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Laws of the Republic of Korea |
1
FRAMEWORK ACT ON NATIONAL TAXES
Act No. 2679, Dec. 21, 1974
Amended by Act No. 2925, Dec. 22, 1976
Act No. 2932, Dec. 22, 1976
Act No. 3097, Dec. 5, 1978
Act No. 3199, Dec. 28, 1979
Act No. 3471, Dec. 31, 1981
Act No. 3746, Aug. 7, 1984
Act No. 3754, Dec. 15, 1984
Act No. 3755, Dec. 15, 1984
Act No. 4177, Dec. 30, 1989
Act No. 4277, Dec. 31, 1990
Act No. 4561, Jun. 11, 1993
Act No. 4672, Dec. 31, 1993
Act No. 4743, Mar. 24, 1994
Act No. 4810, Dec. 22, 1994
Act No. 4981, Dec. 6, 1995
Act No. 5189, Dec. 30, 1996
Act No. 5193, Dec. 30, 1996
Act No. 5454, Dec. 13, 1997
Act No. 5579, Dec. 28, 1998
Act No. 5993, Aug. 31, 1999
Act No. 6070, Dec. 31, 1999
Act No. 6299, Dec. 29, 2000
Act No. 6303, Dec. 29, 2000
Act No. 6782, Dec. 18, 2002
Act No. 7008, Dec. 30, 2003
Act No. 7032, Dec. 31, 2003
Act No. 7329, Jan. 5, 2005
Act No. 7582, Jul. 13, 2005
Act No. 7796, Dec. 29, 2005
Act No. 7930, Apr. 28, 2006
Act No. 8139, Dec. 30, 2006
Act No. 8372, Apr. 11, 2007
Act No. 8521, Jul. 19, 2007
Act No. 8830, Dec. 31, 2007
Act No. 8860, Feb. 29, 2008
CHAPTER GENERAL PROVISIONS
SECTION 1 Common Provisions
Article 1 (Purpose)
Article 2 (Definitions)
FRAMEWORK ACT ON NATIONAL TAXES
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Article 3 (Relation with Tax-Related Acts, etc.)
SECTION 2 Period and Term
Article 4 (Computation of Period)
Article 5 (Exceptional Rule of Term)
Article 5-2 (Report by Mail and by Electron)
Article 6 (Extension of Time Limit Due to Natural Disaster, etc.) Article 6-2 (Revocation of Extension of Time Limit for Payment) Article 7 (Extension of Time Limit due to Delayed Service) SECTION 3 Service of Documents
Article 8 (Service of Documents)
Article 9 (Report on Place to be Served)
Article 10 (Service Method of Documents)
Article 11 (Service by Public Notification)
Article 12 (Taking Effect of Service)
SECTION 4 Personality
Article 13 (Organization Considered as Juristic Person) CHAPTER IMPOSITION OF NATIONAL TAX AND APPLICATION OF TAX-RELATED ACTS
SECTION 1 Principles of Imposition of National Tax Article 14 (Actual Assessment)
Article 15 (Good Faith and Sincerity)
Article 16 (Ground of Assessment)
Article 17 (Follow-up Management of Tax Reduction and Examination) Article 18 (Standard for Tax-Related Acts Interpretation and Prohibition of Retroactive Taxation)
Article 19 (Limitation of Discretion of Tax Officials) Article 20 (Respect for Corporate Accounting)
CHAPTER TAX LIABILITY
SECTION 1 Creation and Determination of Tax Liability Article 21 (Establishment Date of Tax Liability)
Article 22 (Determination of Tax Liability)
Article 22-2 (Effect of Correction, etc.)
SECTION 2 Succession of Liability for Tax Payment Article 23 (Succession of Liability for Tax Payment Due to Merger of Juristic Persons) Article 24 (Succession of Liability for Tax Payment Due to Inheritance) SECTION 3 Joint and Several Liability for Tax Payment Article 25 (Joint and Several Liability for Tax Payment) Article 25-2 (Application of Civil Act Mutatis Mutandis to Joint and Several Liability FRAMEWORK ACT ON NATIONAL TAXES
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for Tax Payment)
SECTION 4 Extinction of Liability to Pay
Article 26 (Extinction of Liability to Pay)
Article 26-2 (Period for Excluding Assessment of National Tax) Article 27 (Extinctive Prescription of Right to Collect National Taxes) Article 28 (Interruption and Suspension of Prescription) Article 29 (Kinds of Security)
Article 30 (Appraisal of Security)
Article 31 (Method to Offer Security)
Article 32 (Change and Supplement of Security)
Article 33 (Payment and Collection by Security)
Article 34 (Release of Security)
CHAPTER RELATION BETWEEN NATIONAL TAX AND OTHER CLAIMS SECTION 1 Priority of National Tax
Article 35 (Preference of National Tax)
Article 35-2 Deleted.
Article 37 (Preference of National Tax with Security)
SECTION 2 Secondary Liability for Tax Payment
Article 38 (Secondary Liability for Tax Payment of Liquidators, etc.)
Article 39 (Secondary Liability for Tax Payment of Contributors)
Article 40 (Secondary Liability for Tax Payment of Juristic Person)
Article 41 (Secondary Liability of Transferee for Tax Payment)
SECTION 3 Liability for Tax Payment in Kind
Article 42 (Liability for Tax Payment in Kind of Person with Right to Property Transferred
for Security)
CHAPTER TAXATION
SECTION 1 Competent Authorities
Article 43 (Competence over Returns of Tax Base)
Article 44 (Competence over Decision or Decision of Correction)
SECTION 2 Revised Return and Request for Correction, etc.
Article
45 (Revised Return)
Article 45-2 (Request for Correction, etc.)
Article 45-3 (Return after Term)
Article 46 (Voluntary Payment of Additional Amount)
Article 46-2 (Payment of National Tax by Credit Cards, etc.)
SECTION 3 Imposition,
Reduction and Exemption of Additional Tax
Article 47 (Imposition of Additional Tax)
Article 47-2 (Additional Tax on Non-Filing)
FRAMEWORK ACT ON NATIONAL TAXES
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Article 47-3 (Additional Tax on Underreported Return)
Article 47-4 (Additional Tax on Over-Refunding Return)
Article 47-5 (Additional
Tax on Insincere Payment and Refunding Return)
Article 48 (Reduction, Exemption, etc. of Additional Tax)
Article 49 (Upper Limit
of Additional Tax)
Article 50 Deleted.
Article 52 (Additional Refund of National Tax)
Article 53 (Transfer of Rights to National Tax Refund)
Article 54 (Extinctive Prescription of National Tax Refund)
CHAPTER EXAMINATION
AND ADJUDGMENT
SECTION 1 Common Provisions
Article 55 (Protest)
Article 55-2 (Special Case on Calculation of Period in Procedure of Mutual Agreement)
Article 56 (Relation with Other Acts)
Article 57 (Effect of Request for Examination on Execution)
Article 58 (Rights to Inspect Related Documents and to Present Opinion)
Article 59 (Representative)
Article 60 (Notification of Method for Protest)
SECTION 2 Examination
Article 61 (Period of Request)
Article 62 (Procedure of Request)
Article 63 (Supplementation or Correction of Request Form)
Article 64 (Procedure of Decision)
Article 65 (Decisions)
Article 65-2 (Correction of Decision)
Article 66 (Objection)
SECTION 3 Tax Appeals
Article 67 (Tax Tribunal)
Article 68 (Period of Request)
Article 69 (Procedure of Request)
Article 70 Deleted.
Article 73 (Exclusion and Refrainment of National Tax Judge)
Article 74 (Challenge of National Tax Judge in Charge)
Article 75
(Joinder and Separation of Cases)
Article 76 (Rights to Question and Inspect)
Article 77 (Judgment of Fact)
FRAMEWORK ACT ON NATIONAL TAXES
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Article 78 (Procedure of Decision)
Article 79 (Nemo Judex Sino Actore and Prohibition of Disadvantageous Modification)
Article 80 (Effect of Decision)
Article 81 (Application Mutatis Mutandis of Provisions Pertaining to Request for
Examination)
CHAPTER -2 TAXPAYERS RIGHTS
Article 81-2 (Establishment and Delivery of Taxpayers Right Charter)
Article 81-3 (Presumption of Taxpayer s Sincerity)
Article
81-4 (Prohibition of Abuse of Right of Tax Investigation)
Article 81-5 (Right to Receive Help in Tax Investigation)
Article 81-6
(Selection of Persons Subject to Tax Investigation)
Article 81-7 (Advance Notice of Tax Investigation and Request for Postponement)
Article 81-8 (Period of Tax Investigation)
Article 81-9 (Notice of Result in Tax Investigation)
Article 81-10 (Confidentiality)
Article 81-11 (Offer of Information)
Article 81-12 (Judgment on Propriety before Tax Levying)
CHAPTER SUPPLEMENTARY PROVISIONS
Article 82 (Tax Manager)
Article 83 (Minimum Limit of Amount to be Notified)
Article 84 (Cooperation for National Tax Service)
Article 84-2 (Payment of
Bounty)
Article 85 (Cooperation for Producing and Collecting Materials for Assessment)
Article 85-2 (Use of Data on Payment Record)
Article 85-3 (Keeping and Preservation of Books, etc.)
Article 85-4 (Delivery of Receipt for Document)
Article 85-5 (Publication of Roll of High and Habitually Delinquent Taxpayers)
Article 85-6 (Preparation and Publication of Statistical
Data)
Article 86 (Enforcement Decree)
CHAPTER GENERAL PROVISIONS
SECTION 1 Common Provisions
Article 1 (Purpose)
The purpose of this Act is to ensure the legal relations pertaining to the
national taxes, to promote the impartiality of taxation,
and to contribute
to the smooth performance of nationals' liability for tax payment, by
providing the fundamental and common matters
concerning the national
taxes and the procedures for protesting against any unlawful or unreasonable
FRAMEWORK ACT ON NATIONAL
TAXES
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disposition of national taxes.
