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ACT ON REAL NAME FINANCIAL TRANSACTIONS AND GUARANTEE OF SECRECY
ACT ON REAL NAME FINANCIAL TRANSACTIONS AND GUARANTEE OF SECRECY
INTRODUCTION
Details of Enactment and Amendment
- Enactment: This Act was enacted on December 31, 1997 as Act No. 5493, in order to solve partial defects, such as inconveniences
in financial transactions following verification of real names, and the anxieties about tax investigations, in the lightning enforcement
process of a system of real name financial transactions under the Presidential Emergency Order for Finance and Economy.
- Amendment: This Act has arrived at its present form after going through the amendments over seven occasions since its enactment.
The latest amendment was on March 12, 2004.
Main Contents
- Where any financial institution makes a financial transaction, it shall be based upon the real name of trade counterpart. A fine
for negligence of not more than 5 million won shall be levied on any officers or employees of the financial institution who have
violated it.
- A real name verification may be exempted in cases where there exist no real benefits in obliging to verify the real name, such as
continuous transactions by a bank account whose real name has already been verified, receipt of public imposts, remittance of not
more than one million won as prescribed by the Presidential Decree, and purchase of foreign currencies.
- Persons engaged in the financial institutions shall not provide any information on financial transactions of the counterparts to
other persons or divulge it, unless obtaining any request or consent in writing of the counterparts: Provided, That an exception
shall be acknowledged in cases where a provision of financial transaction information is requested under an order by a court to submit
it or with a warrant issued by a court, or any financial supervisory organ requests a provision of such information in connection
with its supervisory or inspective duties.
- The request of financial transaction information from a financial institution shall be made by means of the standard form containing
the trade period subject to the request, legal ground for the request, and personal information (including names and posts) of the
person in charge and the responsible person in the institution to be requested.
- Where a financial institution which has furnished financial transaction information fails to notify the holder of the title deed
concerned of such fact within 10 days from the date of furnishing (where such notification is deferred, the date on which the deferred
period of notification expires), it shall be punished by a fine for negligence not exceeding five million won.
- Where a financial institution is requested by a requester for financial transaction information to defer the notification of furnishing
such information, the previous Act prescribes that the financial institution may defer such notification repeatedly within the limit
of 6 months for each time, whereas the amended Act prescribes that the financial institution may defer such notification within the
limit of 6 months, and, if necessary, extend the period of notification only twice within the limit of 3 months for each time, with
the exception of the cases of tax investigation.
- Where a financial institution has received a request for the furnishing of financial transaction information or has furnished financial
transaction information, it shall keep a record of the personal information of the requester, the contents of the request, the personal
information of the person who has furnished such information, the contents of the information furnished, etc., for five years, in
the standard form as determined by the Minister of Finance and Economy. If the financial institution violates the above matters,
it shall be punished by a fine for negligence not exceeding five million won.
- A taxation applying 90 percent withholding tax rate shall be imposed on the interest incomes and dividend incomes accrued from non-real
name financial transactions.
- With respect to the funds converted into real names after this Act enters into force in order to facilitate conversion of non-real
name financial assets into real names, no investigation into their sources shall be made, but exceptions shall be made in cases where
the amount exceeding 30 million won is converted into the name of a person below the age of 30, or where any suspicions of tax evasions
are discovered by other taxable data.
For Further Information, Please Contact :
- Ministry of Finance and Economy
Tel : (82-2)-503-9254 Fax : (82-2)-503-9256
- Website : www.mofe.go.kr
ACT ON REAL NAME FINANCIAL TRANSACTIONS AND GUARANTEE OF SECRECY
Act No. 5493, Dec. 31, 1997
Amended by Act No. 5552, Sep. 16, 1998
Act No. 6051, Dec. 28, 1999
Act No. 6062, Dec. 28, 1999
Act No. 6429, Mar. 28, 2001
Act No. 6682, Mar. 30, 2002
Act No. 7115, Jan. 29, 2004
Act No. 7189, Mar. 12, 2004
Article 1 (Purpose)
The purpose of this Act is to contribute to the realization of economic justice and the sound development of the national economy
by ensuring the normalization of financial transactions through implementing financial transactions based on real names and protecting
confidentiality thereof.
