1.

National Basic Tax Law
 

(1)

Introduction of New Enforcement Fine for Failure to Comply With Request for Documents in Tax Audit

In order to enhance the efficiency of the operation of national tax administration, the proposed amendment newly establishes an enforcement fine for failure to comply with requests for documents in a tax audit. The proposed amendment (i) provides an advance notice of a reasonable deadline (at least 30 days) for the submission of materials to parties that fail to submit the relevant books, documents, among others, without any justifiable reason during the tax audit process, and (ii) imposes an enforcement fine of up to 0.3% of the average daily income per day from the date when the deadline expires (or up to KRW 5 million per day if the amount is difficult to calculate). The amendment also allows a reduction of or exemption from the amount of the enforcement fine by up to 50% in consideration of the parties’ efforts and reasons for non-compliance. This enforcement fine will apply to cases where a taxpayer fails to perform its obligation to submit its books and relevant documents without a justifiable reason during a tax audit that commences on or after September 15, 2025.
 

2.

International Tax
 

(1)

Requirement to Submit Applications for Non-Taxation/Tax Exemption and Payment Statements for Domestic Source Personal Service Income and Payment Statements

Previously, the obligation to submit the application for non-taxation/exemption and payment statements for domestic source personal service income, along with domestic source business income, was exempted. However, in order to strengthen the management of tax sources for domestic source personal service income, the submission of applications for non-taxation/exemption and submission of payment statements for domestic source personal service income have been made mandatory. The amended provision shall apply to payments made on or after January 1, 2026.
 

(2)

Rationalization of Refund Claims Based on Arm’s Length Price Adjustment

In order to establish a basis for fair taxation in international transactions, (i) documents evidencing the appropriateness of an arm’s length pricing method, in addition to the previously required report on the transaction price adjustment, are to be submitted when filing a request for a refund due to an adjustment of arm’s length prices, (ii) the deadline for refund has been extended to up to six months from the date of receipt of the refund request, instead of the previous two months, and (iii) a supplementary provision on refund request-related materials has been introduced, allowing authorities to request additional information within a 30-day period in case the submitted documents are inadequate, with the supplementation period being excluded from the refund deadline calculation. The amended provision will apply to refund claims filed on or after January 1, 2025.
 

3.

Corporation Tax
 

(1)

Extension of Application Period for R&D Tax Credit and Integrated Investment Tax Credit for National Strategic Technologies

In order to strengthen the competitiveness of strategic industries, the R&D tax credit for national strategic technologies and new emerging growth/core technologies was extended from December 31, 2024 to December 31, 2029 (and in the case of semiconductors, extended to December 31, 2031). The tax credit for integrated investments in commercialization facilities for national strategic technologies was extended from December 31, 2024 to December 31, 2029. In case of investment in commercialization facilities for new emerging growth/core technologies, the tax credit for integrated investments can be applied without any separate deadline.
 

4.

Income Tax
 

(1)

Provisions on Ceiling of Non-Taxation on Employee Discount Benefits and Period of Prohibition of Resale

Pursuant to the non-taxation standards for employee discount amounts, the non-taxable amount of employee discounts is whichever is greater of (i) 20% of the market price, and (ii) KRW 2.4 million per year (the sum of the annual market price of all goods and services purchased). As a requirement for non-taxation, a period of prohibition of resale is set as follows: (i) two years for automobiles, large home appliances, high-priced goods, etc., and (ii) one year for other goods. The amended provision will apply to income generated on or after January 1, 2025.
 

(2)

Provision on Scope of Employee Discount Benefits Subject to Classification as Earned Income

The types of employee discounts that fall under the scope of earned income are as follows: (i) selling goods and services produced/supplied by the company at a price lower than the market price to executives, among others, (ii) providing subsidies to executives to support the purchase of goods and services produced/supplied by the company, (iii) providing subsidies to executives to support the purchase of goods and services produced/supplied by its affiliates, and (iv) selling goods and services produced/supplied by its affiliates to executives at a price lower than the market price and paying the discounted amount to its affiliates. According to the Presidential Decree of the Corporate Income Tax Law, the market price shall be determined within the scope of market price under Article 89 of the Presidential Decree of the Corporate Income Tax Law. However, if it is impossible to sell to general consumers or it is difficult to sell to employees other than the employee concerned, the discounted amount will be recognized as the market price. The amended provision will apply to income generated on or after January 1, 2025.
 

(3)

Supplementation of Criteria for Determination of Resident

Previously, a resident was defined as an individual who had stayed in a country for 183 days or more during one taxable period. However, under the amended provision, the definition of residency includes cases where a resident has resided for 183 days or more, taking into account the previous taxable period. To make the criteria for determining residency more rational, the specific scope of temporary departures that can be counted as periods of residence has been delegated to be defined by enforcement rules. The amended provision will apply to (i) the calculation of the residency periods from the tax period that includes the enforcement date of the enforcement decree, and (ii) the definition of resident starting from tax periods beginning on or after January 1, 2026.
 

5.

Value Added Tax
 

(1)

Expanded Scope of Submission of Sales/Payment Settlement Agency Materials

In order to enhance the transparency of tax sources, the proposed amendment expands the scope of business operators subject to submission of sales/payment settlement agency materials from domestic platform companies (e.g., online sales brokers, payment settlement agencies, etc.) to include platform companies overseas (e.g., non-residents and foreign corporations that engage in businesses similar to online sales brokerage and payment settlement agency businesses, etc.). Additionally, app market business operators have been introduced to the scope of businesses required to submit sales and payment settlement agency materials. These are defined as businesses engaging in the registration and sale of mobile content and facilitating transactions for users to purchase such content, pursuant to Article 2 (13) of the Telecommunications Business Act. The amended provision will apply to sales or payment services provided by an agent or broker on or after July 1, 2025.