Article 2 (Definitions)
For the purpose of this Act, the definitions of the terms shall be as follows:
1. The term "national taxes" means any of the following taxes imposed
by the State:
(a) Income tax;
(b) Corporate tax;
(c) Deleted;
(d) Inheritance tax and gift tax;
(e) Deleted;
(f) Deleted;
(g) Value-added tax;
(h) Individual consumption tax;
(i) Liquor tax;
(j) Deleted;
(k) Stamp tax;
(l) Securities transaction tax;
(m) Education tax;
(n) Traffic tax;
(o) Special agricultural and fishing villages tax; and
(p) Gross real estate tax;
2. The term "tax-related Acts" means Acts by which the items and rates
of the national taxes are determined, the National Tax Collection
Act,
the Restriction of Special Taxation Act, the Adjustment of International
Taxes Act, the Punishment of Tax Evaders Act and
the Procedure for
the Punishment of Tax Evaders Act;
3. The term "collection of withholding taxes" means that any person
responsible for collecting withholding taxes under tax-related
Acts
collects a national tax (excluding the additional tax related to it);
4. The term "additional tax" means the amount collected in addition to
the calculated tax amount under tax-related Acts in order
to assure
the faithful fulfillment of duties provided for in tax-related Acts:
Provided, That additional dues shall not be included
in it;
FRAMEWORK ACT ON NATIONAL TAXES
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5. The term "additional dues" means the amount collected in addition to
the notified tax amount under the National Tax Collection
Act, when a
national tax is not paid within the term of payment, and the amount
collected in addition to the said amount, when
the national tax is not
paid within a certain period of time after the fixed term of payment
is expired;
6. The term "disposition fee for arrears" means the expenses required
for the attachment, safekeeping, transport and sale of any
property
(including commissions for its sale, if it is performed by any agent)
pursuant to the provisions pertaining to the disposition
for arrears of
the National Tax Collection Act;
7. The term "local taxes" means taxes as provided for in the Local Tax
Act;
8. The term "public charges" means the claims which can be collected
pursuant to the disposition for arrears under the National Tax
Collection
Act other than the national taxes, customs, provisional import surtax,
local taxes, and additional dues and disposition
fees for arrears related
thereto;
9. The term "person liable for tax payment" means a person liable to
pay national taxes under tax-related Acts (excluding an obligation
to
collect and pay the national taxes);
10. The term "taxpayer" means a person liable for tax payment (including
persons jointly and severally liable for tax payment, persons
secondarily responsible for tax payment or guarantors, by undertaking
a liability for payment on behalf of the taxpayer) and a
person liable
to collect and pay a national taxes under tax-related Acts;
11. The term "person secondarily liable for tax payment" means a person
liable to pay tax on behalf of the taxpayer, if the latter
is unable to
fulfill his liability for tax payment;
12. The term "guarantor" means a person guaranteeing the payment by
a taxpayer of any national tax, additional dues or disposition
fee for
arrears;
13. The term "period of assessment" means a period to be a basis for
calculating the assessment standard of national tax under tax-related
Acts;
14. The term "tax base" means the quantity or value of a taxable object
to be a direct basis for calculating the tax amount under
tax-related Acts;
15. The term "returns of tax base" means a return stating the tax base
FRAMEWORK ACT ON NATIONAL TAXES
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of a national tax and other matters necessary for payment and refund
of the national tax;
15-2. The term "revised returns of tax base" means returns with which to
revise items in the tax base return filed originally;
16. The term "legal term of return" means the term in which a tax base
return is to be submitted under tax-related Acts;
17. The term "tax officials" means the Commissioner of the National Tax
Service, the director of the regional tax office, the head
of the tax
office or officials attached to those offices, and when a collector of customs
takes charge of the affairs relating
to the national tax under tax-related
Acts, the customs collector or other officials attached to it and when
a head of Si/Gun/Gu
(referring to a head of an autonomous Gu;
hereinafter the same shall apply) is entrusted with the collection of
national taxes
under the National Tax Collection Act, the competent
heads of Si/Gun/Gu or other officials attached to them;
18. The term "information and communications networks" means
information and communications system to collect, process, store, search,
send, or receive information through utilizing telecommunications
facilities and equipment under subparagraph 2 of Article 2 of
the
Framework Act on Telecommunications or telecommunications
facilities and equipment and computers as well as computer
technologies;
and
19. The term "electronic returns" means returns made by means of the
information and communications networks designated and publicly
notified by the Commissioner of the National Tax Service (hereinafter
referred to as the "national tax information and communications
networks"), of the documents related to returns pursuant to this Act
or other tax-related Acts, such as returns of tax base, etc.
Article 3 (Relation with Tax-Related Acts, etc.)
(1) This Act shall precede other tax-related Acts in its application: Provided,
That if other tax-related Acts prescribe any special-case
provisions
governing Section 1 of Chapter , Sections 2, 3 and 5 of Chapter , Section
2 of Chapter (limited to secondary persons
liable for tax payment pursuant
to Article 104-7 (4) of the Restriction of Special Taxation Act), Section
1, Article 45-2 of Section
2 and Section 3 (limited to the additional tax
under Article 100-10 of the Restriction of Special Taxation Act) of Chapter
, Articles
51 and 52 of Chapter , and Chapter of this Act, such
other tax-related Acts shall prevail.
Act No. 5189, Dec. 30, 1996; Act No. 5579, Dec. 28, 1998; Act No. 7008, Dec. 30, 2003; Act
No. 8139, Dec. 30, 2006>
(2) If the Customs Act and the Act on Special Cases concerning the
Refundment of Customs Duties, etc. Levied on Raw Materials for
Export
provide for special provisions to this Act with regard to national taxes
levied and collected by the customs collectors,
the special provisions of
the above-mentioned Acts shall be applied.
SECTION 2 Period and Term
Article 4 (Computation of Period)
Except as otherwise provided in this Act or other tax-related Acts, the
computation of a period as provided in this Act or other
tax-related Acts
shall be based on the Civil Act.
(1) If the expiration date of a term for any return, application, claim,
presentation of documents, notification, payment or collection
as provided
by this Act or other tax-related Acts falls on a legal holiday, Saturday
or Workers' Day pursuant to the Designation
of Workers' Day Act, the
expiration date of the term shall be the day following the holiday, Saturday
or Workers' Day.
(3) Where an electronic return or payment (referring to the payment of
the national taxes and additional dues to be paid under this
Act or other
tax-related Acts by means of information and communications networks)
is made impossible by a suspension of operation
of the national tax
information and communications networks due to the obstacle prescribed
by Presidential Decree on the expiration
date of a term of filing returns
or making payment under this Act or other tax-related Acts, the expiration
date of the term shall
be the day following the date of overcoming the
relevant obstacle, which makes such returns or payment possible.
Article 5-2 (Report by Mail and by Electron)
(1) Where the returns of tax base, revised returns of tax base and requests
for correction or the documents related to the return
of tax base, revised
return of tax base and request for correction are filed by mail, the filing
shall be deemed to be made on
the date of post mark pursuant to the
Postal Service Act (if there is no post mark or the mark is illegible, the
FRAMEWORK ACT
ON NATIONAL TAXES
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filing shall be deemed to be made on the date reasonably considered to
be the sending date on the basis of the number of days ordinarily
required
for delivery by mail).
(4) Detailed matters on the procedures, etc. for making returns of tax
base, etc. by means of electronic returns shall be determined
by Ordinance
of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Act No. 3746, Aug. 7, 1984]
Article 6 (Extension of Time Limit Due to Natural Disaster, etc.)
(1)
If it is deemed impossible to carry out any return, application, claim,
presentation of document, notification, or payment as provided
in this
Act or other tax-related Acts, within a prescribed time limit, due to a
natural disaster, terrestrial upheaval or other
grounds prescribed in
Presidential Decree, or if a request therefor is made on the part of the
taxpayer concerned, the head of
the competent tax office may extend the
time limit under the conditions as prescribed by Presidential Decree.
FRAMEWORK ACT ON NATIONAL TAXES
11
1. When the tax payer fails to comply with a request from the head of the
tax office for offering security, etc.;
2. When the head of the tax office deems that it is impossible to collect
the total amount of the national tax, the payment of which
has been
extended, from the tax payer by the extended time limit for the payment
on the grounds that he falls under each of subparagraphs
of Article
14 (1) of the National Tax Collection Act; and
3. When the head of the relevant tax office deems that it is not necessary
to extend the time limit for the payment of his national
tax on the
grounds of a change in the state of his property or other grounds prescribed
by Presidential Decree.
(2) When the head of the competent tax office revokes the extension of
the time limit for the payment in accordance with paragraph
(1), he shall
notify the relevant taxpayer of such fact.
[This Article Newly Inserted by Act No. 7008, Dec. 30, 2003]
Article 7 (Extension of Time Limit due to Delayed Service)
In cases
where the time limit for payment has expired before a notification
of payment, a notice of payment, an urging note, or a notice
of demand
for payment arrives or where the time limit for payment expires within
fourteen days from the date of such arrival, the
time limit for the payment
shall be fourteen days from the date of the arrival: Provided, That in cases
where the time limit for
payment has expired before the notice provided
in Article 14 (2) of the National Tax Collection Act arrives, such time
limit shall
expire when such notice arrives, while where the time limit
for payment expires after such notice has arrived, such time limit shall
expire on the date of expiration as originally established.
Article 8 (Service of Documents)
(1) Documents as provided in this Act or other tax-related Acts shall
be served on the domicile, residence, business office or premises
[referring
to electronic mail address (if stored in national tax information and
communications networks, it means any address
accessible by means of
using an identification mark) in the case of service by means of information
and communications networks
(hereinafter referred to as the "electronic
service"); hereinafter referred to as the "domicile or business office"] of
FRAMEWORK
ACT ON NATIONAL TAXES
12
the designated person (who is designated as the addressee on the
documents; hereinafter the same shall apply).
(2) In serving a document on the persons jointly and severally liable for
tax payment, the designated person shall be the representative
of them.
Where there is no representative, the designated person shall be one
against whom the collection of national tax may be
made more
conveniently: Provided, That documents for the notice and demand of tax
payment shall be served on all of persons jointly
and severally liable for
tax payment.
(4) If there is a tax administrator, documents concerning notice and demand
of the payment of tax shall be served on the domicile
or business office
of the tax administrator.
Article 9 (Report on Place to be Served)
When any person to receive documents under Article 8 has reported to
the Government a place to be served, either his domicile or
business office
under the conditions as prescribed by Presidential Decree, the documents
shall be served on the reported place.
When such place is changed, the
same shall also apply.
Article 10 (Service Method of Documents)
(1) Documents under Article 8 shall be served by delivery, mail, or electronic
service.
13
at another place.
(4) In cases of paragraphs (2) and (3), if a person to receive a document
is not present at the place where the document is to be
served, it may
be served to his employee and other workers or a person living together
with the mental capability to make reasonable
judgement; and if the person
to receive the document, his employee and other workers or a person living
together with the mental
capability to make reasonable judgement refuses
the receipt of document without reasonable grounds, the document may
be left at
the place where the document is to be served.
(5) When a document is delivered under paragraphs (1) through (4), if
a person to receive the document has moved his domicile or
place of business,
such move shall be confirmed by his resident registration card, and then
the document shall be sent to the new
address.
(6) When a document is sent, the receiver shall sign and affix a seal on
the delivery slip. In such cases, if the receiver refuses
to do so, the fact
shall be recorded additionally in the delivery slip.
(7) When a document is served by ordinary mail, the head
of the competent
administrative agency shall prepare and keep a record to confirm the
following matters:
1. Title of the document;
2. Name of the person to receive the document;
3. Destination for service;
4. Date of sending; and
5. Main contents of the document.
(8) The electronic service under paragraph (1) shall be rendered only by
the request of the person
to receive the document under the conditions
as prescribed by Presidential Decree.
(9) Notwithstanding the provisions of paragraph (8), where it is impossible
to render electronic service due to any obstacle to
the national tax information
and communications networks or where, otherwise, there is any cause
prescribed by Presidential Decree,
service by delivery or mail may be
substituted for such electronic service.
(10) Necessary matters for the detailed scope and service method of
FRAMEWORK ACT ON NATIONAL TAXES
14
documents which may be provided in means of electronic service under
paragraph (8) shall be prescribed by Presidential Decree.