Article 2 (Definitions)
The terms used in this Act shall be defined as follows:
1. "Financial institutions" means those falling under one of the following items:
(a) The Bank of Korea, the Korea Development Bank, the Export-Import Bank of Korea, the Industrial Bank of Korea and financial institutions
under the Banking Act;
(b) The Long-Term Credit Bank under the Long-Term Credit Bank Act;
(c) Short-term finance companies under the Short-Term Financing Business Act;
(d) Merchant banking corporations under the Merchant Banking Corporation Act;
(e) Savings banks and their federation under the Savings banks Act;
(f) Agricultural cooperatives and the national federation under the Agricultural Cooperatives Act;
(g) Fisheries cooperatives and the national federation under the Fisheries Cooperatives Act;
(h) Livestock cooperatives and the national federation under the Livestock Cooperatives Act;
(i) Ginseng cooperatives and the national federation under the Ginseng Cooperatives Act;
(j) Credit cooperatives and the central association under the Credit Cooperatives Act;
(k) Community credit cooperatives and the Korean Federation of Community Credit Cooperatives under the Saemaul Savings Depository
Act;
(l) Trust companies under the Trust Business Act, and management companies under the Securities Investment Trust Business Act;
(m) Securities companies, securities finance companies, brokerage companies, and transfer agents under the Securities and Exchange
Act;
(n) Insurers under the Insurance Business Act;
(o) Government postal agencies under the Postal Savings and Insurance Act ; and
(p) Other institutions as determined by the Presidential Decree.
2. "Financial assets" means money, negotiable securities, and other similar assets such as deposits, installment savings,
mutual installments, mutual savings, depositions, investments, trust assets, stocks, bonds, beneficiary certificates, equity securities,
notes, checks, liability certificates which are handled by financial institutions, and other similar items as determined by the Ordinance
of the Ministry of Finance and Economy;
3. "Financial transactions" means transactions in which financial institutions receive, buy or sell, redeem, intermediate,
discount, issue, reimburse, refund, take charge of, register or exchange financial assets, or pay interest, discounts or dividends
thereof, or pay them on a proxy basis and other financial transactions as determined by the Ordinance of the Ministry of Finance
and Economy; and
4. "Real name" means the name entered in resident registration cards, names entered in the business registration certificates,
and other names as determined by the Presidential Decree.
Article 3 (Real Name Financial Transactions)
(1) Financial institutions shall conduct financial transactions on the basis of real names of the persons involved in transactions
(hereinafter referred to as "real name").
(2) Notwithstanding the provisions of paragraph (1), financial institutions may not have to verify real names in the cases where transactions
fall under one of the following subparagraphs:
1. Continuous transactions through such accounts whose real names have already been confirmed as well as transactions such as receipt
of public charges, remittances of not more than one million won, etc., as determined by the Presidential Decree.
2. Transactions such as purchase of foreign currencies, receipt of deposits denominated in foreign currencies or transfers of foreign-currency
denominated bonds during the period prescribed by the Presidential Decree; and
3. Transactions of bonds which fall under one of the following items (hereinafter referred to as the "Specific Bonds") and
are issued under the issue terms such as the period of issuance, interest rate, and maturity as determined by the Minister of Finance
and Economy between the date of enforcement of this Act and December 31, 1998:
(a) Bonds issued as determined by the Presidential Decree for the purpose of contributing to the stabilization of employment security,
improvement of workers' vocational abilities and stabilization of livelihood;
(b) Foreign currency denominated bonds such as Foreign Exchange Equilibrium Fund Bonds under Article 14 of the Foreign Exchange Control
Act;
(c) Bonds issued to support the restructuring of small and medium businesses, as determined by the Presidential Decree;
(d) Securities finance bonds under Article 160 of the Securities and Exchange Act; and
(e) Other bonds issued for the stabilization of the people's livelihood and the sound development of the national economy, as determined
by the Presidential Decree.
(3) Verification methods and procedures and other necessary matters in real name financial transactions shall be determined by the
Ordinance of the Ministry of Finance and Economy.
