SOUTH KOREA Law and Practice Contributed by: Steve M Kim, Philje Cho, Gijin Hong and Kyu Bin Kang, Lee & Ko
party or a deemed contributed capital in the case of its foreign subsidiary. The Confirmation of Return of Transfer Pricing Adjustment must be accompanied by a remit - tance statement proving the actual return of the amount by the foreign related party. The repatri - ated amount must also include interest, which is calculated by applying the prescribed bench - mark interest rate for each currency (ie, SOFR for USD, etc) per the LCITA to the period from the day following the end of the fiscal year in which the controlled transaction date falls until the return date. As of the end of July 2024, South Korea has signed 95 tax treaties (up from 94 the previous year due to a recently sealed tax treaty with Taiwan) and 1 “tax information exchange agree- ments” . South Korea is also one of 149 signato - ries to the Convention on Mutual Administrative Assistance in Tax Matters. The exchange of more TP-specific information with other taxing authorities is facilitated by the Multilateral Competent Authority Agreement, which allows signatories to exchange CbC reporting. South Korea is one of 103 signatories, and it has also separately signed a CbC report - ing exchange agreement with the USA, based on the existing tax information exchange agreement with the USA. 6.2 Joint Audits As noted previously, South Korea is one of sig - natories to the Convention on Mutual Adminis - trative Assistance in Tax Matters. Under Article 6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information
8 (Simultaneous Tax Examinations) and Article 9 (Tax Examinations Abroad), tax authorities of participating states may co-ordinate to conduct specific tax audits simultaneously or exchange all relevant information obtained through such audits. Additionally, participating states may request to take part in appropriate aspects of an ongoing tax audit conducted in another con - tracting state. 7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing History of the Korean APA Programme Korea launched its APA programme in 1995, and its first APA case was concluded with the USA in May 1997. Since then, of 970 APA applica - tions (both unilateral and bilateral), 753 cases had been concluded as of 31 December 2023. As is apparent from these statistics, the Korean APA programme has been very active since its inception, and it is expected that the demand for APAs will gradually increase, as many Korean companies set up their manufacturing and distri - bution entities in other parts of the world. Types of APAs Korean taxpayers can apply for a unilateral or bilateral APA, depending on the objective of the taxpayers and availability of MAP provision (ie, a bilateral APA) per pertinent tax treaty. How - ever, it is noteworthy that, even though the NTS still accepts unilateral APA applications due to the shorter processing time, etc, unilateral APAs are somewhat less favoured due to their limita- tion as a double tax prevention measure, unless taxpayers have a particular reason to pursue a unilateral APA.
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