Article 11 (Service by Public Notification)
(1) When a person who to receive a document falls under any of the following
subparagraphs, the document is deemed to be delivered
under Article 8,
after the lapse of fourteen days from the date the summary of the document
is publicly notified: 1. Where it is difficult to have the document delivered because his domicile
or place of business is in a foreign country;
2. Where his domicile or place of business is not ascertainable; or
3. Where the document delivered by registered mail is returned because
the person as prescribed by Article 10 (4) was not present
at the place,
as prescribed in Presidential Decree.
(2) The public notification referred to in paragraph (1) shall be posted
in the national tax information and communications network,
tax offices
and on the bulletin boards of Si/Gun/Gu (referring to an autonomous Gu;
hereinafter the same shall apply) having jurisdiction
over the place in
which the document is to be served or other proper place or shall be listed
in the Official Gazette or a daily
newspaper. In this case, if the public
notification is posted in the national tax information and communications
network, other
publication methods shall also be used.
(1) Any document served under Article 8 shall take effect when it reaches
the person who is liable to receive the document: Provided,
That in the
case of electronic service, such document shall be deemed to reach the
person to receive the document when it is sent
to the electronic mail address
designated by such person (in the case of service by means of national
tax information and communications
networks, when it is stored therein).
(2) Deleted.
SECTION 4 Personality
Article 13 (Organization Considered as Juristic Person)
(1) To a corporate body, foundation or organization without legal personality
FRAMEWORK ACT ON NATIONAL TAXES
15
(hereinafter referred to as an "organization without legal personality")
falling under any of the following subparagraphs, which
does not distribute
earnings to its members, this Act and other tax-related Acts shall apply
deeming it as a juristic person: 1. A corporate body, foundation or other organization which is established
with permission or authorization of the competent governmental
agency,
or is registered with the competent governmental agency under Acts
and subordinate statutes, but is not recorded on the
register; and
2. A foundation which holds any basic property contributed for the purpose
of the public interest, but is not recorded on the register.
(2) Where any organization without legal personality, other than a corporate
body, foundation or other organization considered
as a juristic person under
paragraph (1), satisfies the following requirements and is approved by
the head of the competent tax
office upon a request of its representative
or manager, this Act and other tax-related Acts shall also apply deeming
such organization
as a juristic person. In these cases, the continuity and
homogeneity of such a corporate body, foundation or other organization
shall be considered to be maintained:
1. It shall have the rules relating to its organization and operation, with
its representative or manager appointed;
2. It shall independently own and manage revenue and property under
its own account and name; and
3. It shall not distribute its income to its members.
(3) Any organization without a legal personality, which is considered as
a
juristic person under paragraph (2) above, shall not be changed to a
resident during the period between the taxable period of the
approval by
the head of the competent tax office upon request and that which includes
the day on which three years expire from
the end of the said taxable period:
Provided, That this shall not apply where the approval is cancelled, since
it fails to meet
the requirements as referred to in the subparagraphs of
paragraph (2).
(4) The liability for the national taxes of an organization without a legal
personality, which is considered as a juristic person
under paragraphs (1)
and (2) (hereinafter referred to as "organization considered as juristic
person"), shall be discharged by
its representative or manager.
(5) If the organization considered as a juristic person appoints or replaces
its representative
or manager to discharge its liability for the national
FRAMEWORK ACT ON NATIONAL TAXES
16
taxes, it shall report to the head of the competent tax office, under the
conditions as prescribed by Presidential Decree.
(6) If no report is made under paragraph (5) above, the head of the
competent tax office may designate one of the members or interested
persons as the person who shall be responsible for discharging the liability
for the national taxes.
(7) Matters necessary for the application for and approval on the
organization considered as a juristic person, delivery of tax
payment number,
etc., and cancellation of approval, shall be determined by Presidential
Decree.
[This Article Wholly Amended by Act No. 4810, Dec. 22, 1994]
CHAPTER IMPOSITION OF NATIONAL
TAX AND APPLICATION OF
TAX-RELATED ACTS
SECTION 1 Principles of Imposition of National Tax
Article 14 (Actual Assessment)
(1) If any ownership of an income, profit, property, act or transaction
which is subject to taxation, is just nominal, and there
is another person
to whom such income, etc., belongs, the latter person shall be liable for
tax payment and tax-related Acts shall
apply accordingly.
(2) The provisions pertaining to the computation of tax base in the
tax-related Acts shall be applied to a real
income, profit, property, act
or transaction, regardless of its title or form.
(3) Where it is recognized as a method of receiving unjust benefit pursuant
to this Act or tax-related Acts, such as an indirect
method through
a third party or a method of going through 2 or more activities or
transactions, this Act or tax-related Acts shall
apply deeming that the
relevant parties have made direct transaction or have conducted an
activity or transaction in succession
according to the economic contents
in essence.
Any taxpayer shall perform his liability in good faith and sincerity. The
same shall apply to any tax officials in performing their
duties.
Article 16 (Ground of Assessment)
FRAMEWORK ACT ON NATIONAL TAXES
17
(1) If any person liable for tax payment keeps and enters a book under tax-related
Acts, the examination and determination of assessment
standard of the
national tax concerned shall be based on the book and related documentary
evidence.
(2) In examining and determining the national tax under paragraph (1), if
the contents of entry of the book are different from the
facts or there
is any omission in the entry, only such a part may be determined in accordance
with the facts examined by the Government.
(3) When the Government examines and determines any fact different
from the contents of entry or omission in the entry under paragraph
(2),
the fact examined and ground for determination by the Government shall
be stated additionally in the determination note.
(4) The chief of the administrative agency shall, upon a demand by the
person liable for tax payment or his representative, permit
him to inspect
or transcribe the determination note as referred to in paragraph (3), or
shall affirm that a transcript or extract
of the note is identical to the
original.
(5) Any demand under paragraph (4) shall be made by oral statement:
Provided, That if the chief of the administrative agency deems
it necessary
to do so, he may demand the signature of the person who inspects or
transcribes it.
Article 17 (Follow-up Management of Tax Reduction and Examination)
(1) If it is deemed necessary to accomplish the object of tax
reduction or
exemption or to implement a national policy, the Government may determine
the range of employing funds or assets equivalent
to the amount of tax
to be reduced or exempted, under the conditions as prescribed in tax-related
Acts.
(2) The amount of tax reduced or exempted, to the extent of the amount
equivalent to funds or assets not conforming to the range
of employment
under paragraph (1), may be collected under the conditions as prescribed
in tax-related Acts after the revocation
of the reduction or exemption.
SECTION 2 Principles for Application of Tax-Related
Acts
Article 18 (Standard for Tax-Related Acts Interpretation and Prohibition
of Retroactive Taxation)
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18
(1) In interpreting and applying tax-related Acts, attention shall be paid
so that property rights of a taxpayer shall not to be
unreasonably damaged
in the light of equity in taxation and fitness of the relevant provisions.
(2) Any income, profit, property,
act or transaction with a duty to pay
the national tax already established (in cases of national tax for which
the person responsible
for collection is provided separately by a
tax-related Act, the duty to collect and pay it; hereinafter the same shall
apply) shall
not be subject to taxation retroactively by a new tax-related
Act enacted after such a duty is established.
(3) Once any construction of the tax-related Act or practices in tax
administration is accepted generally by the taxpayers, any
act or
computation according to such a construction or practice shall be considered
to be correct, and no tax shall be imposed
retroactively by a new construction
or practice.
(4) Deleted.
(5) In applying the provisions of paragraphs (1) through (3), any provisions
of Acts other than tax-related Acts, that provide for
imposition, collection,
reduction, and exemption of the national taxes and procedures for them,
shall be considered as those of
the tax-related Acts.
In examining and determining the assessment standard of national taxes,
standards or practices of corporate accounting which the
person liable for
tax payment adopts continuously and are generally recognized as reasonable
and proper, shall be respected, except
for cases as provided otherwise by
the tax-related Acts.
CHAPTER TAX LIABILITY
SECTION 1 Creation and Determination of Tax
Liability
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19
Article 21 (Establishment Date of Tax Liability)
(1) Liability to pay national taxes arises at the time as follows: 1. For income tax or corporate tax, when the period of taxation expires:
Provided, That a liability to pay a corporate tax on any
income in liquidation
shall come into existence at the time when the juristic person concerned
is dissolved (including the time
when the juristic person is dissolved due
to split-up or merger with any other juristic person after split-up)
or merged;
2. For inheritance tax, when inheritance begins;
3. For gift tax, when property is acquired by gift;
4. Deleted; 5. Deleted; 6. Deleted; 7. For value-added tax, when the taxable period is terminated, while
in cases of imported goods, when the declaration of import is
made
to a customs collector;
8. For individual consumption tax, liquor tax, or traffic tax, when a taxable
item is carried out of the manufacturing place or sold
at a selling place,
or when anyone enters a taxable place or conducts an act for amusement,
food and drink at a taxable amusement
quarter: Provided, That in cases
of an imported object, the tax liability shall come into existence when
the declaration of import
is made to a customs collector;
9. Deleted; 10. For stamp tax, when a taxable document is prepared;
10-2. For securities transaction tax, when transaction becomes finalized;
10-3. For education tax, when it falls under any of the following items:
(a) For education tax assessed on the national tax, when
liability to
pay a national tax comes into existence;
(b) Deleted; or
(c) For education tax assessed on the revenue of financial and insurance
businessmen, when taxable period is terminated;
10-4. For special agricultural and fishing villages tax, when the liability
to pay principal tax as prescribed in Article 2 (2)
of the Act on Special
Rural Development Tax, comes into existence;
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20
10-5. For gross real estate tax, the base date of taxation; and
11. For additional tax, when the liability to pay a national tax thereto
arises.
(2) Notwithstanding the provisions of paragraph (1), liability to pay the
national taxes enumerated below shall come into existence
at the time
specified in the following subparagraphs: 1. For income or corporate tax collected by withholding, when the amount
of income or proceeds is paid;
2. For income tax collected by a taxpayers' association or paid by an
estimated return, the last day of the month in which the amount
of
tax base occurs;
3. For income or corporate tax prepaid intermediately or value-added
tax for an estimated return period, when an intermediate prepayment
period or estimated return period is terminated;
4. For national tax collected by imposition whenever the occasion arises,
when the cause for such imposition occurs; and
5. Deleted.
Article 22 (Determination of Tax Liability)
(1) The amount of a national tax shall be finally determined according
to the procedure under the tax-related Acts concerned.
(2) Notwithstanding the provisions of paragraph (1), the amount of the
national tax enumerated below shall be finally determined
without any
special procedure, when the liability to pay such tax comes into existence:
1. Deleted; 2. Stamp tax;
3. Withholding income or corporate tax;
4. Income tax collected by a taxpayers' association; and
5. Intermediately prepaid corporate tax (excluding cases when the
Government examines and determines it under tax-related Acts).
Article 22-2 (Effect of Correction, etc.)
(1) Any correction which causes an increase in a tax amount determined
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21
originally under tax-related Acts shall not affect the relation of rights and
duties under such tax-related Acts, including this
Act, with respect
to such tax amount originally determined.
(2) Any correction which causes a decrease in a tax amount determined
originally under tax-related Acts shall not affect the relation
of rights and
duties under such tax-related Acts, including this Act, with respect to other
tax amount than that decreased due
to such correction.
