. Cooperatives (including corporations for joint projects of cooperatives) and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act;

2. Cooperatives established under the Consumer Cooperatives Act, their federation, and the national federation of such cooperatives;

3. Cooperatives (including fishing fraternities and corporations for joint projects of cooperatives) and the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act;

4. Forestry cooperatives (including forestry fraternities) and the National Forestry Cooperatives Federation established under the Forestry Cooperatives Act;

5. Tobacco producers' cooperatives and the National Federation of Tobacco Producers Cooperatives established under the Tobacco Producers Cooperatives Act;

6. Deleted; <Dec. 31, 1999>7. Deleted; <Dec. 31, 1999>8. Cooperatives, their federation, and the National Federation established under the Small and Medium Enterprise Cooperatives Act;

9. Credit cooperatives, their federation, and the National Federation established under the Credit Unions Act;

10. Community credit cooperatives and their national federation established under the Community Credit Cooperatives Act;

11. The Korea Salt Manufacture's Association established under the Salt Manufacture Act.

(2) "Corporation that meets the standards prescribed by Presidential Decree" in subparagraph 3 of Article 2 of the Act means any of the following organizations: <Added on Feb. 15, 2013; Feb. 12, 2019>1. An organization endowed with legal personality pursuant to the law of the State in which it was incorporated;

2. An organization formed only with limited partners;

3. Deleted; <Feb. 12, 2019>4. Other foreign organization, if a domestic organization, whose type of business is the same as, or similar to, the type of business of such foreign organization, is a corporation under the Commercial Act or other statutes of the Republic of Korea.

(3) The Commissioner of the National Tax Service may publicly notify a list of foreign corporations referred to in paragraph (2) by category. <Added on Feb. 15, 2013>(4) The application of the criteria for foreign corporations specified in paragraph (2) shall not affect the determination of whether a treaty on taxation is applicable. <Added on Feb. 15, 2013>(5) "Stocks prescribed by Presidential Decree" in subparagraph 10-2 c of Article 2 of the Act means any of the following stocks: <Added on Feb. 28, 2023>1. Stocks held by an employee stock ownership association referred to in the Framework Act on Labor Welfare (hereinafter referred to as "employee stock ownership association");

2. Stocks issued or transferred pursuant to the exercise of stock options pursuant to the main clause, with the exception of the items, of subparagraph 19-2 of Article 19 (including stocks transferred to a third party by a person who has exercised the stock option).

(6) "Cases prescribed by Presidential Decree" in subparagraphs 10-2 d of Article 2 of the Act means where a wholly-owning parent corporation referred to in Article 76-8(1) of the Act (hereinafter referred to as "wholly-owning parent corporation") holds stocks or investment shares of another domestic corporation through a wholly controlled subsidiary referred to in the same paragraph (hereinafter referred to as "wholly controlled subsidiary"). <Added on Feb. 28, 2023>(7) The percentage of stocks or investment shares in another domestic corporation held by a wholly-owning parent corporation through a wholly controlled subsidiary under subparagraphs 10-2 d of Article 2 of the Act shall be calculated in accordance with the following formula. In such cases, where there are two or more wholly controlled subsidiaries, the percentage calculated according to the following formula for each wholly controlled subsidiary shall be aggregated: <Added on Feb. 28, 2023>┌────────────────────────┐│ The percentage of stocks or investment shares × The percentage of stocks or investment shares ││ in a wholly controlled subsidiary held in another domestic corporation held ││ by a wholly-owning parent corporation by a wholly-owning parent corporation │└───────────────────────────┘(8) "Person in a relationship prescribed by Presidential Decree, such as an economic relationship or a management control relationship" in subparagraph 12 of Article 2 of the Act means a person in any of the following relationships: <Added on Feb. 12, 2019; Feb. 28, 2023; Feb. 28, 2025>1. A person (including persons deemed directors pursuant to Article 401-2(1) of the Commercial Act) recognized as having de facto influence over the management of the relevant corporation, such as exercising the right to appoint and dismiss executive officers (referring to executive officers referred to in Article 40(1); hereafter the same shall apply in this paragraph, and Articles 10, 11, 19, 38, and 39) and determining business policies, and his or her relatives (referring to persons prescribed in Article 1-2(1) of the Enforcement Decree of the Framework Act on National Taxes; hereinafter the same shall apply);

2. A shareholder or investor who is not a minority shareholder, etc. referred to in Article 50(2) (hereinafter referred to as "non-minority shareholder, etc.") and his or her relatives;

3. Any of the following persons and his or her relatives who makes a living with them:a. An executive officer or employee of a corporation, or an employee of a non-minority shareholder, etc. (if a non-minority shareholder, etc. is a for-profit corporation, referring to executive officers thereof; and if it is a non-profit corporation, referring to directors and a founder thereof);b. A person whose livelihood depends on money or other assets of a corporation or non-minority shareholder, etc.;

4. Where the relevant corporation exercises a dominant influence prescribed in Article 1-2(4) of the Enforcement Decree of the Framework Act on National Taxes over the management of any other corporation either directly or through a person in a relationship prescribed in subparagraphs 1 through 3 with it, such corporation;

5. Where the relevant corporation exercises a dominant influence prescribed in Article 1-2(4) of the Enforcement Decree of the Framework Act on National Taxes over the management of any other corporation either directly or through a person in a relationship prescribed in subparagraphs 1 through 4 with it, such corporation;

6. A corporation or individual owning at least 30/100 of a corporation which owns at least 30/100 of the relevant corporation;

7. Where the relevant corporation belongs to a corporate group prescribed in the Monopoly Regulation and Fair Trade Act, other affiliates belonging to the corporate group and executive officers of such the affiliates.[Moved from Article 1; Previous Article 2 Moved to Article 3 <Sep. 12, 2019>]

Article 3Scope of profit-making business

(1) "Business specified by Presidential Decree" in Article 4(3)1 of the Act means a business that generates income, except for businesses falling under any of the following: <Amended Dec. 31, 1999; Dec. 31, 2001; Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Feb. 28, 2007; Feb. 22, 2008; Feb. 29, 2008; Jun. 5, 2008; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Dec. 8, 2011; Feb. 2, 2012; Aug. 3, 2012; Feb. 15, 2013; Jun. 28, 2013; Mar. 24, 2014; May 29, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022; Feb. 17, 2022; Feb. 28, 2023; Feb. 29, 2024; Feb. 28, 2025; Dec. 30, 2025; Feb. 27, 2026>1. The agricultural business, excluding the livestock business (including service business related to livestock industry);

2. Research and development (excluding rendering research and development services in return for a price under a contract, etc.);2-2. Business rendering ship classification and survey services;

