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The Application of Tax Rate on International Tax Treaties
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2020-12-17
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The Application of Tax Rate on InternationalTax Treaties

 

 

(1) With international tax treaties

 

Where income from domestic sources occurred toany nonresident and corporation with no fixed establishment withholding taxeswill be levied based on the provisions of income tax law and corporate tax lawrespectively. In this case, withholding tax agent will pay the tax based onwithholding tax rates for non-residents and foreign corporations. 

 

Interest income

20 percent of the payment

Dividend income

20 percent of the payment

Ship rental income & business income from domestic sources

2 percent of the payment

Personal service income

20 percent of the payment

Capital gains

Less amount between the 10 percent of sale proceeds and 20 percent of gains on transfer

Royalty income

20 percent of the payment

Income from transfer of securities

Less amount between the 10 percent of sale proceeds and 20 percent of gains on transfer

Miscellaneous income

20 percent of the payment

 

(2) With international tax treaties

 

As of June, 2018 South Korea has entered intotax treaties with 93 countries, pursuing to offer tax benefits to member statesof the treaty. In most cases international tax treaties override domestic taxlaws in many cases. Under the treaties reduced tax rates, limited tax rates,are applied. Limited tax rate means the maximum tax rate at which a resident orcorporation of the other contracting country may be taxed under internationaltax treaties. Every country has different tax treaties each other but overallthe treaties stipulate that interest income, dividend income, royalties, andpersonal service income should be levied between 10 to 15 percent.

 


 

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