Article published in 2013

Attached below is my article contributed to the BNA Tax Planning International Review of International Taxation in 2013. This article deals with February 2013 amendment to Korean corporate income tax rule (the Corporate Tax Act and its Enforcement Rules Article 130 Article 64, paragraph 1), applicable from January 2014, whereby the domestic source income generated from intra-group transactions between the head office and its branch of a foreign corporation would now be subject to the arm's length principle ("ALP").

It's been a while that the application of ALP became administrative convention for the Korean tax authorities for reviewing the taxpayers' branch-to-headquarters or inter-branch transactions, but there was no express statutory authority for such convention, which was always a source of great uncertainty for taxpayers in the financial services industry.

It is worthy to note that some of the financial services intragroup transactions i.e., intragroup fundings and/or credit guarantees, are excluded from the arm's length testing and denied deductibility.

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