[This Article Newly Inserted by Act No. 6782, Dec. 18, 2002]
SECTION 2 Succession of Liability for Tax Payment
Article 23 (Succession of Liability for Tax Payment Due to Merger of
Juristic Persons)
If juristic persons are merged, the one continuing to exist after merger
or the one established newly due to the merger shall be
liable to pay any
national tax, additional dues and disposition fee for arrears which were
imposed upon or, are to be paid by,
the juristic person disappearing due to
the merger.
Article 24 (Succession of Liability for Tax Payment Due to Inheritance)
(1) When an inheritance is commenced, the heirs (including
testamentary
donees; hereinafter the same shall apply) or any administrator of inherited
property as provided for in Article 1053
of the Civil Act, shall be liable to
pay national taxes, additional dues and disposition fee for arrears which
were imposed upon
or, the ancestor are to be paid by, within the limit
of the value of property acquired by the inheritance.
(2) In cases referred to in paragraph (1), if there are two or more heirs,
each one shall be liable to pay jointly and severally
national taxes, additional
dues and disposition fees for arrears that were imposed upon the ancestor
within the limit of the value
of property acquired by the succession, or
each of them was liable to pay within the limit of the amount computed
in proportion
to his portion under Articles 1009, 1010, 1012 and 1013 of
the Civil Act. In this case, respective heirs shall determine the representative
who will pay national taxes, additional dues and disposition fees for arrears
of ancestors among the heirs concerned and make a
report to the head
of the competent tax office under the conditions as prescribed by Presidential
Decree.
(3) In cases referred to in paragraph (1), if the existence of an heir is
FRAMEWORK ACT ON NATIONAL TAXES
22
not ascertained, any notification, demand and other necessary matters
to be done for him, shall be done toward the administrator
of inherited
property.
(4) In cases referred to in paragraph (1), if the existence of an heir is
not ascertained and there is no administrator of inherited
property, the
head of the tax office may request the nomination of an administrator to
the court having jurisdiction over the place
where the inheritance is commenced.
(5) In cases referred to in paragraph (1), any disposition or procedure
carried out for an
ancestor shall also have an effect on his heirs or on
the administrator of inherited property.
SECTION 3 Joint and Several Liability for Tax
Payment
Article 25 (Joint and Several Liability for Tax Payment)
(1) For any national tax, additional dues and disposition fees for arrears
related to a jointly-owned property or enterprise or any property belonging
to such enterprise, the owners of such property or
enterprise shall be liable
to pay them jointly and severally.
1. A split juristic person;
2. A juristic person established due to split-up or merger with any other
juristic person after split-up; and
3. Where part of a split juristic person is merged with any other juristic
person and the other juristic person exists, the other
juristic person
(hereinafter referred to as the "existent mergee of the split juristic
person").
(3) If a juristic person is dissolved due to split-up or merger with any
other juristic person after split-up, the following juristic
persons shall
be jointly and severally liable to pay national taxes, additional dues and
disposition fees for arrears which are
imposed on the dissolved juristic
person or which it has to pay: 1. A juristic person established due to split-up or merger with any other
FRAMEWORK ACT ON NATIONAL TAXES
23
juristic person after split-up; and
2. An existent mergee of the split juristic person.
(4) Where a juristic person establishes a new company pursuant to the
provisions
of Article 215 of the Debtor Rehabilitation and Bankruptcy
Act, the new company shall be jointly and severally liable to pay the
national
tax, additional dues and disposition fees for arrears, which have been
imposed or the liability of which comes into being
to the existing juristic
person.
The provisions of Articles 413 through 416, 419, 421, 423 and 425 through
427 of the Civil Act shall apply mutatis mutandis to the
joint and several
liability to pay any national tax, additional dues and disposition fees for
arrears under this Act or other tax-related
Acts.
[This Article Newly Inserted by Act No. 4810, Dec. 22, 1994]
SECTION 4 Extinction of Liability to Pay
Article 26 (Extinction of Liability to Pay)
Any liability to pay a national tax, additional dues or disposition fee for
arrears shall become extinct, if falling under any of
the following
subparagraphs:
1. When the payment or appropriation is completed or the imposition
is cancelled;
2. When the period in which a national tax may be assessed under Article
26-2, expires without any assessment; and
3. When an extinctive prescription of the right to collect a national tax
is completed under Article 27.
Article 26-2 (Period for Excluding Assessment of National Tax)
(1) Any national tax shall not be assessed after the following period
expires: Provided, That where a mutual agreement procedure is in progress
according to the provisions of the treaty concluded for
the prevention of
double taxation (hereinafter referred to as a "tax treaty"), the provisions
of Article 25 of the Adjustment of
International Taxes Act shall apply:
1. If a taxpayer evades any national tax, or has it refunded or deducted,
FRAMEWORK ACT ON NATIONAL TAXES
24
by fraudulent or other unlawful means, for ten years from the date
on which the national tax is assessable;
2. If a taxpayer fails to file a written tax base return within the legal
return term, for seven years from the date on which the
national tax
is assessable;
3. If a taxpayer does not fall under subparagraphs 1 and 2 above, for
five years from the date on which the national tax is assessable;
and
4. Notwithstanding the provisions of subparagraphs 1 through 3, in cases
of an inheritance tax or gift tax, for ten years from the
date on which
it is assessable: Provided, That it shall be fifteen years from the day
on which it is assessable, in any of the
following cases:
(a) Where the taxpayer evades the inheritance tax or gift tax, or has
it refunded or deducted by fraudulent or
other unlawful means;
(b) Where the written return is not filed under Articles 67 and 68
of the Inheritance Tax and Gift Tax Act;
and
(c) Where a person who has filed the written return under Articles
67 and 68 of the Inheritance Tax and Gift Tax Act, makes a false
or omitted return as prescribed by Presidential Decree (limited to
the portion which is reported falsely or omitted).
(2) Notwithstanding
the provisions of paragraph (1), a decision of
correction or other necessary disposition may be made according to the
relevant
decision, judgment or mutual agreement or upon the request for
correction before one year elapses from the date when a decision
or judgment
pursuant to subparagraph 1 becomes final or when mutual agreement
pursuant to subparagraph 2 terminates or before two
months elapse from
the date when a request for correction pursuant to subparagraph 3 is filed:
1. When a decision or judgment is made on the objection, or the request
for review or trial, as prescribed in Chapter , the request
for exam ination
as prescribed by the Board of Audit and Inspection Act, or the litigation
as prescribed by the Administrative
Litigation Act;
2. When an application for mutual agreement is made pursuant to the
provisions of the tax treaty, and a mutual agreement is reached,
within three years (where a tax treaty provides it differently, such
provisions shall prevail) after the day on which the existence
of the
measure, which was the cause of the imposition of tax in violation of
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25
the tax treaty, is known; and
3. When a request for correction pursuant to Article 45-2 (2) is filed.
(3) Notwithstanding paragraph (1), in cases where the fact
of lending
title has been made clear at the decision or judgment in paragraph (2)
1, a disposition of imposition to the lender
of title may be revoked,
and a decision of correction or other necessary dispositions may be made
to the person who has actually
operated the business within one year
from the date when the decision or judgment becomes final.
(4) Where a taxpayer evades inheritance tax or gift tax by fraudulent or
other unlawful means, and where it falls under any of the
following
subparagraphs, the inheritance tax and gift tax may, notwithstanding the
provisions of paragraph (1) 4, be levied within
one year from the date on
which the inheritance or gift of the relevant property is known: Provided,
That this shall not apply
in cases where a successor (including a devisee)
or a donor and a donee die and where the property value which is a basis
for calculating
the amount of evaded tax (referring to the total sum of
values of properties falling under one of the following subparagraphs) is
not more than five billion won: 1. Where a successor or donee possesses the property of the inheritee
or donor concerned under a title of third party, or a conversion
by real
name is made under his name;
2. Where a property to be acquired by the deceased under a contract has
been acquired by a successor because a registration, register
or entry
of a change of holders was not achieved as the inheritance began during
the period of contract execution;
3. Where an inherited or gifted property located overseas has been acquired
by a successor or donee; and
4. Where an inherited or gifted property such as securities, paintings
and writings, curios, etc., for which a registration, register
or entry
of a change of holders is not required, has been acquired by a successor
or donee.
(5) The date on which any national tax as referred to in the subparagraphs
of paragraph (1) may be assessed, shall be determined
by Presidential
Decree.
26
by prescription, if it is not exercised for five years from the time it is
exercisable.
(2) Except as provided otherwise by this Act or other tax-related Acts,
the provisions of the Civil Act shall be applied to the
extinctive prescription
as referred to in paragraph (1) above.
1. Notification on tax payment;
2. Urging or demand notice of payment;
3. Request for delivery; and
4. Attachment.
(2) Extinctive prescription interrupted under paragraph (1) above shall
resume when the period specified in the following
subparagraphs expires:
1. Notified period of payment;
2. Period fixed by urging or demand notice of payment;
3. Period specified in the request for delivery; and
4. Period until the cancellation of attachment.
(3) Extinctive prescription under Article 27 shall not be run during the
period
of an installment payment, deferment of collection and disposition
of tax in arrears or yearly installment payment as prescribed
by tax-related
Acts, or during the period for which a lawsuit for the cancellation of a
fraudulent act filed by a tax official
is pending pursuant to Article 30 of
the National Tax Collection Act.
SECTION 5 Security for Tax Payment
Article 29 (Kinds of Security)
Security to be offered under tax-related Acts (hereinafter referred to
as "security for tax payment") shall be any of the following:
by Act No. 4561, Jun. 11, 1993>
1. Money;
2. National or local bonds;
3. Securities which the head of tax office (where a customs collector takes
charge of the affairs pertaining to the national tax
under tax-related
Acts, the customs collector; hereinafter the same shall apply) confirms
to be reliable;
4. Insurance policy for guarantee of tax payment;
5. Written guarantee of any guarantor which the head of tax office confirms
to be reliable;
6. Land; and
7. Insured and registered building, factory or mining foundation, vessel,
aircraft or construction machines.
Article 30 (Appraisal of Security)
Value of any security for tax payment shall be appraised on the basis of
the following: 1. For a national or local bond, the current price;
2. For securities, the value as determined by the Presidential Decree;
3. For an insurance policy for guarantee of tax payment, the insurance
amount;
4. For a written guarantee of tax payment, the amount guaranteed;
and
5. For any land, building, factory or mining foundation, vessel, aircraft
or construction machinery, the value as determined by the
Presidential Decree.
Article 31 (Method to Offer Security)
(1) Any person who desires to offer any money or securities as security
for tax payment, shall deposit it and present the receipt
of deposition to
the head of tax office: Provided, That in cases of any registered national
or local bond or a registered corporation
debenture, the purport to offer
security shall be registered, and the certificate of registration shall be
presented.
(2) Any person who desires to offer an insurance policy for guarantee of
tax payment or written guarantee of tax payment as security
for tax
payment, shall present the insurance policy or written guarantee to the
head of tax office.
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28
(3) Any person who desires to offer land, building, factory or mining
foundations, vessel, aircraft or construction machines as
security for
tax payment, shall present the certificate of its registration to the head
of tax office, who shall thereby initiate
a procedure of registration for the
establishment of mortgage.
(1) Any person who offered security for tax payment, may change the security
with the approval of the head of tax office.
(2) If the head of tax office deems that an offered security is insufficient
to secure the payment of any national tax, additional
dues and disposition
fees for arrears owing to a reduction in the value of the security for tax
payment or reduction in financial
resources of the guarantor, he may demand
the offerer of the security to submit an additional security or replacement
of guarantor.
