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Obligation to Submit Data on Overseas Subsidiaries
Date: Apr 10, 2020
I. Introduction
This post will look into a case of obligationto submit data on overseas subsidiaries. When an individual wants to establish a corporation and acquire real estate overseas how he or she should report tothe head of a foreign exchange bank and what steps should he take after reporting?
II. Who should report?
☞Every domestic corporation that makes an overseas direct investment or right in such property through a capital transaction.
III. What should be reported?
① A detailed statement of the overseas direct investment
② The financial position of the foreign corporation in which the overseas direct investment hasbeen made
③ Losses incurred intransactions to the domestic corporation that has made the overseas directinvestment
④ Losses incurred intransactions to the foreign corporation in which the overseas direct investmenthas been made
⑤ The status of overseas branch offices;
⑥ A statement of investments in overseas real estate, etc.;
IV. Filing Due Date
☞ Corporations: within 3 months from the date of taxation
☞ Individuals:by the end of May of the following year of the relevant taxable period
V. Administrative Fines for being unreported
★ Direct overseas investment
① Administrative fines: KRW 10 million or less
② Imposition of fines: from 2010 for corporations, from2014 for individuals
★ Overseas real estate
① fines: 1 percent or less of the acquisition price of overseas real estate with a maximum of KRW 50 million
② Imposition of fines: from 2014 both for corporations and individuals
VI. Related Regulations
★Article 121-2 (Obligation to Submit Data on Overseas Subsidiaries, etc.)
(1) Every domestic corporation that makes an overseas direct investment pursuant to Article 3 (1) 18 of the Foreign ExchangeTransactions Act or acquires real estate in a foreign country or right in such property (hereinafter referred to as "real estate, etc.") through acapital transaction defined by Article 3 (1) 19 of the aforesaid Act, shall submit the following documents (hereinafter referred to as "statements,etc., on overseas subsidiaries") to the head of the tax office having jurisdiction over the place of tax payment by the deadline specified by Article60 (1) or 76-17 (1), as prescribed by Presidential Decree:
1. Adetailed statement of the overseas direct investment;
2. The financial position of the foreign corporation in which the overseas direct investment has been made (including the financial position of the foreign corporation in which investment is made by the foreign corporation in which the overseas direct investment has been made);
3. Losses incurred in transactions to the domestic corporation that has made the overseas direct investment (limited to the losses incurred intransactions with the foreign corporation in which the overseas directinvestment has been made);
4. Losses incurred in transactions to the foreign corporation in which theoverseas direct investment has been made (excluding the losses incurred intransactions with the domestic corporation that has made the overseas directinvestment);
5. The status of overseas branch offices;
6. A statement of investments in overseas real estate, etc.;
7. Other documents specified by Presidential Decree as relevant to overseas direct investments or real estate, etc., in a foreign country.
(2) Where a domestic corporation referred to in paragraph (1) fails tosubmit a detailed statement, etc., of overseas subsidiaries or submits a false detailed statement, etc., of overseas subsidiaries, the head of the tax office having jurisdiction over the place of tax payment may request the domestic corporation to submit or supplement it: Provided, That the same shall not applywhere two years pass from the following day of the filing deadline referred toin paragraph (1).
(3) A person in receipt of a request to submit or supplement data pursuant to paragraph (2) shall submit the relevant data within 60 days from the receipt ofthe request.
★ Article121-3 (Administrative Fines for Non-Performance of Obligation to Submit Data onOverseas Subsidiaries, etc.)
(1) In either of the following circumstances, a corporation obligated to submit statements, etc., on overseas subsidiaries pursuant to Article 121-2 (excluding a statement on investment in overseas realestate, etc., referred to in Article 121-2 (1) 6 and documents related to realestate, etc., in a foreign country referred to in Article 121-2 (1) 7; the sameshall apply hereafter in this paragraph) shall be subject to an administrative fine not exceeding 50 million won (this clause shall apply only where adomestic corporation that has made overseas direct investment under Article121-2 (1) directly or indirectly owns at least 10/100 of the total number of outstanding stocks of, or total amount of investment in, the invested corporation): Provided, That the foregoing shall not apply where it is found impracticable for a corporation to submit documents by the deadline or where a corporation has any other just ground specified by Presidential Decree:
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