3. Educational service business provided at any of the following educational facilities pursuant to the curriculum prescribed in the relevant statutes:a. Kindergartens referred to in the Early Childhood Education Act;b. Schools referred to in the Elementary and Secondary Education Act and the Higher Education Act;c. Foreign educational institutions established under the Special Act on Establishment and Management of Foreign Educational Institutions in Free Economic Zones and Jeju Free International City (excluding where a school may remit or actually remits its surplus fund to its main school in a foreign country pursuant to its articles of incorporation, etc.);d. An international school operated by a non-profit corporation established under the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;e. Lifelong educational establishment in the form of major colleges referred to in Article 31(4) of the Lifelong Education Act; and distance college-type lifelong educational establishment referred to in Article 33(3) of that Act;

4. Social welfare services provided by any of the following social welfare facilities, from among human health and social work activities:a. A social welfare hall, a facility for vagrants and the homeless, or a facility for those suffer from tuberculosis and Hansen's disease from among the social welfare facilities referred to in Article 34 of the Social Welfare Services Act;b. A Central Self-Sufficiency Center and a regional self-sufficiency center referred to in Articles 15-2(1) and 16(1) of the National Basic Living Security Act;c. A child welfare facility referred to in Article 52(1) of the Child Welfare Act;d. A welfare facility for older persons (excluding geriatric hospital) referred to in Article 31 of the Welfare of Older Persons Act;e. A long-term care institution referred to in subparagraph 4 of Article 2 of the Long-Term Care Insurance Act;f. A welfare facility for persons with disabilities under Article 58(1) of the Act on Welfare of Persons with Disabilities, a production facility for products manufactured by persons with severe disabilities under Article 2(2) of the Special Act on the Preferential Purchase of Products Manufactured by Persons with Severe Disabilities operated by an organization for persons with disabilities under Article 63(1) of that Act, and an institution providing activity assistant services under subparagraph 6 of Article 2 of the Act on Support for Activities of Persons with Disabilities;g. A single-parent family welfare facility referred to in Article 19(1) of the Single-Parent Family Support Act;h. A childcare center referred to in Article 10 of the Infant Care Act;i. A supporting institution referred to in Article 9(1) the Act on the Prevention of Commercial Sex Acts and Protection of Victims; a rehabilitation support center referred to in Article 15(2) of that Act; and a counseling center for victims of commercial sex acts referred to in Article 17(2) of that Act;j. A mental health sanatorium and mental health rehabilitation facility referred to in subparagraphs 6 and 7 of Article 3 of the Act on the Improvement of Mental Health and the Support for Welfare Services for Mental Patients;k. A counseling center for victims of sexual violence and a protection facility of victims of sexual violence referred to in Articles 10(2) and 12(2) of the Sexual Violence Prevention and Victims Protection Act;l. An adoption institution referred to in Article 20(1) of the Act on Special Cases concerning Adoption;m. A counseling center related to domestic violence and a protection facility for victims of domestic violence referred to in Articles 5(2) and 7(2) of the Act on the Prevention of Domestic Violence and Protection of Victims;n. A support center for multi-cultural families referred to in Article 12(1) of the Multicultural Families Support Act;o. A healthy family support center referred to in Article 35(1) of the Framework Act on Healthy Families;

5. The following pension business or mutual aid business:a. The national pension services under the National Pension Act;b. Business operated by an organization established under any special Act or upon authorization or permission of the Government (limited to fundraising and benefit services);c. Business operating an SME retirement pension fund plan referred to in the Act on the Guarantee of Employees' Retirement Benefits;

6. Health insurance services under the National Health Insurance Act and industrial accident compensation insurance services under the Industrial Accident Compensation Insurance Act among social security insurance services;

7. Business of providing services exempt from value-added tax under Article 26(1)18 of the Value-Added Tax Act among services provided by religious organizations (including their affiliated organizations) registered with the competent authorities;

8. Any of the following businesses from among Activities Auxiliary to Financial Service and Insurance Activities:a. Business of operating deposit insurance systems, such as deposit insurance through the Deposit Insurance Fund and the Redemption Fund for Deposit Insurance Fund Bonds established under the Depositor Protection Act, and funding or debt settlement related thereto;b. Business of operating deposit protection systems, such as deposit insurances and funding, through the Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Agricultural Cooperatives and the Fisheries Cooperatives Act;c. Business of operating deposit protection systems, such as deposit insurance and funding through the Depositor Protection Reserve Fund established under the Community Credit Cooperatives Act;d. Any business related to the acquisition and liquidation of non-performing assets, etc. through the Structural Adjustment Fund established under Article 43-2 of the Act on the Establishment of Korea Asset Management Corporation;e. Business of operating deposit insurance systems, such as deposit insurance and funding through the Credit Union Depositor Protection Fund established under the Credit Unions Act;f. Business of operating deposit insurance systems, such as deposit insurance and funding through the Mutual Finance Depositor Protection Fund established under the Forestry Cooperatives Act;

9. Blood management business operated by a person who has acquired permission to open a blood center from the Minister of Health and Welfare pursuant to Article 6(3) of the Blood Management Act;

10. Business of operating the guarantee system of reverse mortgage loan-backed old age pension through the account of guarantee on the reverse mortgage loan-backed old age pension pursuant to the Korea Housing Finance Corporation Act (limited to the guarantee business and business of paying reverse mortgage loan-backed old age pensions);

11. Business of lending money for business start-up, etc. to persons prescribed by Decree of the Ministry of Finance and Economy, such as eligible recipients and the second-lowest income bracket as defined in Article 2 of the National Basic Living Security Act, and which meet the requirements prescribed by Decree of the Ministry of Finance and Economy;

12. Any business conducted by a non-profit corporation (limited to a corporation established for the purposes of construction and expansion of private school buildings, expansion of facilities thereof and improvement of an educational environment) for providing school facilities to the operators of foreigners' schools;

13. Business of promoting test of Dan, Geup and Poom by sports organizations affiliated with the Korea Sports Council established under Article 33 of the National Sports Promotion Act and by the Kukkiwon established under the Act on the Promotion of Taekwondo and Creation of Taekwondo Park;

14. Any business related to treatment of waste which is conducted by Sudokwon Landfill Site Management Corporation established under the Act on the Establishment and Management of Sudokwon Landfill Site Management Corporation;

15. Student loan business operated by the Korea Student Aid Foundation established under the Act on the Establishment of Korea Student Aid Foundation using a student loan account referred to in Article 24-2 of that Act;

16. Other business similar to those referred to in subparagraphs 1, 2, 2-2, 3 through 15 and prescribed by Decree of the Ministry of Finance and Economy.

