This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print page

Korean Tax Newsletter (August, 2008)


DOWNLOAD  


Proposed Revisions to Laws

Act on External Audit of Stock Companies (“AEASC”)

On July 25, 2008, the Financial Services Commission (“FSC”) announced its plan to revise the AEASC for enhancement of accounting systems. The major proposed revisions include the followings:

- Abolition of preparation of combined financial statements

Currently, certain selected companies of which total assets in the previous fiscal year-end exceed KRW 2 trillion together with their domestic affiliates should prepare combined financial statements. According to the proposed revision, the requirement for preparation of combined financial statements will be abolished.

- Scope of companies subject to internal accounting management system

Currently, all stock companies (Chusik Hoesas) audited mandatorily by external auditors should have internal accounting management systems. According to the proposed revision, the internal accounting management system will not be required for certain unlisted company which will be prescribed by Presidential Decree of the AEASC. Further, the reporting period will be reduced from every 6 months to once a year.

- Compulsory change of external auditors

Currently, an accounting firm cannot be appointed as an external auditor of a listed company for more than consecutive 6 years and a partner of an accounting firm cannot be appointed as the partner in-charge of audit for more than consecutive 3 years. With the proposed revision, the abovementioned 6 years’ compulsory period for change of accounting firm will be abolished.



Revisions to Tax Laws

Value Added Tax Law (“VATL”)

- Decrease in period to issue business registration certificate

Under the prior Article 7-3 of the Presidential Decree of VATL which was revised on July 24, 2008, the business registration certificate issuance period was within 5 days from the date of application by the taxpayers. The issuance term has been shortened so that the business registration certificate shall be issued within 3 days with the revision.



Developments at Tax Authorities

Access to information prior to the Tax Tribunal’s decision

In recognition of the need for improved transparency in the tax appeal process, the Tax Tribunal (“TT”) announced its plan to allow both the tax authority and taxpayers to access to the relevant information/data collected for the TT’s review of the case prior to its decision. Both the tax authority and the taxpayer are not only permitted to view the information, but also will be able to submit their additional assertion and opinion based on such information/data.

An integrated law on tax appeal

TT announced to enact a special law related to tax appeals (tentatively named, “Tax Appeals Law”) in order to integrate tax appeal rules dispersed throughout various tax laws such as National Tax Basic Law, Local Tax Law, Customs Law, etc.



Recent Tax Rulings and Cases

Domestic warehouse of the foreign distribution company (Jaekukjo-107, 2008.06.20)

In case where a domestic company (“AA”) which conducts a warehousing business performs custody and delivery of goods which are owned by a foreign distribution company (“BB”) in accordance with the contract with BB, the warehouse of AA might constitute a permanent establishment (“PE”) of BB under Article 133-1 of the Presidential Decree of the Corporate Income Tax Law (“CITL”). However, in case where AA only performs custody and delivery (including simple cleaning, packaging and labeling without any value added activities) within Korea and entire operational activities of BB (such as advertisement and promotional activities) are performed by BB outside Korea, the warehouse of AA would not be regarded as a PE of BB.

 

Get connected
Share your comments

 

More on Deloitte
Learn about our site

 


Stay connected
  • Facebook RSS