SOUTH KOREA Law and Practice Contributed by: Steve M Kim, Philje Cho, Gijin Hong and Kyu Bin Kang, Lee & Ko
7.2 Administration of Programmes A starting point for processing APAs in Korea is to file an application for a pre-filing meeting with the NTS officers at the APA/MAP office, which sits within the International Taxation Bureau of the NTS Head Office. After successfully com - pleting a pre-filing meeting and receiving a go- ahead sign from the APA/MAP office, taxpayers become eligible to file an official APA application to the APA/MAP office. Once an APA application is filed and the negotiation with the competent authority of the other contracting state is com - pleted, the commissioner of the NTS has the final authority to approve APAs. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures As with many other countries, APA and MAP cases are assigned to sub-units within the APA/ MAP team of the NTS, based on the counterpar - ty’s jurisdiction. Usually, one sub-unit is respon - sible for a few different jurisdictions in relation to APAs and MAPs. Since APA and MAP cases are assigned within the APA/MAP office based on the country of the counterparty, APAs and MAPs can sometimes be reviewed together, and merged cases tend to result in a speedier process, due to the overlap - ping circumstances. Even though in theory there is no law requiring NTS officials working on APAs and MAPs to co- operate, in practice, there is definitely co-ordi - nation between these NTS teams. 7.4 Limits on Taxpayers/Transactions Eligible for an APA Technically, there is no restriction on which tax - payers or transactions are eligible for an APA, as long as the taxpayer in question is a Korean legal
entity or a branch/permanent establishment of a foreign corporation. In practice, however, only taxpayers with a mate - rial amount of cross-border related-party trans - actions find APAs useful, in light of the potential tax exposure that could arise from TP-based assessment. There is no rule of thumb as to what constitutes “material amount” , as there can be substantial variation, depending on the industry and individual companies. 7.5 APA Application Deadlines A taxpayer may file an application for an APA to the NTS at any point up to the day before the commencement of the first year of the proposed covered period. For example, if a taxpayer applies for a five-year APA to run from 1 Janu - ary 2026 to 31 December 2030, the application must be filed by 31 December 2025. However, in order to file the application in time, the prepa - ration for the APA should proceed at least six months before in light of the time required to complete a pre-filing meeting and secure a go- ahead sign from the NTS. 7.6 APA User Fees There is no user fee that a taxpayer is required to pay to the NTS in connection with an APA application. 7.7 Duration of APA Cover There is no statutory or other legal limit as to how many prospective years an APA can cover; however, in practice, taxpayers generally pro - pose five-year coverage in their application. 7.8 Retroactive Effect for APAs Roll-Back Provision Taxpayers can request in their APA application that their APA takes retroactive effect.
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