Article 4 (Protection of Confidentiality in Financial Transactions)
(1) Employees of financial institutions shall not provide or disclose to others any information or data concerning the contents of
financial transactions (hereinafter referred to as the "transaction information") without obtaining written request or
consent from the holder of a title deed (referring to consignors or beneficiaries in the case of trust) and no person shall request
such employees of financial institutions to provide the transaction information. However, the foregoing shall not apply to the cases
of providing or asking to provide the transaction information within the minimum limit of need for the purpose of its use among those
falling under one of the following items:
1. Providing the transaction information by the order of submission from the court or by a warrant issued by a judge;
2. Providing tax information ordered under the text laws, and providing the transaction information needed for the confirmation of
inheritance and donation properties by the head of the competent government office, confirmation of evident data sufficiently incriminating
suspected tax evasion, inquiries of delinquent tax payer's properties, and questions and investigations under the tax laws for reason
falling under one of the items Article 14(1) of the National Tax Collection Act;
3. Providing the transaction information by the Governor of Financial Supervisory Service and the President of the Deposit Insurance
Corporation, in accordance with the resolution of the relevant investigation committee of the National Assembly under the Act on
Inspection and Investigation of the Administration of Government, among the transaction information needed for the investigation
of the administration of Government;
4. Providing the transaction information needed for the supervision and inspection of financial institutions by the Minister of Finance
and Economy, the Financial Supervisory Commission (referring to the Securities Futures Commission, in case of investigation of unfair
trades in the securities or futures markets), the Governor of Financial Supervisory Service and the President of the Deposit Insurance
Corporation, where any of the following items applies and where it is to be presented to the investigation committees pursuant to
subparagraph 3:
(a) Where it is necessary to investigate inside trading and unfair trade practices;
(b) Where it is necessary to detect financial misconduct such as embezzlement of deposits from customers or cash withdrawal after
receiving payments without sources;
(c) Where it is necessary to investigate unsound financial transaction practices such as receipt of compulsory deposits and prior
issuance of banker's checks;
(d) Where it is necessary to investigate the violation of the statutes and decrees such as a violation of real name financial transactions,
off-book transactions, lending to investors or excess of credit ceiling on a single borrower; and
(e) Where it is necessary for the deposit insurance services under the Depositors Protection Act and to carry out the functions of
making a list of depositors by the President of the Deposit Insurance Corporation under the Act on the Structural Improvement of
the Financial Industry.
5. Providing the transaction information needed in the course of business within the same financial institution or among financial
institutions; and
6. Providing the transaction information under the law concerned while requiring to be compulsorily opened to unspecified persons
under other laws.
(2) Any person who requests providing of the transaction information pursuant to paragraph (1) 1 through 4, or 6 shall do so at a
specific branch office of a financial institution by means of the standard form as stipulated by the Minister of Finance and Economy
containing the following subparagraphs: Provided, That where any person intends to make a request for the provision of transaction
information, etc. referred to in paragraph (1) 1 and transaction information, etc. referred to in paragraph (1) 2 , both of which
are concerned with a person who is recognized to be suspected of having evaded the income tax or the corporate tax, which is corroborated
by indisputable data on his holding period of real estate (including any right to such real estate; hereafter the same shall apply
in this paragraph), the number of his real estate, the scale of his transaction of real estate and his ways of executing real estate
transaction, etc. in connection with the real estate transaction prescribed by the Presidential Decree and that it is necessary to
confirm the fact of his evading taxes (including any person who has acted as an agent or a broker for the transaction of the relevant
real estate) or transaction information, etc. that are necessary to inquire about the property of any defaulter whose arrearage amounts
to not less than 10 million won under the conditions as prescribed by the Presidential Decree, he may request the department which
keeps and manages transaction information to provide such information:
1. Personal information on the holder of a title deed;
2. Trade period subject to a request;
3. Legal ground for a request;
4. Objectives of the use of information;
5. Contents of transaction information required; and
6. Personal information, such as the name and duties of the person in charge and the responsible person in the requiring institution.
(3) Where employees of financial institutions receive a request for the transaction information in violation of the provisions of
paragraph (1) or (2) of this Article, they shall refuse it.