(2) "The revenues specified by Presidential Decree" in the proviso of Article 4(3)5 of the Act means income arising from the disposal of tangible or intangible assets that were directly used for the principal purpose business as prescribed in the statutes or regulations or the articles of incorporation (excluding the profit-making business referred to in paragraph (1); hereafter the same shall apply in this paragraph), which is classified in the following subparagraphs; and if the revenues fall under both subparagraphs 1 and 2, the greater amount among them shall apply. In such cases, ancillary income, such as admission fees or entrance charges, derived in connection with the maintenance or management of the relevant assets, shall not preclude such assets from being regarded as used directly for the principal purpose business: <Amended on Feb. 28, 2025>1. Where, as of the date of disposal of tangible or intangible assets (or, in the case of a public institution relocated under Article 25 of the Special Act on Decentralization and Balanced National Development, referring to the date of relocation; hereafter the same shall apply in this paragraph), such assets have been used directly for the principal purpose business for 3 or more consecutive years: The income arising from the disposal of such assets shall be included. In such cases, where a non-profit domestic corporation transfers assets belonging to a profit-making business to the principal purpose business and subsequently disposes of them, the acquisition cost of such assets shall be deemed to be their fair market value as of the date of transfer to the principal purpose business;

2. Where tangible or intangible assets have been used directly for the principal purpose business for 10 years or more (including cases where, as of the date of disposal, such assets are no longer being used directly for the principal purpose business): The income calculated according to the following; in such cases, the acquisition cost of such assets shall be deemed to be their fair market value as of the time they were first transferred to the proper purpose business by the non-profit domestic corporation:┌────────────────────────┐│ Income from the disposal of the relevant asset × Number of days the asset was directly used for the principal purpose business │├───┼──────────┼──────────────┤│ The number of days the asset is held │└────────────────────────┘(3) "Revenues prescribed by Presidential Decree" in Article 4(3)7 of the Act means profits (referring to profits on sale of bonds, etc., less losses from sale of bonds, etc.) on sale of bonds, etc. (excluding interest income exempt from corporate tax) referred to in Article 46(1) of the Income Tax Act; provided, excluded herefrom shall be profits on trading of the bonds, etc., devolved on the business referred to in paragraph (1)8. <Amended on Dec. 30, 2002; Feb. 19, 2005; Feb. 4, 2009; Feb. 18, 2010; Jun. 8, 2010; Feb. 12, 2019>[Moved from Article 2; Previous Article 3 Moved to Article 4 <Feb. 12, 2019>]

Article 3-2Trust income

(1) "Trust that meets the requirements prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 5(2) of the Act means a trust that does not fulfill all the requirements specified in the subparagraphs of paragraph (2): <Amended on Feb. 28, 2023; Feb. 29, 2024>1. Deleted; <Feb. 29, 2024>2. Deleted. <Feb. 29, 2024>(2) "Trust that meets the requirements prescribed by Presidential Decree" in Article 5(3) of the Act means any of the following trusts: <Amended on Feb. 28, 2023>1. A trustor shall substantially dominate and control trust property, holding the right to terminate a trust, the right to designate or change a beneficiary, the right to inherit the remaining property after the termination of a trust, etc.;

2. The beneficiary of the right to receive trust principal shall be a trustor; and the beneficiary of the right to receive trust income shall be the spouse, or a lineal ascendant or descendant who lives at the same address or residence (including the spouse’s lineal ascendant or descendant) of a controlling shareholder, etc. referred to in Article 43(7) of the trustor.[This Article Added on Feb. 17, 2021]

Article 4Start date of business year

(1) The start date of the first business year of a corporation shall be any of the followings: <Amended on Feb. 19, 2005; Feb. 15, 2013; Feb. 12, 2019>1. For a domestic corporation, the registration date of its incorporation; provided, it shall be any of the following dates with respect to an organization deemed a corporation under subparagraph 2c of Article 2 of the Act (hereinafter referred to as "organization deemed a corporation"):a. For an organization established under statutes or regulations, the establishment date of which is prescribed by statutes or regulations, the establishment date;b. For an organization which requires permission or authorization of the competent authorities for establishment and an organization which has registered with the competent authorities under statutes or regulations, the date of permission, authorization, or registration;c. For an unregistered organization, which is a foundation having endowments donated for the public interest, the date such endowments are donated;d. For an organization which has obtained approval from the head of the tax office having jurisdiction over the place of tax payment under Article 13(2) of the Framework Act on National Taxes, the date of approval;

2. For a foreign corporation, the date it establishes a domestic place of business (hereinafter referred to as "domestic place of business") under Article 94 of the Act (if it has no domestic place of business, the date on which it initially earns the income specified in Article 6(4) of the Act).

(2) In applying paragraph (1), where profits and losses generated before the start date of the first business year actually have devolved on a corporation and there is no concern about tax evasion, such profits and losses may be included in the profits and losses for the first business year of the corporation, as long as the period of the first business year does not exceed one year. In such cases, the start date of the first business year shall be the date on which the earnings and losses that have devolved on the relevant corporation are first generated.[Moved from Article 3, Previous Article 4 Moved to Article 5 <Feb. 12, 2019>]

Article 5Reports on change of business year

A corporation which intends to report a change in its business year under Article 7(1) of the Act shall file a report on change of business year (including submission through the national tax information and communications network) to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline, in the form stipulated by Decree of the Ministry of Finance and Economy. <Amended on Presidential Decree No. 18312, Mar. 17, 2004; Feb. 29, 2008; Dec. 30, 2025>[Moved from Article 4, Previous Article 5 Moved to Article 6 <Feb. 12, 2019>]

Article 6Scope of registration dates of mergers

(1) "The registration date of a merger" in the Act and this Decree means any of the following dates: <Amended on Feb. 12, 2019>1. A corporation surviving a merger: the registration date of change;

2. A corporation established through a merger: the registration date of incorporation.

(2) "The registration date of a division" in the Act and this Decree means any of the following dates: <Amended on Feb. 12, 2019>1. A corporation surviving a division: the registration date of change;

2. A corporation established through a division: the registration date of incorporation.[Moved from Article 5, Previous Article 6 Moved to Article 7 <Feb. 12, 2019>]

Article 7Scope of place of tax payment

(1) "Place prescribed by Presidential Decree" in the proviso to Article 9(1) of the Act means the location of the place of business of an organization, but if it is an organizations the main income of which is real estate rental income, it means the location of the real estate. In such cases, as for an organization with at least two places of business or real estate, it means the location of the main place of business or primary real estate, and for an organization with no place of business, it means the location of its main office stipulated in the articles of incorporation of the relevant organization (as for an organization that has not stipulated its main office in the articles of incorporation, it means the address of its representative or manager). <Presidential Decree No. 22951, Jun. 3, 2011>(2) "Location of the main place of business or primary real estate" in paragraph (1) means the location of the place of business or the real estate generating the largest amount of business revenue provided in subparagraph 1 of Article 11 (hereinafter referred to as "amount of business revenue") in the immediately preceding business year.