Article 33 (Payment and Collection by Security)
(1) Any person who offered money as security for tax payment, may pay
the secured national tax, additional dues and disposition
fee for arrears
with the money.
(2) If any national tax, additional dues and disposition fee for arrears
for payment for which security is offered, is not settled
within the period
of such security, the head tax office shall collect the tax, charge and fee
from the security under the conditions
as prescribed by the Presidential
Decree.
Article 34 (Release of Security)
When any national tax, additional dues and disposition fee for arrears
for payment for which security is offered, are settled, the
head of tax office
shall initiate, without delay, a procedure for release of the security.
CHAPTER RELATION BETWEEN
NATIONAL TAX AND OTHER
CLAIMS
SECTION 1 Priority of National Tax
Article 35 (Preference of National Tax)
(1) National taxes, additional dues or disposition fee for arrears shall be
collected in preference to other public charges or obligations:
Provided,
That this shall not apply to cases falling under any of the following:
31, 1993; Act No. 5454, Dec. 13, 1997; Act No. 6782, Dec. 18, 2002; Act No. 8139, Dec. 30,
2006; Act No. 8327, Apr. 11, 2007; Act
No. 8830, Dec. 31, 2007>
1. In cases of a disposition for arrears of any local tax or public charge,
if any national tax, additional dues or disposition fee
for arrears is
collected from the amount of disposition for arrears, the additional
dues or disposition fee for arrears of such
local tax or public charge;
2. In cases of selling property through the procedure for compulsory
execution, public auction or bankruptcy, if any national tax,
additional
dues or disposition fee for arrears is collected from the proceeds of selling,
the expenses required for such procedure;
3. In cases of a sale of the property for which the fact that the
establishment of the right of lease on deposit basis, the pledge
right
or the mortgage was registered before the date falling under any of
the following items (hereinafter referred to as "legal
term"), is proved
under the conditions as prescribed by Presidential Decree, if any national
tax or additional dues (excluding
any national tax and additional dues
imposed on the property) is collected from the proceeds of sale, the
obligation secured by
the right of lease on deposit basis, the pledge
right or the mortgage:
(a) If the liability to pay any national tax (including the corporate
tax prepaid intermediately and value-added tax paid by estimated
return) is determined by the return of the tax base and tax amount,
the date on which such return is filed;
(b) If the Government determines, corrects, or imposes and determines
as needed, a tax base and tax amount, the date on which the
payment
notice is sent out;
(c) Notwithstanding the provisions of items (a) and (b) above, if any national
tax or stamp tax is to be collected from persons
liable for withholding
such taxes or a taxpayers' association, the date on which the liability
to pay such taxes is determined;
(d) If any national tax is to be collected from the property of the secondary
person liable for payment of the tax (including any
guarantor), the
date on which the notice of payment as prescribed in Article 12
of the National Tax Collection Act is sent out;
and
(e) If any national tax is to be collected from any transfer-secured
property, when the notice of payment as prescribed in
Article 13
of the National Tax Collection Act is sent out; and
(f) If the taxpayer's property is seized under Article 24 (2) of
the National
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30
Tax Collection Act, for the tax amount finally determined in
connection with such seizure, when the seizure is registered,
regardless
of the provisions of items (a) through (e);
4. Where the national tax or the additional dues are collected from the
amount of sale of leased residence or building to which Article
8 of the
Housing Lease Protection Act or Article 14 of the Commercial Building
Lease Protection Act is applied, the claims to a
specified amount of the
deposit money for the lease which the lessee may be paid preferentially
under the said Article; and
5. Where the national tax or the additional dues are collected from an
amount of sale of, or collection from the employer's property,
the
wages, retirement allowance, accident compensation, or other claims
derived from employment, which has a priority in payment
to the
national tax and additional dues under Article 38 of the Labor Standards
Act.
(2) In cases of attaching property registered provisionally (including cases
being recorded provisionally; hereinafter the same
shall apply) for the
purpose of preserving a claim for transfer rights on the basis of a
preengagement for payment in substitutes,
in which the person liable for
tax payment shall be one responsible for registration, and any default shall
be the condition precedent,
or for the purpose of other similar security, if
the principal registration on the basis of this provisional one is effectuated
after the attachment, the person having a right to the provisional registration
shall not claim any right based on the provisional
registration against a
disposition for arrears to the property: Provided, That in cases of property
registered provisionally before
the legal term of the national tax or additional
dues (excluding the national tax and the additional dues imposed upon the
property),
this provision shall not be applicable.
(3) When the head of tax office attaches or sells by auction any provisionally
registered property as provided for in paragraph
(2), he shall notify
immediately the person having the right to the provisional registration.
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31
(4) If it is deemed difficult to collect the national tax or additional dues
from any proceeds of the sale of a property because
the taxpayer enters
falsely into a contract to establish a right of lease on deposit basis, the
pledge right or the mortgage as
prescribed in paragraph (1) 3, a contract
to effect a provisional registration as prescribed in paragraph (2), or a contract
to
establish a security for transfer as prescribed in Article 42 (2), on the
property in conspiracy with a third person and then register
such contract,
the head of tax office may request a cancellation of such acts to the court.
In these cases, if the taxpayer enters
into such contract with a relative
or person having any special relation as determined by Presidential Decree
within one year before
the legal term of national tax, the contract shall
be presumed as a false one entered into in conspiracy with another person.
(5) The term "national tax imposed on the property" in the provisions
with the exception of each item of paragraph (1) 3 and the
proviso of
paragraph (2) means the inheritance tax, gift tax, and gross real estate
tax from among national taxes.
Article 35-2 Deleted.
(1) When any property of a taxpayer is attached by a disposition for
arrears with payment of national tax, if a delivery of other
national tax,
additional dues, disposition fee for arrears or local tax is requested, the
national tax, additional dues or disposition
fee for arrears related to the
attachment shall be collected in preference to others requested for delivery.
(2) When any property
of a taxpayer is attached by a disposition for arrears
with payment of local tax, if a delivery of national tax, additional dues
or disposition fee for arrears is requested, the national tax, additional
dues, and disposition fee for arrears requested for delivery
shall be collected
in the order next to the local tax related to the attachment.
Article 37 (Preference of National Tax with Security)
When security for tax payment is sold, the national tax, additional dues
or disposition fee for arrears shall, notwithstanding
the provisions of Article
36, be collected from the proceeds of selling, in preference to other national
tax, additional dues,
disposition fee for arrears and local tax.
SECTION 2 Secondary Liability for Tax Payment
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32
Article 38 (Secondary Liability for Tax Payment of Liquidators, etc.)
(1) When a juristic person is dissolved, and its residual
property is divided
or transferred without paying national tax, additional dues or disposition
fee for arrears which was imposed
upon it or which the juristic person
is liable to pay, if it is insufficient to pay the amount to be collected even
after the execution
of the disposition for arrears to it, a liquidator or a
person who participated in the division or transfer of the residual property
shall be subject to a secondary liability for tax payment with regard to
the shortage.
(2) The secondary liability for tax payment under paragraph (1) shall
be limited to the value of divided or transferred property
for a liquidator,
and that of shared property for each person to whom a portion of the property
is divided or transferred.
Article 39 (Secondary Liability for Tax Payment of Contributors)
(1) If the whole property of a juristic person (excluding a juristic
person
whose stocks are listed in the securities market pursuant to the provisions
of Article 2 (1) of the Korea Securities and
Futures Exchange Act) is not
sufficient for appropriating the national tax, additional dues and disposition
fee for arrears which
were imposed upon it or which the juristic person
is liable to pay, any person who falls under any one of the following
subparagraphs
as of the date of the occurrence of the liability to pay the
national tax, shall be subject to the secondary liability for tax payment
with regard to the shortage: Provided, That in case of an oligopolistic
stockholder as prescribed in subparagraph 2, the shortage
shall be limited
to the amount calculated by multiplying that given by dividing it by the
total issued stocks (excluding nonvoting
stocks; hereafter the same shall
apply in this Article) or investments of the juristic person concerned by
the number of stocks
(excluding nonvoting stocks) or the amount of
investments (in case of an oligopolistic stockholder as prescribed in
subparagraph
2 (a) and (b), the number of stocks or the amount of
investments to which he actually exercises the rights) of an oligopolistic
stockholder: 1. A partner with unlimited liability; and
2. An oligopolistic stockholder who falls under any one of the following
items:
(a) A person who actually exercises the rights to more than 50/100
FRAMEWORK ACT ON NATIONAL TAXES
33
stocks or shares out of the total issued stocks or investments of
the juristic person concerned;
(b) The honorary group chairman, group chairman, president,
vice-president, managing director, executive director, director, and
a person who actually controls the operation of the juristic person
concerned, regardless of its title; or
(c) A spouse (including a person who has a de facto matrimonial
relationship) of any person as prescribed in items (a) and (b),
and
a lineal ascendant or descendant who lives together with him.
(2) For the purpose of paragraph (1) 2, the term "oligopolistic stockholder"
means a person who is a relative or has other special
relations with a
stockholder or partner with limited liability as prescribed by the Presidential
Decree, and the total share of
its stocks or investment is more than 50/100
(hereinafter referred to as the "oligopolistic stockholder") of the total issued
stocks
or investment of the juristic person concerned.
Article 40 (Secondary Liability for Tax Payment of Juristic Person)
(1) If the whole property (excluding stocks issued or shares
invested by
the juristic person) owned by the partners with unlimited liability or
oligopolistic stockholders (hereinafter referred
to as the "contributors")
of a juristic person at the expiration of the term to pay the national tax
(if there are two or more
national taxes, the one payment term of which comes
later), is not sufficient to discharge the national tax, additional dues and
disposition fee for arrears that are to be paid by the investors, the juristic
person shall be subject to the secondary liability
to pay the shortage
within the limit of the value of stocks owned or shares invested by the
contributors, only in cases falling
under any of the following subparagraphs:
1. Even if the Government intends to sell the stocks owned or shares
contributed by the contributors by auction or private contract,
but no
one desires to buy them; and
2. When the transfer of stocks owned or shares contributed by the
contributors are restricted by a law or the articles of incorporation
of
the juristic person.
(2) The secondary liability for tax payment of a juristic person under
FRAMEWORK ACT ON NATIONAL TAXES
34
paragraph (1) shall be limited to the amount computed by dividing the
value after deducting the total amount of its debts from the
total amount
of its assets, by the total amount of its issued stocks or investment, and
then multiplying the quotient by the amount
of stocks owned or the
investment by the contributors.
Article 41 (Secondary Liability of Transferee for Tax Payment)
(1) When an enterprise is transferred, if the property of the transferor
is insufficient to discharge the national tax, additional dues and disposition
fee for arrears to the enterprise, for which the
liability of the transferor
for tax payment becomes final before the transfer is made, the transferee
of the enterprise as prescribed
by the Presidential Decree shall assume
the secondary liability for tax payment with respect to such insufficient
amount, within
the limit of the value of the transferred property.
(2) The value of the transferred property as referred to in paragraph (1)
shall
be determined by the Presidential Decree.