(4) Persons who have come to know the transaction information pursuant to any subparagraph of paragraph (1) of this Article (including
Article 5 (1) 1 through 4 of the previous Real Name Financial Transactions Act and each subparagraph of Article 4 (1) of the Presidential
Financial and Economic Emergency Order on Real Name Financial Transactions and Guarantee of Secrecy) shall not provide or disclose
such transaction information to other persons, or use such transaction information for purposes other than the original use thereof,
and no person shall request whoever came to know of such transaction information to provide such transaction information.
(5) Any person who has obtained the transaction information provided or disclosed in violation of paragraph (1) or (4) (including
those who have subsequently obtained the transaction information from them) shall not provide or disclose said transaction information
to others once they become aware of the fact of violation.
(6) Where the provision of transaction information is requested pursuant to the provisions of Acts falling under any of the following
subparagraphs, it shall be based upon the standard from as stipulated by the Minister of Finance and Economy under paragraph (2),
notwithstanding the provisions of relevant Acts:
1. Article 27 (2) of the Board of Audit and Inspection Act;
2. Article 134 (2) of the Act on the Election of Public Officials and the Prevention of Election Malpractices;
3. Article 8 (5) of the Public Service Ethics Act;
4. Article 50 (5) of the Monopoly Regulation and Fair Trade Act;
5. Article 83 (1) and (2) of the Inheritance Tax and Gift Tax Act;
6. Article 10 (3) of the Act on Report and Use, etc. of Specific Financial Transaction Information; and
7. Article 6 (1) of the Act on the Submission and Management of Taxation Data.
Article 4-2 (Notice of Fact to Provide Transaction Information)
(1) A Financial institution shall, where it has provided the transaction information pursuant to the written consent of the holder
of a title deed, or has provided it under Article 4 (1)1, 2(excluding the case of taxable data, etc. liable to submit under the Acts
related to taxes), 3 and 6, notify in writing the holder of a title deed of the major contents, objective of use, person to be provided,
and date of such provision, etc. within 10 days from that date(where such notice is deferred under paragraph (2) or (3), the date
on which the deferred period of notice is expired).
(2) A Financial institution shall, upon receipt of a request in writing, from a requester for transaction information subject to notice,
for a deferment of notice due to reasons falling under any of the following subparagraphs, defer such notice for the requested deferment
period(6 months, where it has been requested due to reasons falling under subparagraph 2 or 3, and such requested deferment period
is in excess of 6 months):
1. Where the relevant notice carries a matter of concern about threatening the safety of human life or body;
2. Where the relevant notice carries a matter of obvious concern about obstructing the progress of fair legal procedures such as destruction
of evidence or threat to witness; or
3. Where the relevant notice carries a matter of obvious concern about obstructing, or delaying to excess, the progress of administrative
procedures such as an interrogation or investigation.
(3) A Financial institution shall, where a requester for transaction information presents that the reasons falling under any subparagraph
of paragraph (2) is continued, and repeatedly requests in writing a deferment of notice, defer such notice for the requested deferment
period within the limit of 3 months for each time, limited to only twice from the date of such request(excluding the case of paragraph
(2) 1): Provided, That where a requester for providing the transaction information under Article 4 (1) 2(excluding the case of taxable
data, etc. liable for submission under the Acts related to taxes) requests a deferment of notice, it shall defer such notice for
the requested deferment period within the limit of 6 months from such date.
(4) Expenses spent by any financial institution to notify the title holder of the fact of the provision of transaction information,
etc. under paragraph (1) shall be borne by anyone who has asked for furnishing such transaction information, etc. pursuant to Article
4 (1) under the conditions as prescribed by the Presidential Decree.
(5) Where the provision of transaction information is requested pursuant to the provisions of Acts falling under any of the following
subparagraphs, the provisions of paragraphs (1) through (4) shall be apply:
1. Article 27 (2) of the Board of Audit and Inspection Act;
2. Article 134 (2) of the Act on the Election of Public Officials and the Prevention of Election Malpractices;
3. Article 8 (5) of the Public Service Ethics Act;
4. Article 50 (5) of the Monopoly Regulation and Fair Trade Act;
5. Article 83 (1) and (2) of the Inheritance Tax and Gift Tax Act; and
6. Article 6 (1) of the Act on the Submission and Management of Taxation Data.
Article 4-3 (Record and Management of Provided Details of Transaction Information)
(1) A Financial institution shall record and manage, pursuant to the standard form as stipulated by the Minister of Finance and Economy,
information containing the following subparagraphs, in case where it has provided the transaction information to other persons than
the holder of a title deed pursuant to a written consent of the holder of a title deed, has received a request for the provision
of transaction information from other persons than the holder of a title deed under Article 4 (1) 1 and 2(excluding the case of taxable
data, etc. liable for submission under the Acts related to taxes), 3, 4 or 6, or has provided the transaction information to other
persons than the holder of a title deed:
1. Personal information on a requester(person in charge and responsible person), details and the date of such request;
2. Personal information on a provider(person in charge and responsible person) and the date of provision;
3. Details of provided transaction information;
4. Legal ground for the provision; and
5. Date on which the financial institution has notified the holder of a title deed of the information.
(2) Records under paragraph (1) shall be preserved for 5 years from the date of the provision of transaction information(the date
of receiving a request for such provision, where it has been refused).
(3) Where the provision of transaction information is requested under Acts falling under any of the following subparagraphs, the provisions
of paragraphs (1) and (2) shall be apply:
1. Article 27 (2) of the Board of Audit and Inspection Act;
2. Article 134 (2) of the Act on the Election of Public Officials and the Prevention of Election Malpractices;
3. Article 8 (5) of the Public Service Ethics Act;
4. Article 50 (5) of the Monopoly Regulation and Fair Trade Act;
5. Article 83 (1) and (2) of the Inheritance Tax and Gift Tax Act;
6. Article 10 (3) of the Act on Report and Use, etc. of Specific Financial Transaction Information; and
7. Article 6 (1) of the Act on the Submission and Management of Taxation Data.
Article 4-4 (Duties of Minister of Finance and Economy)
The Minister of Finance and Economy shall grasp the statistical data on requests for the transaction information and the provision
thereof under this Act or other Acts and shall, if requested, make report to the National Assembly.
Article 5 (Differential Taxation on Income from Non-Real Name Assets)
With respect to interest and dividend incomes generated from the transaction of financial assets without using real name, the withholding
income tax rate shall be 90/100 (20/100 (15/100 on and after January 1, 2001) on interest income generated from the Specific Bonds),
and they shall not be included in the calculation of tax base for the composite income under Article 14 (2) of the Income Tax Act.
Article 6 (Penal Provisions)
(1) A person who violates the provisions of Article 4 (1) or (3) through (5) shall be punished by imprisonment of not more than five
(5) years or by a fine of not exceeding thirty million Won.
(2) Penalty of imprisonment and fines pursuant to paragraph (1) of this Article may be concurrently imposed.
Article 7 (Negligence Fine)
(1) Officers or employees of financial institutions who violate the provisions of Articles 3, 4-2 (1) and (5) (limited to any case
where the provisions of Article 4-2 (1) are applied) and 4-3 shall be punished by negligence fine of not exceeding five million (5,000,000)
Won.
(2) Negligence fine pursuant to paragraph (1) shall be imposed and collected by the Minister of Finance and Economy under the conditions
as determined by the Presidential Decree.
(3) Any person who objects to the imposition of the negligence fine pursuant to paragraph (2) may raise an objection to the Minister
of Finance and Economy within 30 days from the date of notice thereof.
(4) Where a person imposed with the negligence fine under paragraph (2) raises an objection pursuant to paragraph (3), the Minister
of Finance and Economy shall notify the court of jurisdiction without delay. Upon receiving such notification, the court shall adjudicate
the case of negligence fine pursuant to the Non-Contentious Case Litigation Procedure Act.
(5) Where no objection is raised within the period of time mentioned in paragraph (3) and yet no negligence fine is paid, the fine
shall be collected according to the examples of the disposition on national tax in arrears.
Article 8 (Double Penal Provisions)
When a representative of a juristic person, or an agent, employee or other servant of a juristic person or individual violates Article
6 or 7 with respect to any business or duties of the said juristic person or individual, fine or negligence fine as stipulated in
each of the concerned provisions shall also be imposed on that juristic person or that individual in addition to the punishment against
the actual offenders.
