- In line with the recommendations contained in the OECD BEPS report on Action 13, South Korea has adopted new documentation requirements of master file and local file for income years beginning on or after 1 January 2016. Adoption of the country-by-country report will commence at a later stage after the government evaluates the legislation of other countries adopting the CbC requirement. The new master and local files reporting requirement is applicable to all domestic corporations and all foreign corporations with permanent establishments in Korea with:
- annual net sales from the domestic place of business in Korea greater than 100 billion KRW; and
- annual cross-border related-party transactions of a value greater than 50 billion KRW.
Both the master file and the local file should be submitted to the Korean tax authorities by the corporate tax return filing due date. Filing may be performed electronically or in paper. The master file may be submitted in English on the condition that a Korean translation of the documentation will be filed within one month after the submission of the English version; while the local file is to be submitted in Korean only.
- Further to signing the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information in October 2014 and committed to early adoption of the Common Reporting Standard as Early Adopters Group, Korea has amended its Law for Coordination of International Tax Affairs (LCITA) to provide a legal framework for implementing CRS on 1 January 2016 and participation in the AEOI in 2017. Final guidance on AEOI was issued in December 2015 by the Korea's Financial Services Commission. The guidance requires financial institutions to determine whether they are reportable financial institutions under CRS and those so classified must collect self-certification forms from on-boarding new account holders.
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