SOUTH KOREA Law and Practice Contributed by: Je-Heum Baik, Chang Hee Lee, Maria Chang and Min Kim, Shin & Kim
5.3 Blacklists and Non-Cooperative Jurisdictions
million at the end of any month during the reporting year. Additionally, residents holding foreign real estate must submit an Overseas Real Estate Acquisition and Management Report to the tax authorities, and resi - dents who have made overseas direct investments are obligated to submit information regarding their over - seas subsidiaries. From January 2026, new overseas trust reporting requirements will take effect, obligating individuals and entities holding assets through foreign trusts to disclose detailed information to the NTS – an initiative aimed at closing what authorities view as the last major channel for offshore concealment. In addi - tion, residents holding foreign real estate are required to file a Statement of Acquisition and Management of Overseas Real Estate with the tax authorities. 5.5 Role of Tax Authorities and Enforcement Measures The NTS is vested with extensive and graduated investigative powers, ranging from routine adminis - trative inquiries to criminal-level tax offence investiga - tions. As of January 2026, enforcement priorities have increasingly focused on offshore asset concealment and income generated through digital platforms. The NTS possesses broad authority to access records and compel the production of information. Taxpayers are legally required to maintain books and support - ing documentation for a minimum of five years, and the NTS may request such records at any stage of an audit. In cases involving suspected tax evasion, the NTS has direct access to information held by the Korea Financial Intelligence Unit (KoFIU), including reports on suspicious transactions and large-value cash transactions exceeding KRW10 million, with - out the need for a separate warrant. In addition, the NTS may conduct third-party inquiries by requesting records and explanations from a taxpayer’s custom - ers, suppliers and financial institutions in order to verify the accuracy and completeness of reported transactions. The NTS differentiates between levels of tax audits based on the perceived risk and severity of non-com - pliance. Regular (general) audits are typically conduct - ed on a four- to five-year cycle for large corporations and are generally preceded by a 20-day advance notice. By contrast, special or extraordinary audits are
Following the March 2010 amendment to the LCITA, Korea abolished its formal system for designating non-cooperative tax havens. As of January 2026, the tax authorities continue to operate without maintain - ing an official list of non-cooperative or high-risk juris - dictions. 5.4 Reporting Obligations and Disclosure Regimes Korea maintains a robust and increasingly digitalised reporting framework aimed at enhancing transparency and equipping the NTS with the data necessary to detect aggressive tax planning and tax evasion. As of January 2026, key reporting obligations span cross- border transactions, asset disclosures, and targeted compliance requirements for entities with limited or non-business presence in Korea, supported by finan - cial intelligence and whistleblower mechanisms. In the area of cross-border and transactional report - ing, Korea requires extensive disclosures to prevent offshore tax evasion and so-called “roundabout” transactions. Corporations engaged in international related-party transactions must file a Statement of International Inter-company Transactions, a Sum - mary Income Statement of a Foreign Related Party and a Statement of Transfer Pricing Method within six months from the fiscal year-end. Multinational enter - prise groups with substantial cross-border activity – generally those exceeding KRW100 billion in annual turnover and KRW10 billion in related-party transac - tions – are required to submit a BEPS Master File and Local File within 12 months from fiscal year-end. In addition, ultra-large multinational groups with con - solidated global revenues exceeding EUR750 million must file a CbC report, which Korea automatically exchanges with other participating tax jurisdictions under international information-sharing agreements. Asset disclosure obligations have also been signifi - cantly expanded to capture opaque ownership struc - tures and emerging asset classes. Korean residents and domestic companies must report all overseas financial accounts, including bank accounts, secu - rities accounts, and virtual asset or cryptocurrency accounts, if the aggregate balance exceeds KRW500
417 CHAMBERS.COM
Powered by FlippingBook