(3) "Location of the main place of business prescribed by Presidential Decree" in Article 9(3) of the Act means the location determined by applying mutatis mutandis paragraph (2); provided, this shall apply only when the place of tax payment is first determined. <Amended on Dec. 30, 2002; Jun. 3, 2011>(4) "Place prescribed by Presidential Decree" in Article 9(3) of the Act means the place reported as the place of tax payment by a foreign corporation among places where domestic source income is generated. In such cases, the foreign corporation shall file a report on the place of tax payment in the form stipulated by Decree of the Ministry of Finance and Economy to the head of the tax office having jurisdiction over the place of tax payment within one month from the date on which domestic source income is generated from at least two categories thereof. <Amended on Feb. 29, 2008; Jun. 3, 2011; Dec. 30, 2025>(5) Where it is impractical to determine the domestic place of business of a foreign corporation engaged in the construction industry, etc. as the place of tax payment because the domestic place of business of such corporation is on in the territorial waters or on other grounds, the place of tax payment of such corporation shall be its domestic location in the register; provided, no location is entered in the register, the place in which overall management of the business is performed in the Republic of Korea shall be the place of tax payment. <Added on Feb. 4, 2009>(6) "The location of the relevant person liable for withholding prescribed by Presidential Decree" in the main sentence of Article 9(4) of the Act means a place according to the following classification: <Added on Feb. 12, 2019>1. Where the relevant person liable for withholding is an individual: the location provided in Article 7(1)1 or 2 of the Income Tax Act;

2. Where the relevant person liable for withholding is a corporation: the location according to the following:a. The headquarters or main office of the relevant corporation, and its actual business management place (hereinafter referred to as "headquarters, etc.") if its headquarters or main office is not located in the Republic of Korea (referring to the location provided in paragraph (1) in the case of an organization deemed a corporation; the location of the main domestic place of business in the case of a foreign corporation);b. Notwithstanding item a, where a branch, business office, or other place of business of a corporation keeps separate accounting under the self-supporting accounting system, it means the location of the relevant place of business (excluding the location of the place of business if it is located in any foreign country); provided, if a corporation collectively computes the amount of tax withheld on the income paid through its branches, business offices, and other places of business by an electronic computer system in its headquarters, etc., has filed a report thereon with the head of the tax office having jurisdiction over its headquarters, etc., and has registered each of business establishments with the head of the competent tax office in accordance with Article 8(3) and (4) of the Value-Added Tax Act, it shall be the location of the headquarters, etc. of the relevant corporation.

(7) "The place prescribed by Presidential Decree" in the proviso to Article 9(4) of the Act means places according to the following classification: <Added on Feb. 12, 2019>1. Where domestic-sourced real estate transfer income referred to in subparagraph 7b of Article 93 of the Act or other income specified in any subparagraph of Article 132(8) of this Decree accrues: the location of the domestic place of business of a domestic corporation or foreign corporation which has issued the relevant securities;

2. In cases other than those under subparagraph 1: the place designated by the Commissioner of the National Tax Service.

(8) Matters necessary for the procedures for batch calculation and reporting pursuant to the proviso of paragraph (6)2b shall be determined by Decree of the Ministry of Finance and Economy. <Added on Feb. 12, 2019; Dec. 30, 2025>[Moved from Article 6 <Feb. 12, 2019>]

Article 8Designation of and notices on place of tax payment

(1) "Circumstances prescribed by Presidential Decree" in Article 10(1) of the Act means any of the following cases: <Amended on Jun. 3, 2011; Feb. 12, 2019>1. Where the location of the headquarters, etc. of a domestic corporation is not the same as its registered address;

2. Where the location of the headquarters, etc. of a domestic corporation is separate from its assets or place of business and thus tax evasion could occur;

3. Where the location of the main place of business of a foreign corporation with at least two domestic places of business cannot be determined under Article 7(3);

4. Where a foreign corporation with at least two property prescribed in the proviso to Article 9(2) of the Act does fail to file a report under Article 7(4).

(2) In cases falling under any subparagraph of paragraph (1), the commissioner of the competent regional tax office may designate the place of tax payment under Article 10(1) of the Act. In such cases, where the place of tax payment to be designated is in another jurisdiction, the Commissioner of the National Tax Service may designate the place of tax payment.

(3) A notice on the designation of the place of tax payment under Article 10(2) of the Act shall be given within 45 days from the end date of the relevant business year of the relevant corporation.

(4) Where a notice referred to in paragraph (3) is not given within the deadline, the previous place of tax payment shall be the place of tax payment of the relevant corporation.

Article 9Report on change of place of tax payment

(1) Where a corporation reports a change of its place of tax payment under Article 11(1) of the Act, it shall submit a report (including submission through the national tax information and communications network) on the change of the place of tax payment in the form stipulated by Decree of the Ministry of Finance and Economy to the head of the tax office having jurisdiction over the place of tax payment after the change. <Amended on Dec. 30, 2002; Mar. 17, 2004; Feb. 29, 2008; Dec. 30, 2025>(2) The head of a tax office in receipt of a report on the change of the place of tax payment under Article 11(1) of the Act shall inform the head of a tax office having jurisdiction over the place of tax payment before the change of the details of the report.

(3) Where any corporation disappears in a merger or division during a business year, the place of payment for corporate tax on the income (including transfer gains or losses due to a merger or division) of a merged corporation, a divided corporation, or a counterpart corporation to a disappearing corporation through a division and merger (hereinafter referred to as "merged corporation, etc.") during the business year may be the place of corporate tax payment of the surviving corporation, the corporation established through the division, or the counterpart corporation to the merger and division (hereinafter referred to as "surviving corporation, etc.") (in the case of a division, it means the place of tax payment of the corporation which succeeds to the highest assets value). In such cases, a report on the change of the place of tax payment shall be filed under Article 11(1) of the Act. <Amended on Dec. 31, 2001; Jun. 8, 2010>

Article 10Deduction of losses

(1) "Corporations specified by Presidential Decree, such as ... enterprises performing a rehabilitation plan" in the proviso, with the exception of its subparagraphs, of Article 13(1) of the Act; the part, with the exception of the subparagraphs, of Article 45(5) of the Act; the part, with the exception of the subparagraphs, of Article 46-4(5) of the Act means corporations falling under any of the following: <Added on Feb. 12, 2016; Apr. 29, 2016; Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 29, 2024; Dec. 30, 2025>1. A corporation in the course of performing a rehabilitation plan for which a court decides to authorize pursuant to Article 245 of the Debtor Rehabilitation and Bankruptcy Act;

2. A corporation in the course of performing a corporate improvement plan under an agreement concluded to perform the corporate improvement plan pursuant to Article 14(1) of the Corporate Restructuring Promotion Act;

3. A corporation in the course of performing a business normalization plan under an agreement concluded to perform the business normalization plan with any financial company, etc., as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, among those that have claims against the corporation or an institution prescribed by Decree of the Ministry of Finance and Economy among public institutions defined in the Act on the Management of Public Institutions that conduct the financial business or corporate restructuring business pursuant to any other Act;

