TITLE : FAQ on FDI in Korea 2023 (Q91~Q95)
페이지 정보
작성일
2023
2023-12-05
본문
■ FAQ on FDI in Korea 2023 (Q91~Q95)
Taxation and Accounting
Q91 | How is a foreign company or non-resident taxed for capital gains on securities sourced domestically? |
A91 | In principle, the lesser of the following shall be reported and paid: ① Sale price of shares × 10% ② Profit from sale of shares (Income – Acquisition price andsales expense) × 20% However, if there is a tax treaty between the resident countryof the foreign company or non-resident and the country whereincome originated (Korea) does not have taxation rights forincome from stock transfer under the tax treaty, the income isnot taxed. |
Q92 | Does the scope of payment guarantee for overseas controlling shareholders which applies to the thin capitalization rule only apply when a payment guarantee certificate, etc. was issued to a third party? |
A92 | The scope of payment guarantee for overseas controlling shareholders applied to the thin capitalization rule includesall payment guarantee regardless of whether there is a payment guarantee certificate, the type of payment guaranteecertificate or payment guarantee method, as long as the payment guarantee is in the form that requires the defacto overseas controlling shareholder to fulfill payment obligations where the domestic company, etc. defaults. |
Q93 | Can a foreign corporation (foreign business) that came to Korea for a meeting receive value added tax (VAT) refund for products or services provided in Korea for business? |
A93 | VAT is refundable for food, lodging, services, and advertisement services provided in Korea. |
- A foreign corporation without a place of business in Korea or a nonresident who runs business outside Korea ("foreign business" hereunder)is eligible for VAT refund for one of the following goods or services eitherpurchased or received for business purposes. However, if the total refundamount of the foreign business does not exceed KRW 300,000 for thecalendar year, the VAT will not be refunded.
- Food and lodging service
- Advertisement service
- Electricity and communications service
- Real estate rental service
- Goods or services necessary for the operation and maintenance ofdomestic offices of foreign companies defined by Ordinance of theMinistry of Economy and Finance
- The VAT refund mentioned above applies only to foreign businesseswhose country refunds VAT to Korean businesses in the same manner(principle of reciprocity).
Q94 | What is the tax base for value added tax (VAT) imposed on imported goods? |
A94 | The tax base for VAT on the importation of goods shall be the total sum of customs value, customs duties, individual consumption tax, liquor tax, education tax, special rural development tax, and traffic, energy and environment tax on such goods. |
- EVAT is imposed on the supply of goods or services by entrepreneurs and importation of goods.* For the supply of goods or services, entrepreneurs are liable to pay VAT, and in principle, only for the goods or services supplied in Korea. For importation of goods, however, theimporter of goods is liable for VAT regardless of the purpose or whether the importer is an entrepreneur.
- VAT is imposed on imported goods as an indirect tax for the goods consumed or used in Korea. This is to apply the same tax treatment applied to goods produced in Korea to imported goods as well, assuming the imported goods will be used or consumed in Korea.
- The tax base for VAT on the importation of goods shall be the total sum of the taxable value for customs duties, individual consumption tax, liquor tax, education tax, special rural development tax, and traffic, energy and environment tax on such goods.**
* Article 4 of the Value-Added Tax Act
** Article 29 (2) of the Value-Added Tax Act
Q95 | What are the types of taxes levied on the importation of alcoholic beverages in the context of wholesale of imported alcoholic beverages? |
A95 | Customs duty, liquor tax, education tax, and VAT are imposedon imported alcoholic beverages. |
Procedures according to relevant laws
- The Liquor Tax Act: The business should have a trader’s identificationnumber under the Foreign Trade Act and a license for alcoholicbeverage sales.
- Enforcing authority: National Tax Service (www.nts.go.kr)
- The Food Sanitation Act: The import declaration for food should beapproved by the Minister of Food and Drug Safety or the head of theNational Quarantine Office. Customs clearance is possible only afterpassing the quarantine inspection.
- Enforcing authority: The Ministry of Food and Drug Safety (www.kfda.go.kr), National Quarantine Office (nqs.cdc.go.kr)
- The Act on the Promotion of Saving and Recycling of Resources:The Korea Environment Corporation needs to check whether the bottlesof imported alcoholic beverage are subject to a contribution charge.
- Enforcing authority: Korea Environment Corporation (www.keco.or.kr)
Customs clearance procedure
- Upon the arrival of goods that meet the requirements above, importdeclaration, goods inspection, and customs duty payment should follow.
Types and calculation method of taxes on importation
- For the example of vodka (HSK2208.60-0000), tariff rate (refer to therate set by FTA), liquor tax (72%), and VAT (10%) are imposed. The taxis calculated as follows:9)
- Customs duty = Dutiable value (Value of goods + Transportation cost+ Insurance premium) x Tariff rate (refer to the rate set by FTA)
- Liquor tax = (Dutiable value + Customs duty) × Liquor tax rate (72%)
- Education tax = 30% of Liquor tax
- VAT = (Dutiable value + Customs duty + Liquor tax + Education tax) ×VAT rate (10%)