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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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