Article 9 (Relations with Other Laws)
(1) In case this Act is in conflict with the other laws, this Act shall prevail.
(2) Notwithstanding the provisions of paragraph (1), the laws that took precedence over the Presidential Financial and Economic Emergency
Order on Real Name Financial Transactions and Guarantee of Secrecy at the time of its enforcement shall prevail in application.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Repeal of Emergency Order)
The Presidential Financial and Economy Emergency Order on Real Name Financial Transactions and Guarantee of Secrecy (hereinafter referred
to as the "Emergency Order") shall be hereby repealed.
Article 3 (General Transitional Measures)
Except as otherwise provided by this Act, the guarantee of secrecy in financial transactions, conversion of assumed or borrowed name
for financial assets into real ones and taxation at the source of income from financial assets prior to the entry into force of this
Act shall be governed by the previous Emergency Order.
Article 4 (Transitional Measures on Penal Provisions)
The application of penal provisions and fines for negligence to acts committed prior to the entry into force of this Act shall be
governed by the previous Emergency Order.
Article 5 (Verification of Real Names for Existing Financial Assets)
(1) For holders of title deed for financial assets whose real names are not verified before the entry into force of this Act from
among financial assets for which financial accounts have been opened prior to the entry into force of the previous Emergency Order
(hereinafter referred to as "existing financial assets"), financial institutions shall verify whether any name is real
when the first financial transactions are executed after the entry into force of this Act.
(2) Financial institutions shall not pay, redeem, refund or repurchase existing financial assets which are not verified pursuant to
paragraph (1) or for which it is confirmed that they are not real names.
(3) The provisions of Articles 7 and 8 shall apply mutatis mutandis to cases in which the officers or employees of financial institutions
violate the provisions of paragraph (1) or (2). In this case, the term "Article 3" of Article 7 (1) shall be deemed to
read "Article 5 (1) or (2) of the Addenda".
Article 6 (Imposition of Charges on Those who have Converted into Real Names)
(1) Financial institutions shall collect withholding taxes as charges at the source of the amount calculated by applying 50/100 to
the value of financial assets as of the date of entry into force of the previous Emergency Order and pay them to the Government by
the 10th day of the following month in which they are collected, where customers with existing financial assets convert their names
into real ones after the entry into force of this Act.
(2) Where it is deemed difficult for customers with existing financial assets to convert their names into real ones for any cause
as determined by the Presidential Decree but where they convert their names into real ones within one month from the date on which
such cause disappears, charges shall not be imposed notwithstanding the provisions of paragraph (1).
(3) Where, in case of paragraph (1), charges collected or to be collected by financial institutions are not paid in full within the
time limit, the Minister of Finance and Economy shall collect additional dues equivalent to 10/100 of the charges, plus unpaid charges,
from the financial institutions.
(4) The Minister of Finance and Economy may delegate the functions on the collection, payment, delinquent disposition and refund of
charges and additional dues referred to in paragraphs (1) and (3) (hereinafter referred to as "collection") to the Commissioner
of the National Tax Administration.
(5) The National Tax Collection Act, the Framework Act on National Taxes and the Income Tax Act shall apply mutatis mutandis with
respect to the collection of charges and additional dues referred to in paragraphs (1) and (3). In this case, the term "national
taxes" shall be deemed to read "charges".
Article 7 (Taxation at Source for Income Tax on Real Name- Converted Assets)
(1) For interest and dividend income derived from existing financial assets converted into real names after the entry into force of
this Act, financial institutions shall collect withholding taxes at the source of the total amount of deficiencies in withholding
taxes referred to in any of the following subparagraphs, and shall pay them to the Government by the 10th day of the following month:
1. Balance when the existing income tax amount collected at the source is deducted from the amount of withholding taxes at the source
of income calculated by applying the withholding tax rate referred to in Article 5 for interest and dividend income derived after
the entry into force of this Act;
2. Balance when the existing income tax amount collected at the source is deducted from the amount of withholding taxes at the source
of income calculated by applying the withholding tax rate referred to in Article 9 of the previous Emergency Order for interest and
dividend income derived before the entry into force of this Act from October 13, 1993; and
3. Amount of withholding taxes at the source of income tax calculated pursuant to Article 8 (1) of the previous Emergency Order for
interest and dividend income derived until October 12, 1993.
