Summary of Consolidated Reports on International Transaction Information

 

 

 

1. Introduction

 

Based on Transfer Pricing Documentation (Action 13) of OECD Base Erosion and Profit Shifting (BEPS) project, Consolidated Reports on International Transaction Information were introduced in 2015 and newly implemented in 2017.

 

 

 

2. Types of Reports

 

(1) Master File

 

A report which includes organizational structure, details of business, details of intangible assets, financing activities, and financial status.

 

 

 

(2) Country-By-Country Report

 

A report which includes details of profit by country, pre-tax profit or loss by country, amount of tax payment by country, capital by country, and major business activities by country.

 

 

 

(3) Local File

 

A report which includes organizational structure, details of business, details of transactions with his/her foreign related party, major agreements, and financial status.

 

 

 

3. The Subject Enterprises

 

(1) Master Files and Local Files (Article 34 of Enforcement Decree of the Adjustment of International Taxes Act)

 

Domestic places of business of domestic corporations and foreign corporations satisfying all of the following criteria:

 

① The yearly turnover of individual corporation exceeds 100 billion KRW.

 

② Yearly transactions with foreign related party or parties exceed 50 billion KRW.

 

 

 

(2) Country-By-Country Reports (Article 35 of Enforcement Decree of the Adjustment of International Taxes Act)

 

Corporations satisfying one of the following criteria:

 

① Turnover of domestic corporation (Ultimate Parent) exceeds 1 trillion KRW on a consolidated basis.

 

② A multinational corporation which is a domestic affiliate controlled by Ultimate Parent has a turnover that exceeds 750 million euros on a consolidated basis. Provided, only that the cases are when the country where Ultimate Parent is located doesn't need to fulfil the obligation of submitting the CbCR by legislation or the country where Ultimate Parent is located cannot exchange the CbCR with Korea.

 

 

 

4. Submission Process and Period

 

(1) Submission Process

 

1) Master Files and Local Files

 

① Master files and local files can be submitted at www.axis.go.kr by uploading the files and all formats are allowed. (Hangul, Excel, MS Word, PDF, etc.)

 

② They can be submitted in writing at competent tax office as well.

 

 

 

2) Country-By-Country Reports

 

① CbCR must be submitted in both Korean and English at www.axis.go.kr.

 

② Because CbCR needs to follow the standardized format for the information exchange between countries next year, the CbCR must be filed via electronic submission.

 

 

 

3) Additional materials for CbCR Submission

 

① Electronic submission should be made via www.hometax.go.kr.

 

② Written submission should be made at competent tax office.

 

 

 

* How to use AXIS portal

 

① Email address shall be registered at www.hometax.go.kr  beforehand and the ID and temporary password are sent to email address registered at the National Tax Service.

 

② After logging in with the given VPN account, using Public Key Certificate, register corporate info. and the user at Corporate Register/Edit.

 

③ Public Key Certificate used in here (National Public Key Infrastructure) shall be issued from Korean certification authority, and can be used after AXIS registration process.

 

 

 

(2) Submission Period

 

1) Master files, localfiles, and CbCRs (Article 16 of the Adjustmentof International Taxes Act)

 

Shall be submitted within 12 months from the end of the business year.

 

 

 

2) Additional materials for CbCR Submission (Article 35 of Enforcement Decree of theAdjustment of International Taxes Act)

 

Materials prescribed by Ordinance of the Ministry of Strategy and Finance shall be submitted within six months from the end date of the month in which the end date of each business year falls, to the head of the tax office having jurisdiction over the place of tax payment.

 

 

 

5. Administrative Fines for Non-submission

 

① Where a person fails to submit all or any of the statements ofinternational transactions or submits a false statement of international transactions: 5 million won per foreign related party.

② Where a person fails to submit all or any of a Master File, Local Files, and reports by country or submits a false Local File: 30 million won per report.