skip to main contents skip to main menu

Resolved Cases

  • Home
  • Grievance Consultation
  • Resolved Cases
  • Delivery Processing of Foreign Tax Payments
    • 담당부서 : 외투기업고충처리실(고상원)
    • 조회수 : 2,460
  • Organization : National tax office
  • Regulation : Corporate law
Software Exporter Company I files withholdings in the export destination country. However, they were informed that after filing corporate taxes that the bulk of withholdings filled were deducted as foreign income tax.

Since Company I’s business has not kicked into full swing, and is operating in the red, so they will probably not be required to pay corporate tax. If there is no income, it would be irrational to require then to pay taxes on withholdings. Therefore they asked for help looking into ways to get a refund.

Resoultion and Results
Resolution and Results
We explained current regulations and requested that the national tax office employee official help with filing corporate tax.

In terms of tax withholdings, under the signed tax agreement, interest on loans issued to a foreign subsidiary, income tax on overseas withholdings; shared profits from the foreign subsidiary, tax paid on property rights and CD/album royalties are exempt from taxation.

However, according to tax law, national taxes, tax default penalty for amounts paid in error and if there is a return due, the amount of overpayment or tax return, is predetermined (Tax Law Article 51)

According to Corporate law, should a foreign subsidiary distribute profits or surplus to the parent company, that money would be considered a reimbursement under basic tax law(article 57). In this case, this reimbursement would be appropriated to the corporate tax payment.( general principles 57-0-2)

If it is decided that there is no need to issue cash refunds, as in case of payment of royalties, or of calculation of income tax for foreign tax payment for a small amount it is included for each business year.

Corporate tax for one business year x (foreign withholdings/tax base for the year in question) as the upper limit to calculate the foreign tax payment and deduct from the corporate tax payment

Should a company be in debt, and not fit any of the categories on the tax base, no real exemption takes place as is in the case of Company I, since the amount can be carried over for 5 years. So, if during the next five years the company gets out of debt, then the company can register for an exemption the next time taxes are filed.