Important South Korean Tax Reporting Requirements Coming Due

l 2019 Annual Corporate Income Tax and Local Income Tax Filing Deadlines

Under the Corporate Income Tax Law (CITL), a company having a fiscal year ended December 31, 2019 should file the FY2019 annual corporate income tax return by March 31, 2020 together with necessary tax payments.

In this connection, we summarized the due dates of tax return filing and necessary tax payment related to corporate income tax and local income tax as follows:

In principle, annual/interim corporate income tax and local income tax returns are due filing together with tax payment as given below:

Tax returns	Filing due dates
● Annual corporate income tax return	- Within 3 months from the fiscal year-end
● Interim corporate income tax return	- Within 2 months after the first 6 months of each fiscal year
● Annual local income tax return	- Within 4 months after the fiscal year-end

If the annual/interim corporate income taxes payable are over Won 10 million, companies are allowed to make tax payments in 2 installments as below:

Tax returns	Payment due dates
● Annual corporate income tax return
- 1st installment (*)	- Within 3 months from the fiscal year-end
- 2nd installment (*)	- Within 1 month from the end of the filing due date (within 2 months for a small and medium-sized company)
● Interim corporate income tax return
- 1st installment (*)	- Within 2 months from the end of interim period
- 2nd installment (*)	- Within 1 month from the end of the filing due date (within 2 months for a small and medium-sized company)

(*) The amount of installments shall be determined as follows:

If total taxes payable is:		Installment payments can be broken down as below:
Over Won 10 million ~ up to 20 million	1st installment	10 million
	2nd installment	Excess over 10 million
Over Won 20 million	1st installment	50% or more of taxes payable
	2nd installment	Remaining balance

(**) Installment payment is not applicable for local income tax.

l Transfer Pricing (TP) and BEPS Requirements

Under the International Tax Coordination Law (ITCL), which governs the taxation of international transactions between taxpayers and overseas specially related parties (OSRP), a company is obliged to submit the following documents for the transactions made with its OSRPs during the fiscal year to the relevant tax office together with its annual corporate income tax return:

a. “Schedules of international transactions”

b. “Report on Arm’s Length Price Determination Method”

c. “Summarized Profit and Loss Statement of OSRP”

In addition, Multinational Enterprises (MNE) which meet the following conditions are also required to submit the Combined Report of International Transactions (CRIT) which is comprised of three elements (Local file, Master file, and CbC report).

CRIT	Local file and Master file	CbC report
Condition	Domestic corporations and foreign corporations with a domestic place of business that satisfy the following criteria: a. Annual gross sales of an individual entity exceed KRW100 billion; and b. International related party transaction exceeds KRW 50 billion per year.	• In the case where the ultimate parent company is a domestic company or a resident of Korea, the CbC reporting obligator is the domestic parent company preparing the consolidated financial statements of a multinational group whose consolidated revenue exceeds KRW1 trillion during the preceding fiscal year. • In the case where the ultimate parent company is a foreign company or a non-resident of Korea, the CbC reporting obligator is a Korean affiliated company of a multinational group whose consolidated revenue exceeds 750 million Euros (or equivalent) in the preceding fiscal year. However, if both of the following conditions are met, submission of the Notification of CbC reporting obligator can substitute the CbC reporting obligation of the Korean affiliated company of a multinational group : a. There is an obligation to submit a CbC report under the laws and regulations of the country where the ultimate parent company is located at; and b. There is an arrangement for the exchange of CbC report information between Korea and the country where the ultimate parent company is located at.
Due date	Within 12 months from the end of each fiscal year	Within 12 months from the end of each fiscal year (within 6 months from the end of each fiscal year in case of submitting the Notification of CbC report obligator)

l 2019 Individual Income Tax Return Filing Deadline (due by June 1, 2020)

Residents, regardless of their nationalities, are subject to Korean income tax based on worldwide income including global income (employment income, business profits, dividend, pension, interest, rental, and other miscellaneous income), severance pay and capital gains. However, under the revised Individual Income Tax Law (IITL), in the case where the period that a foreigner, who is a tax resident of Korea, has his address or abode in Korea does not exceed 5 years in aggregate during the past 10 years from the end of the concerned tax year, his/her foreign source income earned from January 1, 2009 shall be taxed in Korea only if such income is paid in Korea or such income is remitted into Korea.

Taxpayers making monthly tax payments and having only one source of worldwide income (i.e., either Class A or Class B) are generally not required to file a global income tax return since the employer (for Class A income earners) or the Class B taxpayers' association (for Class B income earners) finalizes the individual's tax liability at the end of the year. Taxpayers having more than one source of income, however, are required to file a global income tax return for the year and pay taxes due on such income on or before May 31 of the following year, or prior to permanently leaving Korea.

The filing of 2019 annual individual income tax return is coming due on June 1, 2020 together with necessary tax payments.