Korea

Recommendations

Info

62 Country starter pack Business practicalities in Korea KAFTA Regulations KAFTA regulations: KAFTA preferential rules of origin (ROO) are agreed criteria used to ensure that only goods originating in either Korea or Australia enjoy duty preferences. Preferential ROO are required to prevent transshipment, whereby goods from a third party are redirected through either Korea or Australia to avoid the payment of import tariffs. For this reason, most goods require a certificate of origin (COO) to receive the benefits under KAFTA. According to DFAT, a COO should be prepared by the Australian exporter or the producer. This is known as selfcertification. Australian exporters also have the option of obtaining a COO from an authorised body such as the Australian Chamber of Commerce and Industry (ACCI) or the Australian Industry Group, however, charges will apply. COOs remain valid for at least two years and can apply to a single shipment or multiple importations of goods of the same description. For up to date information, a list of applicable tariffs, COO requirements, and an example of a COO, please see DFAT’s dedicated KAFTA webpage: http://dfat.gov.au/trade/agreements/kafta/factsheets/Pages/guide-to-using-kafta-to-export-andimport-goods.aspx. Australian exporters may also seek formal advice from the Korea Customs Service on the tariff classification of the goods intended for export. This advice can be obtained through an ‘advance ruling’, which is an official ruling on tariff classification of a good that is binding on the customs administration. • A completed application form for an import permit • Lading bill • Invoice containing a description of goods, brand name, quantity, specifications, type or model number, unit price, freight, insurance and expenses, as well as any amount of duty reduction or exemption of duties • Origin verification requirements must be obtained at the port of shipment. • Packing list • Price declaration • Other import documents, such as those covering applications for preferential treatment of goods. Parallel imports: Parallel imports (often known as grey product) are non-counterfeit products imported from another country without the permission of the intellectual property owner, but which may be allowed due to the concept of exhaustion of rights. While there is no rule on parallel imports of foreign brand goods, Korea has dealt with such imports through a government notice on the export/import clearance guidelines for the protection of intellectual property since 1995. Exclusive licensors or dealers of imported goods may request the customs office to withhold the import customs clearance of parallel import goods. In response to such a request, parallel importers may request the customs office to examine whether such a request may be repealed and the customs office must notify the examination result in 15 days from the date the request is filed. The customs office is empowered to prohibit imports or exports of goods infringing intellectual property rights such as trademarks, copyrights and geographical identification. 5.3 TAXATION Korea’s taxation system includes a wide range of imposts on businesses and individuals applied at both national and local levels, including income taxes (corporate income tax, local income tax and individual income tax), turnover taxes (value added tax and excise tax, as well as taxes such as surtax, and acquisition tax. This section will provide an overview of the primary taxes that Australian businesses need to consider when establishing in Korea. Be aware, however, that taxation of foreign enterprises can be complex, and that not all potentially applicable taxes are covered in this guide. All businesses should seek professional tax advice from firms such as PwC when setting up in Korea. Corporate income tax Corporate income tax (CIT) in Korea is covered under the Corporate Income Tax Law (CITL), the FIPA, the Special Tax Treatment Control Law (STTCL) and the Law for the Coordination of International Tax Affairs (LCITA). Taxes are administered and collected by the National Tax Service (NTS). Although CITL distinguishes between foreign and domestic companies, most provisions apply to both. Foreign entities, however, are eligible for tax incentives thanks to FIPA and the STTCL. Foreign businesses may also be eligible for further tax savings if they establish a presence in foreign investment and free trade zones.
Country starter pack Business practicalities in Korea 63 KOREA QUICK TAX FACTS FOR COMPANIES Corporate income tax rate Progressive from 10% to 22% Local income tax on corporate Progressive from 1% to 2.2% taxable income Alternative minimum tax Progressive from 10% to 17% (in case of SMSE, 7%, 8% or 9%) Branch profits tax rate 20% Local income tax on branch profits 10% Capital gains tax rate Normal corporate income tax rates from 10% to 22% for resident companies; lesser of 10% of proceeds received or 20% of gains realised for nonresident companies having no PE in Korea Basis Worldwide Participation exemption No Loss relief - Carryforward - Carryback Double taxation relief Tax consolidation Transfer pricing rules Thin capitalisation rule Controlled foreign company rule Tax year 10 years One year only for SMEs Yes Yes Yes Yes Yes Accounting period as stipulated under law or articles of incorporation which does not exceed one year Yes (interim tax payment for the first half of tax year) Within 3 months from the end of the month of the chosen tax year Advance payment of tax Return due date Withholding tax - Dividend 20% plus local income tax at 10% of withholding tax (under applicable tax treaty: 15%) - Interest 20% plus local income tax at 10% of withholding tax (under applicable tax treaty: 15%) - Royalty 20% plus local income tax at 10% of withholding tax (under applicable tax treaty: 15%) Capital registration tax 0.48% (or 1.44%) including surtax Social security contribution Varies Real property tax Varies Securities transaction tax 0.5% for unlisted shares (0.3% for the shares traded on KOSDQ or KONEX) Acquisition tax Varies Registration tax Varies Local inhabitant tax Varies VAT 10%
Page 1 and 2:
REPUBLIC OF Korea COUNTRY STARTER P
Page 3 and 4:
SURFACE AREA 99,400 square kmS GDP
Page 5 and 6:
Country starter pack Introduction t
Page 7 and 8:
Page 9 and 10:
Page 11 and 12: Country starter pack Introduction t
Page 21 and 22: Country starter pack Getting starte
Page 39 and 40: Country starter pack Sales & market
Page 47 and 48: Country starter pack Conducting bus
Page 55 and 56: Country starter pack Business pract
Page 61: Country starter pack Business pract
Page 83 and 84: Country starter pack Visiting Korea
Page 97 and 98: Country starter pack Engage with us
Page 99 and 100: Country starter pack Engage with us
Page 102: © August 2015, Asialink Business.
show all

Korea

Create successful ePaper yourself

Delete template?

Save as template?