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Newsletter | July 2016, Issue 2
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TAX
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Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and Those Companies Subject to the Comprehensive Report on International Transactions
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Under the amendments to Article 11 of the International Tax Coordination Law (“ITCL”) and Article 21-2 of the Presidential Decree of the ITCL, taxpayers are required to submit an Individual Company Report, and a Comprehensive Report on International Transactions (“Comprehensive Report”) if their annual sales amount exceeds KRW 100 billion (approx. USD 83 million) and annual cross-border intercompany transactions exceeds KRW 50 billion (approx. USD 42 billion).
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The new filing requirement is effective for fiscal years commencing on or after January 1, 2016.
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On April 14, 2016, the MOSF issued a notice in relation to preparing and submitting a Comprehensive Report.
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Key points of the MOSF notice are:
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Parties subject to be included in the Comprehensive Report:
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Entities subject to the consolidated financial statements to which a taxpayer is included should be included in the Comprehensive Report.
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Where a taxpayer is included in two or more consolidated financial statements, entities subject to the top-level consolidated financial statements should be included in the Comprehensive Report.
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If a multinational enterprise (“MNE”)’s business consists of more than two business groups, the Comprehensive Report may be prepared and submitted by each business group.
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If a MNE group is controlled by a holding company, the Comprehensive Report may be submitted by each subsidiary.
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Representative submitting the Comprehensive Report:
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Where two or more taxpayers are required to submit the same Comprehensive Report, the controlling entity or the entity closest to the ultimate controlling entity should submit the Comprehensive Report.
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Where two or more taxpayers are equally close to the ultimate controlling entity based on the ownership structure, either may submit the Comprehensive Report.
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In case where subsidiaries of a holding company under the Monopoly Regulation and Fair Trade Act carry on different businesses, each subsidiary can submit the Comprehensive Report separately.
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In this case, companies included in the consolidated financial statements of the subsidiary are subject to the Comprehensive Report.
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