4. A corporation who meets all the following requirements, among corporations established with an objective to issue securities under the Financial Investment Services and Capital Markets Act or to borrow funds (hereafter in this paragraph referred to as "securitization"), based on receivables, real estate, or other property rights (hereafter in this paragraph referred to as "securitized assets"):a. The corporation shall be either a stock company or limited company under the Commercial Act or any other statute;b. The corporation shall be established for a limited duration with no full-time executive officer or employee;c. The corporation's articles of incorporation, etc., shall limit its business operations to those necessary for securitization and shall prohibit a merger, liquidation, or dissolution not prearranged in securitization;d. A contract for outsourcing business process and a contract for outsourcing asset management shall be signed to manage and operate the company's assets for securitization;e. The acquisition of securitized assets shall be completed by December 31, 2015;

5. A domestic company that falls under any subparagraph of Article 51-2(1) of the Act or a domestic corporation referred to in Article 104-31(1) of the Act on Restriction on Special Cases concerning Taxation;

6. A corporation that has obtained approval for a business reorganization plan pursuant to Article 10 of the Special Act on the Corporate Revitalization.

7. A non-profit domestic corporation which may include income from profit-making business of a juristic person in deductible expenses as the proper-purpose business reserve pursuant to Article 74(1) (excluding subparagraphs 4 through 6) or (4) of the Act on Restriction on Special Cases concerning Taxation.

(2) In deducting losses under subparagraph 1 of Article 13 of the Act, the losses shall be deducted sequentially beginning with the losses first generated in the relevant business year. <Amended on Feb. 12, 2016; Feb. 12, 2019>(3) In applying subparagraph 1 of Article 13 of the Act, any of the following losses shall be deemed deducted when calculating the tax base for each business year: <Amended on Feb. 9, 2006; Mar. 31, 2011; Feb. 12, 2016; Feb. 12, 2019; Feb. 15, 2022>1. Losses appropriated under Article 17(2) of the Act;

2. Losses carried forward that is appropriated by the value of assets gratuitously acquired or the amount of reduced debts due to exemption from or expiration of debts under subparagraph 6 of Article 18 of the Act;

3. Losses deducted under Article 72(1) of the Act and Article 8-4 of the Act on Restriction on Special Cases concerning Taxation.

(4) Losses referred to in Article 13(1)1 of the Act shall include any amount within the limit of succeeded losses referred to in Articles 81(2) and 83(2). <Amended on Jun. 8, 2010; Feb. 12, 2016; Feb.12, 2019>(5) Where any loss incurs in a business year of a corporation which has included a loss exceeding the allocation limit referred to in Article 100-18(3) of the Enforcement Decree of the Restriction of Special Taxation Act in deductible expenses, the loss additionally allocated or the loss of the business year, whichever is smaller, shall be deemed the loss incurred in the business year in which the last day of the business year of a partnership enterprise which has generated a loss exceeding the allocation ends, falls for purposes of paragraph (2). <Added on Feb. 4, 2009; Feb. 12, 2016; Feb. 29, 2024>

Article 11Scope of earnings

Except as otherwise provided for in the Act and this Decree, profits or earnings specified in Article 15(1) of the Act (hereinafter referred to as "earnings") shall include each of the following: <Amended on Dec. 29, 2000; Feb. 9, 2006; Feb. 28, 2007; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Feb. 2, 2012; Feb. 12, 2019; Feb. 28, 2023; Feb. 29, 2024; Feb. 28, 2025; Oct. 1, 2025; Dec. 30, 2025>1. The amount of business income [excluding the amounts of sales overcharge and sales discount calculated under the corporate accounting standards (referring to the accounting standards referred to in the subparagraphs of Article 79; hereinafter the same shall apply), and hereinafter the same shall apply] generating from each business prescribed in the Korean Standard Industrial Classification prepared and publicly notified by the Minister of Data and Statistics pursuant to Article 22 of the Statistics Act (hereinafter referred to as the "Korean Standard Industrial Classification"); provided, the amount of income from security deposits or deposit money in real estate rent when making estimations under the proviso to Article 66(3) of the Act shall be calculated by multiplying the interest rate prescribed by Decree of the Ministry of Finance and Economy in consideration of the term deposits of financial companies, etc. (hereinafter referred to as "term deposits interest rates");

2. The amount of assets transferred;2-2. The amount of treasury stocks (including where a surviving corporation acquires the stocks of the surviving corporation held by a merged corporation following a merger). In such cases, where shares are transferred according to the exercise of stock options pursuant to the main clause, with the exception of the items, of subparagraph 19-2 of Article 19, it shall be an amount calculated at the market price at the time of the exercise of stock options;

3. Property rental fees;

4. Marginal profits from the evaluation of assets;

5. The value of assets gratuitously received;

6. The amount (including the amount computed under the proviso to Article 17(1)1 of the Act) of debts reduced due to exemption from, or expiration of debts;

7. The returned amount included in deductible expenses;

8. Profits distributed from a specially related party through capital transactions referred to in any of the items of Article 88(1)8 and subparagraph 8-2 of the same paragraph;

9. Any of the following provisional payments as referred to in Article 28(1)4b of the Act and interest thereon (hereafter referred to as "provisional payment, etc." in this Article); provided, where any justifiable grounds prescribed by Decree of the Ministry of Finance and Economy exists, such as where collection is impossible due to litigation about claims or debts:a. Provisional payment, etc. (excluding the interest included in the gross income under item b) not collected until the date of termination of the special relationship referred to in Article 2(8);b. Interest accrued where the special relationship under Article 2(8) is not terminated and where the interest on the provisional payment referred to in Article 28(1)4b of the Act is not collected by the first anniversary of the end date of the business year in which the interest accrual date falls;

10. The amount of a decrease in the liability reserve fund accumulated by an insurance company defined in the Insurance Business Act (hereinafter referred to as "insurance company") pursuant to Article 120 of that Act (excluding a decrease in the assessed value of the liability reserve fund due to changes in the discount rate), which is appropriated as earnings in accordance with the accounting standards referred to in paragraph (3) of the same Article (hereinafter referred to as "insurance supervisory accounting standards");10-2. The decrease in the liability reserve (excluding the decrease in the appraised value of the liability reserve due to changes in the discount rate), which is accumulated by the Housing and Urban Guarantee Corporation under the Housing and Urban Fund Act pursuant to Article 24 of the Enforcement Decree of that Act, which is accounted for as revenue in accordance with the Insurance Supervisory Accounting Standards;

11. Other earnings reverted or to be reverted to a corporation.

Article 12Scope of surpluses untaxed upon capitalization

(1) "An amount prescribed by Presidential Decree" in Article 16(1)2a of the Act means the amount specified in any subparagraph of Article 17(1) of the Act; provided, the following amounts shall be excluded therefrom: <Amended on Apr. 13, 2012; Feb. 15, 2013; Feb. 12, 2019; Feb. 29, 2024; Dec. 30, 2025>1. An excess referred to in the proviso to Article 17(1)1 of the Act;

