National Tax Service

【November, 2014】

☞ The following tax information is translated from Korean for foreign-invested companies, and is not legally binding.

(Q) If a person is fined for failing to report or under-reporting his/her overseas financial account, how is the amount of the fine calculated?

(A) If a person obliged to report his/her overseas financial account fails to report or under-reports within the time limit for report, a fine equivalent to the amount stated in Article 35 (1) of the Adjustment of International Taxes Act will be imposed for each of the unreported or under-reported account.
※ Criteria for fine imposed on unreported or under-reported financial account (The amount of fine may be reduced)



(Q) If an Indian company provides technology service to a Korean company from outside of Korea, is the income accrued from providing the service subject to withholding tax?

(A) If an Indian company that does not have a place of business in Korea provides software development service to a Korean company from outside of Korea, the income accrued from providing the service constitutes domestic source income in accordance with Article 13 of the Republic of Korea-India Income Tax Convention and Article 93 of the Corporate Tax Act. Therefore, 15 percent of the income will be withheld (including local income tax).
※ Related law: Article 93 of the Corporate Tax Act


(Q) If a non-resident of Korea enters into a contract for performing in Korea and receives down payment and performance fee before the performance, is the income subject to withholding tax?

(A) 1. If the party to the contract is a Hong Kong company that does not have a place of business in Korea and the actual performer and recipient of the performance fee is a non-resident entertainer, the tax convention between Korea and the non-resident entertainer\'s country of residence shall apply in accordance with Article 2-2 of the Adjustment of International Taxes Act. Also, in accordance with Article 156 (1) of the Income Tax Act, tax shall be withheld from the income accrued from providing the performance service.

2. If the Korean company that receives the performance service pays accommodation expense and airfare for the performer directly to the accommodation provider or airline, the expense shall be excluded from the non-resident performer\'s domestic source income in accordance with Article 119 Subparagraph 6 of the Income Tax Act and Article 179 (7) of the Enforcement Decree of the same Act.

※ Related law: Article 2-2 of the Adjustment of International Taxes Act.

☞ For more information, please contact the International Tax Resource Management Office of the National Tax Service (82-2-397-1438~9).