[This Article Wholly Amended by Act No. 4672, Dec. 31, 1993]
SECTION 3 Liability for Tax Payment in Kind
Article 42 (Liability for Tax Payment in Kind of Person with Right to
Property Transferred for Security)
(1) When a taxpayer fails to pay any national tax, additional dues or
disposition fee for arrears, if he has property transferred
for security, the
national tax, additional dues and disposition fee for arrears may be
collected from such property under the conditions
as prescribed in the
National Tax Collection Act, only in case where there is a shortage in the
amount to be collected after the
execution of a disposition for arrears to
its other properties: Provided, That for the property transferred for security
which
has been established prior to the legal term to pay the national
tax, this shall not be applicable.
(2) The term "property transferred for security" in paragraph (1) means
the property substantially becoming the object of security
for an obligation
to the transferor, when a taxpayer transfers the property by a contract
between the parties concerned.
CHAPTER TAXATION
FRAMEWORK ACT ON NATIONAL TAXES
35
SECTION 1 Competent Authorities
Article 43 (Competence over Returns of Tax Base)
(1) Return on tax base shall be submitted to the head of tax office having
jurisdiction over the place where the national tax is
paid at the time of
return: Provided, That in case of an electronic return, it may be made
to the director of a regional tax office
or the Commissioner of the National
Tax Service.
Article 45 (Revised Return)
(1) Any person (including persons who fall under Article 73 (1) 1 through
8 of the Income Tax Act) who has filed a written tax base
return within
the legal return term may file a revised tax base return until the head
of the competent tax office determines or
corrects and notifies the tax base
and the tax amount of the national tax pursuant to the provisions of tax-re-
lated Acts, in
the following cases: 1. Where the tax base and tax amount entered in the tax base return
is short of those to be returned under the tax-related Acts;
2. Where the deficit amount or refundable tax amount entered in the
tax base return exceeds the deficit amount or that to be refunded
under
the tax-related Acts; and
3. Where incomplete returns are made due to the causes prescribed by
Presidential Decree such as an ommission in the course of exact
calcu-
lation by a person responsible for collecting withholding taxes, tax ad-
justment, etc. other than subparagraphs 1 and 2
(excluding cases where
request for correction, etc. under Article 45-2 may be filed).
FRAMEWORK ACT ON NATIONAL TAXES
36
(2) Deleted.
(3) Matters to be mentioned in a revised return of tax base and procedure
of return shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 3199, Dec. 28, 1979]
Article 45-2 (Request for Correction, etc.)
(1) Any person who has filed a tax base return within the legal return
term may request the head of the competent tax office within
3 years after
the elapse of legal return term (in cases where a decision or correction
is made pursuant to tax-related Act, it
refers to the period for objection
or request for examination or adjudgment) to decide or correct the tax
base and tax amount (in
cases where a determination or correction is made
pursuant to tax-related Acts, it refers to tax base and tax amount after
such
decision or correction is made) of the national tax that is first returned
or is first returned after revision when it falls under
any of the following
subparagraphs: 1. Where the tax base and tax amount entered in the tax base return
(referred to the tax base and tax amount after the decision or
correction
is made, if such decision or correction is made pursuant to the tax-related
Acts), exceed those to be returned under
the tax-related Acts; and
2. Where the deficit amount or refundable tax amount entered in the
tax base return (referred to the deficit amount or refundable
tax amount
after the decision or correction is made, if such decision or correction
is made pursuant to the tax-related Acts),
is short of the deficit amount
or refundable tax amount to be returned under the tax-related Acts.
(2) Any person who has filed
the tax base return within the legal return
term, or who has the tax base and tax amount of the national tax decided
upon, may
request the decision or correction within two months from the
date of knowing that the cause has occurred, regardless of the period
as
referred to in paragraph (1) above, in the following cases: 1. Where the transaction or act, etc. which is the ground of calculation
of the tax base and tax amount in the initial return, decision
or correction,
becomes a different one by a final judgment (including any reconciliation
or other act having the same effect as
the judgment) in the lawsuit
against it;
FRAMEWORK ACT ON NATIONAL TAXES
37
2. Where there is decision or correction converting the ownership of the
income or other taxable object to a third person;
3. Where the mutual agreement which is made under a tax treaty is carried
out differently from the contents of the initial return,
decision or correc-
tion;
4. Where the tax base and tax amount of the national tax returned initially
for the taxable period other than that which is the object
of the decision
or correction, exceed the tax base and tax amount to be returned under
the tax-related Acts, due to such decision
or correction; and
5. Where the cause similar to those as referred to in subparagraphs 1
through 4 above, and as prescribed by Presidential Decree,
occurs after
the legal return term of the national tax expires.
(3) The head of tax office shall, upon receiving a request for
decision or
correction under paragraphs (1) and (2), decide or correct the tax base
and tax amount, or notify the person filing
such request of the fact that
there is no reason to make any decision or correction, within two months
after he receives such request.
(4) The provisions of paragraphs (1) through (3) shall apply mutatis muta-
ndis to any earner of the income falling under Article
73 (1) 1 through
8 of the Income Tax Act or subparagraphs 4 through 8, 11 and 12 of Article
119 of the same Act or the income generated
from sources in Korea falling
under subparagraphs 4 through 6, 9 and 10 of Article 93 of the Corporate
Tax Act (hereafter referred
to as the "person liable to pay a withholding
tax" in this paragraph and Article 52) if he falls under any of the following
subparagraphs.
In this case, "any person who files his tax base return
within the legal return term" in the provisions with the exception of each
subparagraph of paragraphs (1) and (2) shall be deemed the "person liable
to withhold an income tax at source or the person liable
to pay a withholding
tax who submits his payment record within the fixed submission deadline
in accordance with Articles 164 and
164-2 of the Income Tax and Articles
120 and 120-2 of the Corporate Tax Act after paying his income tax through
the year-end adjustment
of his income tax or withholding his income tax
at source", "after the lapse of the legal return deadline" in the provisions
with
the exception of each subparagraph of paragraph (1) shall be deemed
"after the lapse of the legal payment deadline for the tax amount
of year-end
FRAMEWORK ACT ON NATIONAL TAXES
38
adjustment or the amount of the tax withheld at source", the "tax base
and the tax amount entered in the tax base return" in paragraph
(1) 1
shall be deemed the "tax base and tax amount entered in the receipt of
the tax withheld at source" and the "loss amount or
the refunded amount
entered in the tax base return" in paragraph (1) 2 shall be deemed the
"refunded tax amount entered in the
receipt of the tax withheld at source",
respectively:
1. Where any person who is liable to withhold taxes at source pays his
income tax as a result of his year-end adjustment made in
accordance
with Articles 137, 138, 143-4 and 144-2 of the Income Tax Act and
submits his payment record within the submission deadline
in accordance
with Article 164 or 164-2 of the same Act;
2. Where any person who is liable to withhold taxes at source pays his
income tax that is collected at source in accordance with
Articles 146
and 156 of the Income Tax Act and submits his payment record within
the submission deadline in accordance with Article
164 or 164-2 of
the same Act; or
3. Where any person who is liable to withhold taxes at source pays his
corporate tax that is collected at source in accordance with
Article 98
of the Corporate Tax Act and submits his payment record within the
submission deadline in accordance with Article 120
or 120-2 of the
same Act.
(5) Matters necessary for the request for decision or correction and the
procedure of notification thereof, shall be determined
by Presidential Decree.
[This Article Newly Inserted by Act No. 4810, Dec. 22, 1994]
Article 45-3 (Return after Term)
(1) Any person who has failed to file a tax base return within the legal
return term may file the tax base return after the term,
prior to the notifica-
tion of tax base and tax amount (including the additional taxes under
this Act and the tax-related Acts;
hereafter the same shall apply in this
Article) of the relevant national tax determined by the head of the competent
tax office
pursuant to the tax-related Acts: Provided, That this shall not
apply to the revaluation return pursuant to Article 15 of the Assets
Revaluation Act.
39
to paragraph (1) and has a payable tax amount in accordance with the
tax-related Acts shall pay the tax amount simultaneously with
the filing
of the tax base return after the term.
(4) Matters necessary for the stated items on and the return procedures
for a tax base return after the term shall be prescribed
by Presidential
Decree.
[This Article Newly Inserted by Act No. 5993, Aug. 31, 1999]
Article 46 (Voluntary Payment of Additional Amount)
(1) When a taxpayer
submits a revised return on tax base as prescribed
by Article 45, with regard to the national tax for which a tax amount equiv-
alent to the amount of tax base return is to be paid voluntarily under
tax-related Acts, if the tax amount already paid is less
than that equivalent
to the amount of the revised return on the tax base, he shall pay the shortage
and additional taxes determined
by this Act or other tax-related Acts,
at the time when the revised return on tax base is submitted.
40
a national tax payment agency prescribed by Presidential Decree.
(2) Where national taxes are paid by credit card, etc. pursuant
to paragraph
(1), the date of approval from the national tax payment agency shall be
deemed as the date of payment.
(3) Matters regarding the kinds of national taxes that can be paid by credit
card, etc. pursuant to paragraph (1), designation and
operation of national
tax payment agencies, fee for vicarious payment, etc. shall be prescribed
by Presidential Decree.
[This Article Newly Inserted by Act No. 8830, Dec. 31, 2007]
SECTION 3 Imposition, Reduction and Exemption of
Additional Tax
Article 47 (Imposition of Additional Tax)
(1) The Government may impose an additional tax upon the person defaulting
the obligation as prescribed in a tax-related Act, under
the conditions as
provided in this Act or other tax-related Acts.
(2) Additional tax shall be an item of the national tax as may be determined
by the tax-related Acts prescribing the obligation
concerned: Provided,
That in cases of reducing or exempting relevant national tax, the additional
tax shall not be included in
such a reduced or exempted national tax.
Article 47-2 (Additional Tax on Non-Filing)
(1) Where a taxpayer (excluding the person who is exempted from the
duty of paying taxes pursuant to Article 29 of the Value-Added
Tax Act)
fails to submit a tax base return pursuant to tax-related Acts within the
legal term of return, an amount (hereafter referred
to as an "additional
tax amount on general non-filing" in this paragraph) equivalent to 20/100
of the tax amount calculated in
accordance with the tax-related Acts
(including both a corporate tax on the transfer income of land, etc. under
Article 55-2 of
the Corporate Tax Act in case of a corporate tax and the
additional dues under Article 27 or 57 of the Inheritance Tax and Gift
Tax Act in case of the inheritance tax and gift tax, respectively, and referring
to the tax amount to be paid under Articles 17
and 26 (2) of the Value-Added
Tax Act in case of a value-added tax; hereafter referred to as a "calculated
tax amount" in this
Section) shall be added to the tax amount to be paid
FRAMEWORK ACT ON NATIONAL TAXES
41
or deducted from the tax amount to be refunded: Provided, That where
a person subject to double-entry bookkeeping (hereafter referred
to as a
"person subject to double-entry bookkeeping" in this Section) or a corpo-
ration as prescribed by Presidential Decree fails
to submit a tax base return
on the income tax or corporate tax, an amount equivalent to 20/100 of
the calculated tax amount or
an amount obtained by multiplying the amount
of revenue by 7/10,000, whichever is larger, shall be added to the amount
of the income
tax or corporate tax to be paid or deducted from the tax
amount to be refunded.