2. Profits accruing by retiring treasury stocks or investment shares (excluding the capitalized amount after the secondary anniversary of the date of the retirement if the market price referred to in Article 52(2) of the Act does not exceed the acquisition value at the time of retirement);

3. In the case of a qualified merger referred to in Article 44(2) of the Act (including cases deemed a qualified merger pursuant to paragraph (3) of the same Article; hereinafter referred to as "qualified merger"), the aggregate of the following amounts (in the case of a corporation other than a stock company, referring to the amount computed by applying this mutatis mutandis). In such cases, an aggregated amount shall not exceed the amount prescribed in Article 17(1)5 of the Act (hereafter in this Article referred to as "merger gain"):a. As of the merger registration date, where the value of the property that a merging corporation succeeds to exceeds the book value (where tax settlement matters referred to in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, out of the tax settlement matters; hereafter in this paragraph the same shall apply) of such property of a merged corporation, the amount in excess;b. An amount equivalent to a surplus referred to in the main clause, with the exception of its items, of Article 16(1)2 of the Act (hereafter referred to as "capital surplus subject to fictious dividend" in this Article and Article 17) out of the capital surplus prescribed by Decree of the Ministry of Finance and Economy;c. The amount equivalent to the earned surplus of a merged corporation;

4. In the case of a qualified division prescribed in Article 46(2) of the Act (hereinafter referred to as "qualified division"), the aggregate of the following amounts (in the case of a corporation other than a stock company, referring to the amount computed by applying this mutatis mutandis). In such cases, the limit shall be an amount prescribed in Article 17(1)6 of the Act (hereafter in this Article referred to as "marginal profits from a division"):a. As of the registration date of a division, where the value of the property that a corporation established through division, etc. (referring to a corporation established through division, etc. referred to in the former part, with the exception of the subparagraphs, of Article 46(1) of the Act; hereinafter the same shall apply) succeeds to is greater than the book value of such property of a divided corporation, the amount in excess;b. Where a decrease in surplus other than the capital surplus subject to fictious dividend out of the capital of a divided corporation following a division and the capital surplus prescribed by Decree of the Ministry of Finance and Economy falls short of the book value of net assets as at the division registration date of the divided business division, such shortfall. In such cases, such shortfall shall be limited to the aggregate of the retained earnings before the division as at the division registration date of the divided corporation and the amount equivalent to the capital surplus subject to fictious dividends before the division;c. Deleted;<Feb. 12, 2019>d. Deleted. <Feb. 12, 2019>5. The amount repaid from retained earnings out of the excess amount, under the main clause of Article 17(1)1 of the Act, of the different classes of shares concerning redemption of shares pursuant to Article 345(1) of the Commercial Act.

(2) In applying paragraph (1)3 and 4, where some of marginal profits from a merger or marginal profits from a division is converted into capital or investment, the amount other than the amount pursuant to the relevant subparagraph shall be converted first. <Amended on Feb. 12, 2019>(3) In applying paragraph (1)3 and 4, although reserve funds are succeeded to under Article 459(2) of the Commercial Act, surpluses shall be calculated, deeming such reserve funds are not succeeded.

(4) Where some of the revaluation reserve referred to in Article 16(1)2b of the Act are converted into capital or investment, it shall be deemed that conversion is made based on the rate of the amount to which Article 13(1)1 of the Assets Revaluation Act applies and other amount.[This Article Wholly Amended on Feb. 2, 2012]

Article 13Timing for constructive dividend payment or distribution of surpluses

The date on which profit dividends or surpluses are distributed under Article 16(1) of the Act means the dates according to the following classification: <Amended on Feb. 19, 2005; Feb. 13, 2018; Feb. 12, 2019>1. In cases falling under Article 16(1)1 through 3 of the Act: the date on which a general meeting of stockholders, general meeting of employees, or meeting of the board of directors adopts a resolution to retire stocks, reduce capital or financing, or convert surpluses into capital or financing (referring to the date determined under Article 461(3) of the Commercial Act in cases of a resolution by the board of directors; provided, it refers to the record date under Article 354 of the Commercial Act, if stockholders on the date of resolution on the cancellation of stocks or the reduction of capital or investment are different from the stockholders on the record date under said Article of said Act) or the date of retirement or withdrawal of a partner;

2. In cases falling under Article 16(1)4 of the Act: the date on which the value of the residual assets of the relevant corporation is determined;

3. In cases falling under Article 16(1)5 of the Act: the registration date the relevant corporation is merged;

4. In cases falling under Article 16(1)6 of the Act: the registration date of the division of the relevant corporation.

Article 14Evaluation of values of assets

(1) The value of an asset, other than cash, which has been acquired under any subparagraph of Article 16(1) of the Act shall be determined as follows: <Amended on Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2003; Feb. 19, 2005; Feb. 4, 2009; Jun. 8, 2010; Feb. 2, 2012; Feb. 12, 2016; Feb. 3, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022>1. Where the acquired assets are stocks or investment shares (hereinafter referred to as "stocks, etc."), the following amounts:a. In cases of stocks, etc., referred to in Article 16(1)2 and 3 of the Act: the par value or the amount of investment; provided, in cases of stocks, etc. acquired by a corporation referred to in Article 51-2(1)2 of the Act (hereafter referred to as "investment company, etc." in this Article, Articles 70, 75, and 86-3), the amount shall be deemed nil;b. In cases of stocks, etc., referred to in Article 16(2)1 and 2 of the Act: Where the requirements referred to in Article 44(2)1 and 2 (excluding the part related to holding of stocks, etc.) or Article 46(2)1 and 2 (excluding the part related to holding of stocks, etc.) are met or in cases falling under Article 44(3) of the Act, the previous book value (it refers to the market value, if a portion of costs of a merger or a division under Article 16(2)1 or 2 of the Act is paid in cash or by any other asset and the appraised market price of the stocks, etc. acquired through the merger or division is smaller than the previous book value); provided, the amount of stocks, etc. acquired by an investment company, etc. shall be deemed nil;c. In cases of a stock dividend referred to in Article 462-2 of the Commercial Act: issued price (if an investment company, etc. is given with any stock dividend, such stock dividend shall be deemed nil);d. In other cases: the market price at the time of acquisition provided for in Article 52 of the Act (hereinafter referred to as "market price"); provided, where profits are distributed from an affiliated person under Article 88(1)8, it shall be the amount less the profits;1-2. Where the acquired assets are stocks, etc. that meet all of the following requirements, the previous book value (it refers to market value, if costs of a merger under Article 16(2)1 of the Act is partially paid in cash or by any other asset and the appraised market value of the stocks, etc. acquired through the merger is smaller than the previous book value):a. Where a foreign corporation holds the total number of outstanding stocks of another foreign corporation or the total amount of investment and is merged to the latter foreign corporation; or where a domestic corporation holds the total number of outstanding stocks of, or the total amount of investment in, two separate foreign corporations and the separate foreign corporations are merged with each other (including cases where the sum of stocks, etc. of a foreign corporation held respectively by a domestic corporation and by another foreign corporation whose total number of outstanding stocks or whose total amount of investment is held by the domestic corporation equals to the total number of outstanding stocks of, or the total amount of investment in, the former foreign corporation and the two foreign corporations are merged with each other);b. The surviving corporation and the merged corporation are corporations in one and the same state with which the Republic of Korea has signed a tax treaty;c. The state referred to in item b does not levy corporate tax on any domestic corporation that is a stockholder of the merged corporation or defers the levying of corporate tax on such domestic corporation;d. The corporation shall submit the documents that can prove the matters referred to in items a through c to the head of the tax office having jurisdiction over the place of tax payment;

