Korea Transfer Pricing Policy

Email: sel4ww@evershinecpa.com
or
Contact us by WeChat or Skype or Whatsapp in the day-work-time of China (GMT+8)
The Engaging Manager from Headquarter
Ms. Judy Wang, CPA(Taiwan) Speaks in both English and Chinese.
WeChat: Judy_Evershine
skype: Judy Wang

TP-Q-10
Why kinds of scenarios will be adopted TP policy? What is the relevance between DTA and TP policy?

TP-A-10
When the South Korea Tax entity would like to pay out whatever business profits, Royalty, Technical Services fees, Interests, trading amount etc., it will adopt DTA tax rate. Its judge criteria, please see the South Korea Treaty Page.
But if want to verify the above-mentioned amount if reasonable, will adopt South Korea TP Policy.

TP-Q-20:   
在韓國甚麼情況下, WFOE 外商投資企業不需要同時處理TP 申報和文件申報?
What are the scenarios in South Korea, that a Wholly Foreign-Owned Entity (WFOE) is exempted from compliance of Transfer Pricing (TP) declaration and TP documentation?

TP-A-20:
When Cross-border transactions is less than KRW 1 billion (tangible) / KRW 200 million (services), exempted from preparing TP declaration.
Taxpayers with an annual turnover of less than KRW 100 billion, or cross-border transactions of less than KRW 50 billion are exempted from preparing TP documentation.

TP-Q-30:   
在韓國甚麼情況下, WFOE 外商投資企業需要向該國的稅務局發送TP 申報? 甚麼是申報單名稱?
What are the scenarios in South Korea, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration to the country’s tax bureau? What is the name of the TP declaration form?

TP-A-30:
TP-specific returns need to be prepared when cross-border transactions exceeded KRW 1 billion (tangible) / KRW 200 million (services).

TP-Q-40:   
在韓國甚麼情況下, WFOE 外商投資企業需要向該國稅務局發送TP 申請和文件? 甚麼 declaration 表單名和文檔名?
What are the scenarios in South Korea, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration and TP documentation to the country’s tax bureau? What are the name of the TP declaration form and TP documentation form?

TP-A-40:
TP declaration form – TP specific returns
When cross-border transactions exceeded KRW 1 billion (tangible) / KRW 200 million (services).

TP documentation – Local File, Master File

Both conditions satisfied:

1. Annual sales revenue > KRW 100 billion.
2. Cross-border transactions > KRW 50 billion.

TP documentation – Country-by-Country (CbC) Report

Consolidated UPC’s sales revenue > KRW 1 trillion in the previous year.

South Korea TRANSFER PRICING for professionals

Overview

South Korea is an OECD member and follows OECD TP guidelines.

The Transfer Price is the price applied to an international transaction in which either party to the transaction is a foreign-related party. “Foreign related party” means any nonresident or foreign corporation in a special relationship with a resident, domestic corporation, or domestic place of business.

Using the International Tax Coordination Law, tax authorities could make adjustments to the transfer price if it is deemed not at arm’s length price.

Special Relationship

1. Direct or indirect shareholding of at least 50% on another.
2. Having common shareholding of at least 50% on another.
3. The party to a transaction has a common interest through investment in capital, trade in goods or services, grant of a loan, etc., and either party to the transaction has the power to substantially determine the business policy of the other party.
4. Both parties to a transaction where the parties have a common interest through investment in capital, trade in goods or services, grant of a loan, etc., and a third party has the power to substantially determine the business policies of both parties.

Acceptable Transfer Pricing method

1. Comparable Uncontrolled Price (CUP)
2. Resale price
3. Cost-plus
4. Profit split
5. Transactional net margin

Due dates and respective threshold:

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Seoul Evershine BPO Service Limited Corp.
3F., KS Building,60 Yeoksam Ro 17 Gil Gangnam-gu, Seoul (06237), South Korea
E-mail: sel4ww@evershinecpa.com
or
Contact us by WeChat or Skype or Whatsapp in the day-work-time of China (GMT+8)
The Engaging Manager from Headquarter
Ms. Judy Wang, CPA(Taiwan) Speaks in both English and Chinese.
WeChat: Judy_Evershine
skype: Judy Wang

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(version: 2024/07)

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