1. For the amount of additional tax on a tax base not returned in an
unjust manner: An amount (hereafter referred to as the "additional
tax amount on unjust non-filing" in this paragraph) equivalent to 40/
100 of an amount obtained by multiplying the ratio that an
amount
corresponding to a tax base not returned by using an unjust manner
(hereafter referred to as the "unjustly non-filed tax
base" in this para-
graph) accounts for in the total tax base by the calculated tax amount:
Provided, That where a person subject
to double-entry bookkeeping
or a corporation fails to submit a tax base return on the income tax
or corporate tax, it shall be
the additional tax amount on unjust non-filing
or an amount obtained by multiplying the revenue amount related to
a tax base not
returned in an unjust manner (hereafter referred to
as the "unjustly non-filed revenue amount" in this paragraph) by
14/10,000,
whichever is larger; and
2. For the amount of additional tax on the portion other than that referred
FRAMEWORK ACT ON NATIONAL TAXES
42
to in subparagraph 1: An amount equivalent to 20/100 of an amount
obtained by multiplying the ratio that an amount corresponding
to a
tax base less an unjustly non-filed tax base accounts for in the total
tax base by the calculated tax amount: Provided, That
where a person
subject to double-entry bookkeeping or a corporation fails to submit
a tax base return on the income tax or corporate
tax, it shall be an
amount equivalent to 20/100 of an amount obtained by multiplying
the ratio that an amount calculated by deducting
an unjustly non-filed
tax base from the total tax base accounts for in the total tax base by
the calculated tax amount or an amount
obtained by multiplying the
revenue amount other than an unjustly non-filed revenue amount by
7/10,000, whichever is larger.
(3) Where an income tax has been withheld from the income amount not
returned, the amount of such income tax shall be deducted,
in the application
of paragraph (1), from the calculated tax amount, and, in the application
of paragraph (2), from an amount obtained
by multiplying the aforesaid
ratio by the calculated tax amount under subparagraph 2 of the same
paragraph.
(4) Where there is no corporate tax on the liquidation income, the proviso
of paragraph (1) and the provisos of subparagraphs of
paragraph (2) shall
not apply.
(5) Where paragraph (1) or (2) applies together with Article 81 (8) or
115 of the Income Tax Act or Article 76 (1) of the Corporate
Tax Act,
only the larger of the calculated additional tax amounts shall be applicable,
and if the calculated additional tax amounts
are the same, only the addi-
tional tax provided for in paragraph (1) or (2) shall be applicable.
(6) Where paragraphs (1) and (2) applies to the portion on which an addi-
tional tax is levied in relation to the scheduled return
under Article 18
of the Value-Added Tax Act, additional tax related to the final return under
Article 19 of the said Act shall
not be imposed, and additional tax shall
not be imposed in cases where it is corrected by the head of the relevant
tax office pursuant
to the proviso to Article 17-2 (3) of the same Act.
(7) The scope of the revenue amount, the calculation of the unjustly non-filed
revenue amount and other matters necessary for the
imposition of the addi-
FRAMEWORK ACT ON NATIONAL TAXES
43
tional tax on non-filing shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 8139, Dec. 30, 2006]
Article 47-3 (Additional Tax on Underreported Return)
(1) Where a taxpayer (excluding the person who is exempted from the
duty
of paying taxes pursuant to Article 29 of the Value-Added Tax Act)
has submitted a tax base return pursuant to tax-related Acts
within the
legal term of return, but the reported tax base is short of the tax base
to be declared pursuant to the tax-related
Acts, an amount (hereafter re-
ferred to as an "additional tax amount on general understated return"
in this paragraph) equivalent
to 10/100 of an amount obtained by multi-
plying the ratio that an amount corresponding to the underreported tax
base accounts
for in the total tax base by the calculated tax amount shall
be added to the tax amount to be paid or deducted from the tax amount
to be refunded: Provided, That it is corrected by the head of the relevant
tax office pursuant to the proviso of Article 17-2 (3)
of the Value-Added
Tax Act, this shall not apply. 1. For the amount of additional tax on a tax base underreported in an
unjust manner: An amount (hereafter referred to as the "additional
tax amount on unjustly underreported return" in this paragraph)
equivalent to 40/100 of an amount obtained by multiplying the ratio
that an amount corresponding to a tax base underreported in an unjust
manner (hereafter referred to as the "unjustly underreported
tax base"
in this paragraph) accounts for in the total tax base by the calculated
tax amount: Provided, That where a tax base on
the income tax or
corporate tax reported by a person subject to double-entry bookkeeping
or a corporation is short of the tax base
on the income tax or corporate
tax to be declared pursuant to tax-related Acts, it shall be the additional
tax amount on unjust
understated return or an amount obtained by
multiplying the revenue amount related to a tax base underreported
in an unjust manner
(hereafter referred to as the "unjustly underreported
FRAMEWORK ACT ON NATIONAL TAXES
44
revenue amount" in this Article) by 14/10,000, whichever is larger;
and
2. For the amount of additional tax on the portion other than that referred
to in subparagraph 1: An amount equivalent to 10/100
of an amount
obtained by multiplying the ratio that a tax base less the unjustly under-
reported tax base accounts for in the amount
equivalent to underreported
tax base by the calculated tax amount.
(3) The provisions of Article 47-2 (3), (5) and (6) shall apply mutatis
mutandis with respect to the imposition of the additional
tax on understated
return.
(4) Necessary matters concerning the imposition of the additional tax on
understated return including the calculation of the unjustly
underreported
revenue amount shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 8139, Dec. 30,
2006]
Article 47-4 (Additional Tax on Over-Refunding Return)
(1) Where a taxpayer has submitted a tax base return pursuant to tax-related
Acts within the legal term of return, but declares the tax amount subject
to payment by return pursuant to the tax-related Acts
as the tax amount
to be refunded to the taxpayer or the refunded tax amount declared by
the taxpayer exceeds the refunded tax amount
to be declared pursuant
to the tax-related Acts, an amount equivalent to 10/100 of the tax amount
declared for refund or of the
tax amount excessively declared for refund
shall be added to the tax amount to be paid or deducted from the tax amount
to be refunded.
In this case, where there is a tax amount to be paid by
the taxpayer in spite of the return of such refund, Article 47-3 shall apply,
considering that the tax payer has underreported the tax amount: Provided,
That it is corrected by the head of the relevant tax
office pursuant to the
proviso of Article 17-2 (3) of the Value-Added Tax Act, this shall not apply.
(2) Notwithstanding the provisions of paragraph (1), where there is a tax
amount excessively declared for refund in an unjust manner,
an amount
obtained by adding the amount provided for in any of the following subpara-
graphs shall be added to the tax amount to
be paid or deducted from the
tax amount to be refunded:
1. The amount of additional tax on a tax amount excessively declared
FRAMEWORK ACT ON NATIONAL TAXES
45
the tax amount excessively declared for refund in an unjust manner;
and
2. The amount of additional tax on the portion other than that referred
to in subparagraph 1: An amount equivalent to 10/100 of the
tax amount
excessively declared for refund other than that so declared in an unjust
manner.
(3) The provisions of Article 47-2 (5) and (6) shall apply mutatis mutandis
with respect to the imposition of the additional tax
on over-refunding return.
[This Article Newly Inserted by Act No. 8139, Dec. 30, 2006]
Article 47-5 (Additional Tax on Insincere
Payment and Refunding Return)
(1) Where a taxpayer fails to pay a national tax within the term of payment
pursuant to tax-related
Acts or the paid tax amount is short of the tax
amount to be paid, an amount calculated by applying the following formula
shall
be added to the tax amount to be paid or deducted from the tax amount
to be refunded: Provided, That where a stamp tax is not paid
in violation
of Article 8 (1) of the Stamp Tax Act or the paid tax amount is short
of the tax amount to be paid, it shall be 300/100
of the unpaid tax amount
or of the shortage: The unpaid tax amount or the shortage The period
from the next day of the time limit
of payment through the voluntarily
paid date or the day of notification of payment The interest rate prescribed
by Presidential
Decree in consideration of the interest rates, etc. that the
financial institutions apply to overdue loans.
(2) Where the tax amount refunded to the taxpayer is in excess of the
tax amount to be refunded pursuant to the tax-related Acts,
an amount
calculated by applying the following formula shall be added to the tax amount
to be paid or deducted from the tax amount
to be refunded: The excessively
refunded tax amount The period from the next day of the refunded day
through the voluntarily paid
date or the day of notification of payment
The interest rate prescribed by the Presidential Decree in consideration
of the interest
rates, etc. that the financial institutions apply to overdue
loans.
(3) The provisions of paragraph (1) shall not apply in the case of falling
under any one of the following subparagraphs:
1. Where an additional tax is imposed in accordance with Articles 158
and 159 of the Income Tax Act;
FRAMEWORK ACT ON NATIONAL TAXES
46
2. Where an additional tax is imposed in accordance with Articles 76 (2)
and 98 (2) and (3) of the Corporate Tax Act;
3. Where an additional tax is imposed in accordance with Article 34 (2)
of the Value-Added Tax Act; or
4. Where it is corrected by the head of the relevant tax office pursuant
to the proviso to Article 17-2 (3) of the Value-Added Tax
Act.
(4) The unpaid tax amount or the shortage in the formula referred to in
paragraph (1) and the excessively refunded tax amount
in the formula
provided in paragraph (2) shall be calculated by including the additional
amount corresponding to the interest to
be paid by being added to the
income tax and corporate tax pursuant to the Corporate Tax Act or the
Restriction of Special Taxation
Act.
[This Article Newly Inserted by Act No. 8139, Dec. 30, 2006]
Article 48 (Reduction, Exemption, etc. of Additional Tax)
(1) Where
an additional tax is to be imposed under this Act or any other
tax-related Act, if the cause of such imposition corresponds to the
cause
for extending the term under Article 6 (1) or the taxpayer has any justifiable
grounds for non-fulfillment of the obligation
concerned, the Government
shall not impose the additional tax.
(2) In the case of falling under any of the following subparagraphs, the
Government shall reduce or exempt an amount equivalent
to 50/100 of
the additional tax imposed pursuant to this Act or any other tax-related
Act:
1. Where a revised return is filed pursuant to Article 45 within six months
after the legal term of return elapses (limited to the
additional tax
referred to in Articles 47-3 and 47-4, except in cases where he files
the revised return of tax base with a prior
knowledge that the initial
tax base and amount would be corrected);
2. Where a return after the term is filed pursuant to Article 45-3 within
one month after the legal term of return elapses (limited
to the additional
tax referred to in Articles 47-2);
FRAMEWORK ACT ON NATIONAL TAXES
47
3. Where a decision on judgment of propriety before tax levying and the
notification thereof are not made in violation of Article
81-12 within
the fixed period (limited to the additional tax referred to in Article
47-5 imposed with respect to the period for
which such decision and
notification are delayed); and
4. Where the duty of the submission, return, joining, registration or estab-
lishment pursuant to the tax-related Acts (hereafter
referred to as
"submission, etc." in this subparagraph) is fulfilled in compliance with
the tax-related Acts within one month after
the term of such submission,
etc. elapses (limited to an additional tax is imposed pursuant to tax-re-
lated Acts for the violation
of the duty of such submission, etc.).