2. Where the acquired assets are not stocks, etc., the market price of the assets at the time of acquisition.

(2) Where stocks, etc. are acquired under the proviso to Article 16(1)2 of the Act, the book value of one stock or share of new or old stocks, etc. shall be as follows:┌─────────────────────┐│ ││ │Book value of one stock or share=Book value of one stock or share of old stock, etc.│ 1 ＋ ──────────────────────────│1 ＋ number of one stock or share of old stock, etc. allotted to one share of new stock, etc.│ ││ │└────────────────────────┘(3) In applying Article 16(1)1 of the Act, where stocks, etc. referred to in the proviso, with the exception of the items, of subparagraph 2 of the same paragraph are acquired within two years prior to the retirement of stocks, etc. (including the reduction of capital or financing; hereafter in this paragraph the same shall apply), such stocks, etc. shall be deemed retired first, and the initial acquisition value of such stocks, etc. shall be deemed nil, notwithstanding paragraph (2). In such cases, where some stocks, etc. are disposed of during this period, such stocks, etc. are deemed disposed of in proportion of such stocks, etc. to other stocks, etc., and the book value of one stock or share after the retirement of the stocks, etc. shall be the aggregate of book values after the retirement divided by the total number of stocks, etc. after the retirement, notwithstanding paragraph (2). <Amended on Feb. 12, 2019>(4) In cases of paragraph (1)1a, the value of non-par-value stocks shall be calculated by dividing the amount transferred to the capital on the date specified in any subparagraph of Article 13 by the number of the stocks newly issued in return for the amount transferred to capital. <Amended on Feb. 21, 2014>

Article 15Amount in excess of par value of issued stocks

(1) "Amounts prescribed by Presidential Decree" in Article 17(2) of the Act means the following amounts: <Added on Feb. 9, 2006; Jun. 3, 2011; Apr. 29, 2016; Feb. 3, 2017; Feb. 12, 2019>1. The amount of stocks issued in excess of the market price of such stocks, etc. (or the par value if the market price is less than the par value), if any corporation whose rehabilitation plan to convert its debts to investments has been approved under the Debtor Rehabilitation and Bankruptcy Act converts its debts to investments;

2. An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any enterprise that shows the sign of insolvency and has signed an agreement to implement a corporate improvement plan aimed at converting its debts into investments converts its debts into investments under the Corporate Restructuring Promotion Act;

3. An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any corporation converts its debts to investments after having signed an agreement to implement a management normalization program aimed at converting its debts to investments with any financial company, etc. defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which holds its claims against the relevant corporation;

4. An amount in excess of the market price (or par value, if the market price is less than par value) of the relevant stocks, etc., if a corporation that has a corporate restructuring plan approved under Article 10 of the Special Act on the Corporate Revitalization converts debts into investments.

(2) Where any domestic corporation discontinues its business or is dissolved before appropriating the total amount excluded from the gross income to cover losses under Article 17(2) of the Act, the total amount that is not appropriated to cover losses shall be included in the gross income when calculating the amount of income of the business year in which the relevant grounds arise. <Added on Feb. 9, 2006; Feb. 12, 2019>

Article 16Losses carried forward

(1) "Losses carried forward as prescribed by Presidential Decree" referred to in subparagraph 6 of Article 18 means any of the following: <Amended on Dec. 29, 2000; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Mar. 29, 2006; Jun. 8, 2010; Mar. 31, 2011; Apr. 29, 2016; Feb. 12, 2019>1. Losses referred to in Article 14(2) of the Act (excluding losses succeeded to under Article 44-3(2) or 46-3(2) of the Act) that is not deducted when calculating the tax base for each business year thereafter under Article 13(1)1 of the Act;

2. Any of the following losses referred to in Article 14(2) of the Act among those excluded from the tax base reported under Article 60 of the Act for each business year:a. Losses of a corporation whose rehabilitation plan is approved under the Debtor Rehabilitation and Bankruptcy Act, which are confirmed by a court;b. Losses determined by a creditor financial institution council as those of a corporation that has signed an agreement to implement a corporate improvement plan under the Corporate Restructuring Promotion Act.

(2) Article 10(2) and (3) shall apply mutatis mutandis to the calculation of carried forward losses referred to in paragraph (1). <Amended on Feb. 12, 2019>[Moved from Article 18, Previous Article 16 is Deleted. <Feb. 12, 2019>]

Article 17Limitation on reduced distribution of revaluation reserve out of merger gain

(1) "Amount prescribed by Presidential Decree" in subparagraph 8b of Article 18 of the Act means the amount calculated according to the following formula:┌──────────────────────────────────┐A - (B - C)A: Profit from mergerB: Amount calculated by adding up the capital of a merged corporation and capital surplus other than capital surplus subject to fictitious dividends(excluding revaluation reserves under Article 16(1)2b of the Act)C: Increase in capital of a merging corporation└───────────────────────────┘(2) "Amount prescribed by Presidential Decree" in subparagraph 8c of Article 18 of the Act means the amount calculated according to the following formula:┌─────────────────────────────────────┐A - (B - C)A: Division marginB: The sum of reduction in the capital of a divided corporation and reduction in capital surplus other than the capital surplus subject to fictitious dividends(excluding the revaluation reserve under Article 16(1)2b of the Act)(excluding the revaluation reserve under Article 16(1)2b of the Act)└─────────────────────┘(3) In applying paragraphs (1) and (2), if a merged corporation or a corporation newly established through division falls under any of the following subparagraphs, it shall be calculated as prescribed in the relevant subparagraph:

1. Where there is a reserve fund that has been succeeded pursuant to Article 459(2) of the Commercial Act: It shall be calculated deeming that there is no succession thereto;

2. Where marginal profits from a merger or division is partially transferred to capital or investment: The calculation shall be made deeming the amount equivalent to the revaluation reserve under Article 16(1)2b of the Act of the merged corporation or the divided corporation is transferred to the capital or investment in advance, including only the amount remaining after such transfer in the marginal profit from a merger or division.