(2) The amount of income tax collected at the source pursuant to paragraph (1) shall be within the limit of the value of financial
assets concerned as of the date of conversion into real names.
(3) The provisions of Article 158 (1) of the Income Tax Act shall not apply where financial institutions tax at the source for income
tax and pay it pursuant to paragraph (1).
Article 8 (Special Cases for Tax Investigations on Real Name-Converted Financial Assets)
(1) Notwithstanding tax Acts, investigations shall not be made into the source of funds for existing financial assets converted into
real names after the entry into force of this Act, and obligations to pay taxes which arose prior to the entry into force of the
previous Emergency Order based on the tax data for financial assets concerned shall not be imposed: Provided, That this shall not
apply in any of the following subparagraphs:
1. Where the financial assets have been converted into the real name of a person of less than thirty years of age and the value exceeds
thirty million won; and
2. Where taxes are imposed based on the tax data other than the financial assets.
(2) Financial institutions shall notify the Commissioner of the National Tax Administration of the converted contents on the financial
assets referred to in paragraph (1) 1 as determined by the Presidential Decree.
(3) The provisions of paragraph (1) shall also apply to financial assets which have been converted into real names and reported to
the Commissioner of the National Tax Administration prior to the entry into force of this Act.
Article 9 (Special Cases for Tax Investigations on Transactions of Specific Bonds)
Notwithstanding tax Acts, investigations shall not be made into the source of funds for bearers of specific bonds, and obligations
to pay taxes which arose prior to the purchase of such bonds based on the tax data shall not be imposed: Provided, That this shall
not apply where taxes are imposed based on the tax data other than the funds which purchased the bonds.
Article 10 (Special Cases for Tax Investigations on Small and Medium Business Investments)
(1) Where any resident referred to in Article 1 of the Income Tax Act falls under any of the following subparagraphs during the period
as determined by the Presidential Decree, investigations shall not be made into the sources of funds in connection with such contributions
or investments for such funds notwithstanding tax Acts, and obligations to pay taxes which arose prior to the contribution or investment
based on the tax data shall not be imposed: Provided, That this shall not apply where taxes are imposed based on the tax data other
than the funds contributed or invested:
1. Where he contributes to any small and medium business (limited to juristic persons) as determined by the Presidential Decree;
2. Where he contributes to any small and medium enterprise establishment investment company, small and medium enterprise establishment
investment association or other similar juristic person or association under the Support for Small and Medium Enterprise Establishment
Act, as determined by the Presidential Decree;
3. Where he contributes to any financial institution which provides assisting funds to small and medium businesses as determined by
the Presidential Decree; and
4. Where he converts beneficiary certificates of any venture business investment trust referred to in Article 13-3 (1) 2 of the Regulation
of Tax Reduction and Exemption Act.
(2) Any resident who intends to be subject to the provisions of paragraph (1) 3 shall contribute imposts on contribution (hereinafter
referred to as "contribution imposts") to any credit guarantee institution as determined by the Presidential Decree.
(3) The provisions of the main sentence of paragraph (1) shall not apply in cases falling under any of the following subparagraphs:
1. Where a person of less than thirty years of age contributes or invests;
2. Where he contributes or invests in the method of transfer of another's contribution quotas or beneficiary certificates; and
3. Where he falls under any of the following subparagraphs before five years have elapsed from the date of contribution or investment:
Provided, That this shall not apply due to the contributor's or investor's death or other causes as determined by the Presidential
Decree:
(a) Where he transfers or recovers his contribution quotas referred to in paragraph (1) 1 through 3; and
(b) Where he transfers beneficiary certificates of any venture business investment trust referred to in paragraph (1) 4, or a management
company referred to in Article 2 (3) of the Securities Investment Trust Business Act repurchases the beneficiary certificates; and
4. Where it is deemed that he has contributed or invested to evade taxes, as determined by the Presidential Decree.
(4) The contribution imposts referred to in paragraph (2) shall be an amount calculated by applying the following bearing rates to
respective amounts of contributions:
<Amount of Contributions>
Not more than one billion won 10/100 of the amount of contributions
More than one billion won One hundred million won + 15/100 of
the amount exceeding one billion won
(5) The contribution method of contribution imposts and other necessary matters shall be determined by the Presidential Decree.
