No matter what your tax matter is,
our professional tax experts
serve for your business success.
Foreign Exchange Transaction Bank System
Date: Oct 30, 2020
I. Significance
Generally those who want to engage in foreignexchange transactions such as foreign currency exchange or overseas remittanceare free to choose one's favorite bank. However the Foreign Exchange ManagementAct make it mandate for them to designate a bank for such transactions in orderto secure efficiency in foreign currency management. That is foreign exchangetransaction bank system.
A party to the transaction designate a bank andthe bank should keep transactions and post-management. When a bank isdesignated both overseas remittance and deposit from overseas account should beoccurred through the designated bank.
II. Required documents
Required documents are as it follow:
For each item designated bank should bedetermined.
1) Principle: when more than five thousand USdollars need to be transferred to overseas account, foreign exchange bank mustbe designated.
2) Exception: After designation of a bank, overseasremittance of less than five thousand US dollars is allowed without submissionof required documents.
① Payment without disbursementvoucher of a resident
② Those who make an overseasinvestment
③ Overseas savings or transactionof trust of a resident
④ Borrowing or disposal of foreigncurrencies and won
⑤ Payment of emigration expenses ortransference of property of overseas Koreans
⑥ Acquisition or sale of realestate overseas
* Annual remittance amount refers to thecumulative amount from the first date to the Dec 31 of the year that a persondesignated which means that foreign exchange bank should be designated everyyear.
III. Restrictions
Where a person fails to report and make anotification foreign currency transactions it violates the foreign exchangetransaction act.
① Warning: it calls attention toprevent violation of the foreign exchange transaction act from happening againand does not carry any disadvantages
② Administrative fines: impose twoto four percent of fines of the amount of violation
③ Suspension of transaction: wherea person violates the foreign exchange transaction act more than two times infive years transaction should be suspended about a year
④ Criminal penalty: a year ofprison sentence or fines less than 100 million won
IV. Cases
1) Giving: where aresident give to a non-resident he or she should make notification to thegovernor of the Korean Bank in advance. However in the opposite case it shouldbe exempt from notification
2) Securities: wherea Korean acquires securities from a foreigner it is imperative for he or she tomake a notification. When the ownership percentage exceeds 10 percent he or sheshould notify to the president of a foreign exchange bank and if the percentageis below 10 percent he or she should notify to the governor of the Korean Bank.
3) Claim-obligationrelationship: it is subject to notification when creditors and debtor make a settlementor set off deposits.
4) Loan &overseas savings: when a resident wants to deal with deposits he or she shouldreport to the president of a foreign exchange bank. When make a remittancewhich exceeds 50,000 US dollars overseas he or she should report to thegovernor of the Korean Bank.
V. Required documents
Loans agreement, business registration,corporate stamp, and certificate of corporate stamp are required.
Learn more about Korean tax system by visiting our website
이전글 | Taxation on Domestic Source Income of Nonresident | ||||
---|---|---|---|---|---|
다음글 | Taxation carried forward of transfer income |