(4) Where a merged corporation or a corporation newly established through division distributes reduced dividends on some of the profits from the merger or division, it shall be deemed that the relevant amount has been distributed in the following order:

1. Dividends provided for in subparagraph 8b or c of Article 18 of the Act;

2. The amount equivalent to the retained earnings of the merged corporation or the divided corporation and the capital surplus subject to a fictitious dividend;

3. An amount equivalent to the capital surplus other than the capital surplus subject to a fictitious dividend of the merged corporation or the divided corporation.[This Article Added on Feb. 29, 2024]

Article 17-2Non-inclusion of domestic corporations' dividend income in gross income

(1) For the purpose of Article 18-2(1)1 of the Act, the ratio of investment made by a domestic corporation in another domestic corporation (hereafter in this Article referred to as "invested corporation") shall be calculated based on the latter's stocks, etc. that has been held for at least three months as at the ex-dividend date of the invested domestic corporation. In such cases, in calculating the number of the retained shares, etc., if some stocks of the same kind are transferred, the stocks, etc. first acquired shall be deemed the stocks, etc. first transferred. <Amended on Feb. 12, 2019>(2) For the purpose of Article 18-2(1)2 of the Act, the borrowings and interest thereon shall not include the amount excluded from deductible expenses under Article 55. <Amended on Feb. 12, 2019>(3) The amount calculated pursuant to Article 18-2(1)2 of the Act shall be the sum of deductions calculated according to the following formula: <Amended on Feb. 12, 2019>┌─────────────────────┐│ │Amount deducted = A x B x D│ ││ ││ │A = Interest on the borrowings of domestic corporationsB = The accumulated amount during the corresponding period (referring to the total amount of the daily balances; hereinafter the same shall apply) of the book value of the stocks, etc.(excluding stocks, etc. invested in kind by the State or local governments) of the invested corporationC = The accumulated amount of the total assets during the corresponding period, as indicated in the statement of financial position, as of the end of the business year of the domestic corporationD = The ratio of non-inclusion in gross income pursuant to the classification under Article 18-2(1)1 of the Act└─────────────────────┘(4) "Corporation prescribed by Presidential Decree" referred to in Article 18-2(2)4 means any of the following corporations: <Amended on Feb. 12, 2019; Feb. 29, 2024>1. A corporation (limited to the business years during which the reduction or exemption rate is 100/100) to which Articles 63-2, 121-8 and 121-9 of the Act on Restriction on Special Cases concerning Taxation apply;

2. A corporation to which special taxation to partnership enterprises prescribed in Article 100-15 of the Act on Restriction on Special Cases concerning Taxation applies.

(5) "Amount of dividend revenue specified by Presidential Decree" in Article 18-2(2)8 of the Act means any of the following: <Added on Feb. 29, 2024>1.The amount prescribed in Article 16(1)1 of the Act (limited to cases of a decrease in capital);

2. The amount specified in Article 16(1)3 of the Act.

(6) Any corporation that wishes to be governed by Article 18-2(1) of the Act shall submit a detailed statement of dividend income prescribed by Decree of the Ministry of Finance and Economy to the head of the tax office having jurisdiction over the place of tax payment, along with a report provided for in Article 60 of the Act. <Amended on Feb. 29, 2008; Feb. 12, 2019; Feb. 29, 2024; Dec. 30, 2025>[This Article Added on Dec. 29, 2000][Title Amended on Feb. 12, 2019][Moved from Article 17-3, Previous Article 17-2 Moved to Article 17-3 <Feb. 12, 2019>]

Article 17-3

Deleted. <Feb. 28, 2023>

Article 18Non-inclusion of dividend income of foreign subsidiaries in gross income

(1) "Corporation that meets the requirements prescribed by Presidential Decree" in Article 18-4(1) of the Act means a domestic corporation that directly holds at least 10/100 (at least 5/100 in the case of a foreign corporation that engages in an overseas resources development project under Article 22 of the Act on Special Taxation Restrictions) of the total number of issued voting stocks or the total amount of investments of a foreign corporation for at least six months as of the dividend base date of the foreign corporation (where a domestic corporation succeeds to the stocks, etc. of a foreign subsidiary owned by another domestic corporation through a qualified merger, qualified division, qualified split-off, or qualified investment in kind, such domestic corporation shall be deemed to have held relevant stocks, etc. from the time when such another domestic corporation acquired the stocks, etc. of the foreign subsidiary before the succession).

(2) "The amount of dividend income prescribed by Presidential Decree" referred to in Article 18-4(4)1 of the Act means the following amounts for the relevant business year of a specified foreign corporation to which Article 27(1) of the Adjustment of International Taxes Act applies and whose actual tax burden under subparagraph 1 of that paragraph is not more than 15 percent of its actually accrued income; provided, where an overseas resources development business entity under the Overseas Resources Development Business Act (hereafter in Article 19-2 referred to as "overseas resources development business entity") makes an equity investment in a foreign corporation under Article 104-15(1)2 of the Act on Restriction on Special Cases concerning Taxation or invests in a foreign subsidiary under Article 104-15(1)3 of that Act for overseas resources development under the Overseas Resources Development Business Act (hereafter in Article 19-2 referred to as "overseas resources development"), the following amounts for the relevant business year of such foreign corporation or foreign subsidiary shall be excluded: <Amended on Feb. 28, 2025>1. Profit dividends (including interim dividends from disposing of retained earnings during the relevant business year) or surplus distributions out of the proceeds of disposing of retained earnings;

2. An amount deemed a dividend or distribution under Article 16 of the Act.

(3) "Financial instrument prescribed by Presidential Decree" referred to in Article 18-4(4)2 of the Act means financial instruments that meet the requirements according to the following classification:

1. In the case of the Republic of Korea: Pursuant to the tax law of the Republic of Korea, the relevant financial instruments are deemed capital, and the interest and discount fees paid to a domestic corporation by its foreign subsidiary, the counterparty to a transaction, following the transaction of the relevant financial instrument shall be treated as dividend income;

2. In the case of a country where a foreign subsidiary is located: Pursuant to the tax law of that country, the relevant financial instrument is deemed a liability, and the interest and discount fees paid to a domestic corporation, the counterparty to a transaction, by its subsidiary following the transaction of the relevant financial instrument shall be treated as interest expenses.

(4) A domestic corporation that intends to be governed by Article 18-4(1) of the Act shall submit a detailed statement of dividend income of a foreign subsidiary prescribed by Decree of the Ministry of Finance and Economy when filing the tax base return under Article 60 of the Act to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Dec. 30, 2025>[This Article Added on Feb. 28, 2023]