(3) Any person who wishes to have an additional tax reduced or exempted
under paragraph
(1) or (2) may file an application therefor under the con-
ditions as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 8139, Dec. 30, 2006]
Article 49 (Upper Limit of Additional Tax)
(1) Any additional tax which falls under each of the following subparagraphs
shall be imposed up to one hundred million won, by
types of violation of
the obligation concerned: Provided, That the same shall not apply to the
cases where the obligation is willfully
violated:
1. Additional tax pursuant to Article 81 (1), (3) through (6) and (12)
of the Income Tax Act;
2. Additional tax pursuant to Article 76 (4) through (7), (9) and (10)
of the Corporate Tax Act;
3. Additional tax pursuant to Article 22 (1) (including the cases where
it applies mutatis mutandis under Article 28 (3)), (2) and
(4) through
(6) of the Value-Added Tax Act;
4. Additional tax pursuant to Article 78 (3) and (5) (limited to cases
where the obligation provided for in Article 50 (1) and (2)
of the said
Act is violated) of the Inheritance Tax and Gift Tax Act; and
5. Additional tax pursuant to Articles 30-5 (5) and 90-2 (1) of the
Restriction of Special Taxation Act.
(2) In the application of paragraph (1), the classification of violations of
obligation, the period and methods of application of
the upper limit of addi-
tional tax, and other necessary matters shall be prescribed by Presidential
FRAMEWORK ACT ON NATIONAL
TAXES
48
Decree.
[This Article Wholly Amended by Act No. 8139, Dec. 30, 2006]
Article 50 Deleted.
REFUND OF NATIONAL TAX
Article 51 (Appropriation and Refund of National Tax Refund)
(1) If there is any amount paid in error or tax amount to be refunded
under the tax-related Acts (when there is any amount of tax to be deducted
from the amount to be refunded under the tax-related
Acts, referring to
the remaining amount after deducting it), which a taxpayer has paid as
a national tax, additional dues or disposition
fee for arrears, the head
of tax office shall immediately determine such excess amount paid in error
or tax amount to be refunded
as a refund of national tax. In this case,
any claim filed for the refund of any tax that has mistakenly or doubly
been paid shall
be governed by Presidential Decree.
(2) The head of tax office shall appropriate the amount determined as
a refund of the national tax for the payment of national taxes,
additional
dues or disposition fees for arrears that fall under any of the following
subparagraphs under the conditions as prescribed
by Presidential Decree:
Provided, That the appropriation of national tax under subparagraph 1
(excluding the case falling under
the cause for collection prior to the payment
term under Article 14 of the National Tax Collection Act) and subparagraph
3 shall
be made only if the taxpayer agrees to the relevant appropriation:
1. National tax to be paid by a notification of tax payment;
2. National tax, additional dues and disposition fee for arrears, that are
in arrears (where another head of tax office requests
such appropriations,
national tax, additional dues and disposition fee for arrears, that are
in arrears in the relevant tax office,
shall be included);
3. National tax to be paid voluntarily under the tax-related Acts; and
4. Deleted.
49
of the national tax as prescribed in paragraph (2) 1 and 3. In these cases,
it shall be deemed that such national tax has been paid
when the taxpayer
has requested such appropriation.
(4) In the event that any person who is liable to withhold taxes at source
has any tax amount to be refunded from the tax amount
he has paid after
having withheld taxes at source, he shall be paid the remainder of the
tax amount that he appropriates for the
payment of the tax amount he
is liable to pay by withholding taxes at source (the appropriation of any
refunded tax amount for
the payment of a withholding tax on any other
taxable item may be allowed only when a report containing details of appro-
priation
and adjustment in the report on the progress in the withholding
of taxes at source under the Income Tax Act is filed): Provided,
That in
the event that the relevant person who is liable to withhold taxes at source
asks for the immediate refund of the tax amount
or has no tax amount
to pay by withholding taxes at source, the tax amount shall be immediately
refunded.
(5) The amount of national tax refund left after appropriating under para-
graph (2) above, shall be repaid to the taxpayer within
30 days after the
refund of the national tax is determined, under the conditions as prescribed
by Presidential Decree.
(6) Repayment of the national tax refund under paragraph (5) shall be
made by the Bank of Korea with the revenues under the jurisdiction
of
the head of tax office concerned under the conditions as prescribed by
Presidential Decree.
[This Article Wholly Amended by Act No. 2932, Dec. 22, 1976]
Article 51-2 (Refund of Property Paid in Kind)
(1) Where any inheritance tax, gift tax, income tax, corporate tax or gross
real estate tax is to be refunded according to a decision
of correction to
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50
cancel the assessment of such tax or to reduce the amount of such assessment
in whole or in part after a taxpayer paid it in kind
under Article 73 of
the Inheritance Tax and Gift Tax Act, Article 112-2 of the Income Tax
Act, Article 65 of the Corporate Tax
Act or Article 19 of the Gross Real
Estate Tax Act, the property already paid in kind shall be refunded:
Provided, That where the
property paid is already sold or being used for
other purpose or, otherwise, in such cases as prescribed by Presidential
Decree,
Article 51 shall apply mutatis mutandis.
(2) Where a refund is made under the main sentence of paragraph (1),
Article 52 shall not apply.
(3) The detailed matters relating to the refund of the property paid in
kind, such as the order of its refund and the determination
as to who should
bear management expenses required until the time of refund after it is
received, shall be prescribed by Presidential
Decree.
[This Article Newly Inserted by Act No. 6782, Dec. 18, 2002]
Article 52 (Additional Refund of National Tax)
When the head of tax office appropriates or pays a national tax refund
under Article 51, he shall add to the national tax refund
the amount calcu-
lated (hereinafter referred to as "additional refund of national tax") accord-
ing to the interest rate as prescribed
by Presidential Decree taking into
consideration the period between the day following the day prescribed in
the following subparagraphs
and the day of appropriation or decision on
payment, and the interest rate of deposits in the financial institutions.
In this case,
in the application of the provisions of subparagraph 1, the
amount of interim prepayment or the amount of payment that is made
by withholding taxes at source under the tax-related Acts shall be deemed
to have been paid on the last date of the legal return
term of the relevant
taxable item: 1. For a national tax refund due to correction or cancellation of the return
or imposition forming the base of the relevant payments
after an erro-
neous or double payment, or a payment, the day of relevant payment:
Provided, That if the national tax refund was
paid in two or more
installments, it shall be the last day of payment, but if the national
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51
refund exceeds the final payment, it shall be each due date of national
tax refund computed retroactively in the order of due dates
until it
reaches such amount;
2. Deleted; 3. For a national tax refund by any reduction of or exemption from the
national tax paid lawfully, the date of determination;
4. Deleted; 5. For a national tax refund by the amendment of a tax-related Act after
lawful payment, the enforcement date of the tax-related
Act;
6. For the cause of correcting a return or a mistaken return of the refund
of tax amount under the Income Tax Act, the Corporate
Tax Act, the
Value-Added Tax Act, the Individual Consumption Tax Act, the Liquor
Tax Act or the Traffic, Energy and Environment
Tax Act, the time
when 30 days have passed from the date of return (if the date of return
is the one before the legal return date,
it shall be from the legal return
date): Provided, That in the case of refunding any tax amount on the
grounds of deciding not
to file a return of the refund, the time when
30 days have passed since the date on which the relevant decision
is made; and
7. For refunding any tax amount to any person liable to withhold taxes
at source or any person liable to pay a withholding tax, which
the
person liable to withhold taxes at source has paid after withholding
taxes at source or performing the year-end settlement
upon receiving
a request for correction provided in Article 45-2 (4), the time when
30 days have passed since the date on which
the deadline for the payment
of year-end settlement amount or the payment of the tax amount with-
held at source expires.
Article 53 (Transfer of Rights to National Tax Refund)
A taxpayer may transfer to another person the rights to the national tax
refund under the conditions as prescribed by Presidential Decree.
Article 54 (Extinctive Prescription of National Tax Refund)
(1) Rights of a taxpayer to any national tax refund or additional national
tax refund shall become extinct by a prescription, if
he does not exercise
them for five years from the time they are exercisable.
(2) For the extinctive prescription under paragraph
(1), the provisions
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52
of the Civil Act shall be applied except as otherwise provided for in this
Act or tax-related Acts.
SECTION 1 Common Provisions
Article 55 (Protest)
(1) Any person whose rights or interests have been infringed in, or by
receiving an unlawful or unreasonable disposition or by not
getting a required
one under this Act or other tax-related Acts, may request the cancellation
or modification of such disposition,
or other necessary measures through
the request for examination or adjudgment according to the provisions of
this Chapter. 1. A person who has received a notice of tax payment as a person secondarily
liable for tax payment;
2. A person who has received a notice of tax payment as he has to bear
the liability of tax payment in kind pursuant to the provisions
of Article
42;
3. A guarantor; and
4. Other persons prescribed by Presidential Decree.
(3) Except for the cases of dispositions under paragraphs (1) and (2) which
are to be or to have been examined, determined or managed by the
Commissioner of the National Tax Service, an objection pursuant
to the
provisions of this Chapter may be filed before the request for examination
or adjudgment.
(4) Deleted.
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(5) The dispositions of the following subparagraphs shall not be included
in the disposition of paragraph (1) above: 1. Disposition on an objection, request for examination or adjudgment
under this Chapter: Provided, That the cases of request for
examination
or adjudgment on the disposition of objection shall be excluded;
2. Disposition of notice by the Procedure for the Punishment of Tax Evaders
Act; and
3. Disposition to which a request for examination is made under the Board
of Audit and Inspection Act or disposition to such request
for examination.
(6) A request for examination under paragraph (5) 3 shall be made within
ninety days from the date when the disposition
concerned is known (if
notice of the disposition is given, the date when such notice is received).
(7) Administrative litigation against a disposition through a request for
examination under paragraph (5) 3 shall, notwithstanding
the provisions
of Articles 18 (2) and (3) and 20 of the Administrative Litigation Act,
be instituted against the agency which has
made the disposition as a defend-
ant party within ninety days after being notified of the decision on the
request for examination.
(9) Request for examination and adjudgment on the same disposition shall
not be doubly filed.
The special cases on calculation of the period in the procedure of reciprocal
agreement shall be subject to the conditions as prescribed
in Article 24
(1) of the Adjustment of International Taxes Act.
[This Article Wholly Amended by Act No. 4981, Dec. 6, 1995]
Article 56 (Relation with Other Acts)
(1) For a disposition under Article 55, the provisions of the Administrative
Appeals Act shall not be applicable: Provided, That
the provisions of Articles
11, 12, 16, 20 and 26 of the same Act shall be applicable mutatis mutandis
to a request for examination
or adjudgment, and in this case, the "committee"
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54
shall be deemed as the "National Tax Examination Committee", the "council
of tax judges" or the "joint session of tax judges".
(2) Notwithstanding the provisions of Article 18 (1) (main sentence), (2)
and (3) of the Administrative Litigation Act, any administrative
litigation
against an illegal disposition as prescribed in Article 55 shall not be filed
without going through the request for
examination and adjudgment as
prescribed by this Act and the decision thereof.
(4) If the request for examination as prescribed in Article 55 (5) 3 is made,
it shall be considered to have gone through the request
for examination
or adjudgment under this Act, and the provisions of paragraph (2) shall
be applicable mutatis mutandis.