South Korea: New Tax Law Proposals
On July 28, 2016, the South Korean government announced new tax law proposals to take effect on January 1, 2017. Key corporate tax proposals announced included:
- Setting the deduction limit for losses carried forward by a Korean branch to 80%, consistent with that available for domestic companies.
- Expanding the scope of withholding tax for technical service fees such that it includes technical service income arising from services rendered outside of South Korea but paid in South Korea. Where prescribed by an applicable treaty, such income will be subject to withholding tax at the rate of 3% when paid to non-residents.
- Extending the refund request period for claiming reduced treaty withholding tax rates on applicable payments paid from Korea from 3 years to 5 years.
- Requiring multinational enterprises with a Korean ultimate parent and consolidated turnover of at least KRW 1 trillion (approximately $870 million) to submit a country-by-country report by the end of 2017 for the 2016 tax year.
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