Providing Excellence In Client Services
May 2014
Newsletter
Bi-monthly Tax Newsletter of Horwath Choongjung LLC
Contents
This newsletter is prepared and issued by Horwath Choongjung LLC
(Choongjung Accounting Corp.) on a bi-monthly basis and intended to
Korea - US Agreement on
Automatic Exchange of
Tax Information
provide foreign investors with an update on tax law changes in Korea
and other related subjects of special interests to foreign investors.
The information provided herein should not form a basis of any
decision as to a particular course of action, nor should it be relied upon
Tax News
as a substitute for a detailed advice in individual cases.
New Tax Ruling
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Please contact any of the following individuals with any inquiries or
comments.
Contacts: HS Kim, SY Kim, SJ Kim or GS Sim at Tax&BPO
Services of Horwath Choongjung [Tel: (82)(2) 316-6600, Fax: (82)(2)
775-5885, E-mail: post@crowehorwath.co.kr]
(You may find this newsletter and other items of interest at
http://www.crowehorwath.co.kr)
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Audit l Tax l Advisory
www.crowehorwath.co.kr
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May 2014
Korea - US
Agreement on
Automatic
Tax
Information
Exchange
Korea-US signed a Treaty on Tax related Information Exchange
The Ministry of Strategy and Finance announced that Korea has signed a treaty
agreeing to exchange tax related information with the US Department of
Commerce starting in 2015. Key elements of the agreement are as follows:
US to Korea
▪ US bank accounts held by
Accounts
information
of individuals
Korea to US
▪ Financial accounts containing
Koreans accruing more than
over US$50,000 (Savings
US$10 in annual interest
worth more than US$250,000
▪ Other bank accounts related to US
deposited in insurance companies)
source income
▪ US source income related
▪ Financial accounts containing
Accounts
financial accounts
over US$250,000 (no limits for
information
new accounts opened after
of corporations
enforcement of the agreement)
Other information
to be exchanged
▪ Interests, dividends, and other
▪ Interests, dividends, other
income
income, and account balances
▪ Banks, investment banks, insurance companies, etc.
Financial
▪ Government entities, central banks, international organizations, and public
institutions
pension funds are excluded.
to participate
Method of
▪ To be determined between tax authorities.
exchange
▪ Previous year information will be exchanged by September 30
When to exchange
of the following year (beginning in 2015).
▪ To be identified by using information on nationality, address, place of birth,
Identification of
telephone numbers, etc.
account holder
The foregoing agreement will be effective after the agreement is formally signed by
both countries and ratified by the national assembly.
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Audit l Tax l Advisory
www.crowehorwath.co.kr
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May 2014
Tax News
Tax support to help taxpayers in the Special Disaster Zones affected by
Sewol ferry disaster
The government declared Jindo-gun county and Ansan-si as special disaster
zones (“SDZ”) on April 20, 2014 to help support the taxpayers in the regions who
are affected by the sinking of Sewol ferry.
Eligible persons
a.
Victims and victim’s families, taxpayers in the SDZ, and fishermen who are
affected by the Sewol ferry disaster.
b.
Taxpayers engaging in tourism, lodging or shipping industries who suffered
from damage to their businesses due to the disaster.
Tax supports granted
a.
Extended deadline for filing and paying national taxes up to nine months.
b.
Extended due date for tax payment up to nine months for taxpayers in the
regions who have already received tax assessment notices.
c.
Non-enforcement of process for recovery of taxes in arrears up to one
year for the taxpayers who have failed to pay taxes by the deadlines.
d.
Extended period for application of earned income tax credit (“EITC”) from
May 1 - June 2 to May 1 - September 2 for the victims, victims’ families
and the residents in the SDZ. The period for delayed filing of EITC for
which only 90% of the subsidy is granted will be extended from June 3 September 2 to June 3 - December 2.
New Tax
Ruling
Input VAT on Golf membership for entertainment purpose
[Daebeob 2013 Du 14887, 2013.11.28]
Generally VAT paid on acquisition of asset is refundable or it must be added to the
acquisition cost of the asset so that the non-refunded VAT can reduce the capital
gains to be realized in the future when the asset is disposed. However, when a
golf membership is purchased obviously for entertainment purpose, the VAT on
purchase of such golf membership shall be neither refundable nor added to the
acquisition cost of the asset because the VAT shall be treated as entertainment
expenses subject to tax limit.
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Audit l Tax l Advisory
www.crowehorwath.co.kr
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May 2014
New Tax
Rulings
(continued)
Consolidated VAT return covering unregistered business places
[Daebeob 2013 Du 17800, 2013.12.26]
A taxpayer having two or more business places (e.g., head-office, branch office,
factory, etc.) should register each of the business places for VAT purpose at the
district tax office and file VAT return for each business place unless the taxpayer
applied for a consolidated VAT return filing. In the case where a taxpayer having
two or more business places failed to register all of the business places and filed
unauthorized consolidated VAT return with the tax office governing the head office,
the VAT return that should have been filed for each of the unregistered business
places shall not be regarded as duly filed and therefore tax penalties for non-filing
and non-issuing VAT invoices shall be imposed.
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Horwath Choongjung LLC
Member Crowe Horwath International
PMAA Jaram Building, 16th Floor, 78 Mapodaero,
Mapo-gu, Seoul 121-815, Korea
TEL: (82)(2) 316-6600 FAX: (82)(2) 775-5885 E-mail:
post@crowehorwath.co.kr
Website: http://www.crowehorwath.co.kr
Horwath Choongjung LLC is a member of Crowe Horwath International, a Swiss association. Each member firm of Crowe Horwath
separate and independent legal entity. Horwath Choongjung LLC and its affiliates are not responsible or liable for any acts or omissions
International or any other member of Crowe Horwath International and specifically disclaim any and all responsibility or liab
Crowe Horwath International or any other Crowe Horwath International member.
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Audit l Tax l Advisory
www.crowehorwath.co.kr
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