Article 11 (Promoting Real Name Financial Transactions and Total Taxation)
Organizations in exclusive charge established under Article 11 of the previous Emergency Order shall exist until the time as determined
by the Presidential Decree.
Article 12 Deleted. <By Act No. 6051, Dec. 28, 1999>
Article 13 (Amendment of Other Acts and Relations with Other Acts and Subordinate Statutes)
(1) through (7) Omitted.
(8) Where other Acts and subordinate statutes cite the previous Emergency Order or its provisions at the time of the entry into force
of this Act, this Act or the corresponding provisions of this Act shall be deemed to have been cited if this includes the provisions
corresponding to them.
Article 14 (Examples of Application pursuant to Amendment of Other Acts)
(1) The amended provisions of the Inheritance Tax and Gift Tax Act under Article 13 (3) of the Addenda shall apply to the determination
of inheritance taxes or gift taxes levied for the first time after the entry into force of this Act.
(2) The amended provisions of the Act on Special Tax for Rural Development under Article 13 (7) of the Addenda shall apply to the
payment of income derived for the first time after January 1, 1998.
ADDENDA <Act No. 5552, Sep. 16, 1998>
Article 1 (Enforcement Date)
This Act shall enter into force on the first day of the month following the month to which the date of its promulgation belongs.
Articles 2 and 3 Omitted.
Article 4 (Applicable Cases following Amendments to Other Acts)
(1) Omitted.
(2) The amended provisions of the Act on Real Name Financial Transactions and Guarantee of Secrecy referred to in Article 3 (2) of
these Addenda shall apply to the payment of income which is accrued on or after the enforcement date of this Act: Provided, That
with respect to the bonds, etc. referred to in Article 46 (1), the amended provisions shall apply to those which are issued on or
after the enforcement date of this Act.
ADDENDA <Act No. 6051, Dec. 28, 1999>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000: Provided, That ...(Omitted)... the provisions of Article 12 of the Act on Real
Name Financial Transactions and Guarantee of Secrecy (Act No. 5493) amended under the provisions of Article 6 (2) of this Addenda
shall enter into force on January 1, 2001.
Article 2 (General Cases of Application)
This Act shall apply to the income which is accrued on or after the enforcement date of this Act: Provided, That the amended provisions
of Articles 14, 62 and 129 and the amended provisions of Article 12 of the Addenda of the Act on Real Name Financial Transactions
and Guarantee of Secrecy, Act No. 5493, under Article 6 (2) of these Addenda shall apply to the income which is accrued and paid
on or after January 1, 2001, and the amended provisions of Articles 81 (1) and 87 (2) shall apply with respect to the taxable period
to which the promulgation date of this Act belongs.
Articles 3 through 6 Omitted.
Article 7 (Examples of Application pursuant to Amendment to Other Acts)
The provisions of the Act on Special Rural Development Tax amended under Article 6 (1) of this Addenda or the provisions of Article
5 of the Act on Real Name Financial Transactions and Guarantee of Secrecy amended under Article 6 (2) of this Addenda shall apply
to the portion of income accrued on and after the date of its promulgation. In this case, the tax rate (15/100) to be applied on
and after January 1, 2001 shall apply to the portion of income accrued on and after January 1, 2001.
ADDENDA <Act No. 6062, Dec. 28, 1999>
Article 1 (Enforcement Date)
This Act shall enter into force on March 1, 2000.
Articles 2 and 3 Omitted.
ADDENDA <Act No. 6429, Mar. 28, 2001>
Article 1 (Enforcement Date)
This Act shall enter into force on the date as prescribed by the Presidential Decree within the limit not exceeding two years from
the date of its promulgation. (Proviso Omitted.)
Articles 2 through 11 Omitted.
ADDENDUM <Act No. 6682, Mar. 30, 2002>
This Act shall enter into force on July 1, 2002.
ADDENDUM <Act No. 7115, Jan. 29, 2004>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 7189, Mar. 12, 2004>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 18 Omitted.
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