South Korea: Proposed Changes to Permanent Establishment Laws
South Korea has proposed several key changes to its permanent establishment (PE) laws, with a proposed effective date of January 1, 2019. The proposed changes include.
Fixed place PE. The definition of what constitutes a “domestic place of business of a resident/foreign corporation” will be expanded to include places where activities conducted are preparatory or auxiliary in nature, provided certain conditions are satisfied.
Dependent agent PE. A person may be considered a dependent agent even if he or she does not have authority to conclude contracts but if he or she repeatedly plays a principle role leading to the conclusion of contracts that are routinely executed with no material modification by the non-resident/foreign corporation. The types of contracts that may trigger at PE are clearly defined and include those in the name of the non-resident/foreign corporation, those relating to the transfer of ownership or the grant of the right to use intangibles held by the non-resident/foreign corporation, and those relating to the provision of services by the non-resident/foreign corporation.