Change of Business Year

Date: April 9, 2021

I. Introduction

This post will investigate procedures forchanging a business year of a corporation and subsequent business year calculation.

II. Procedures for changing a business year

(1) A corporation which intends to change itsbusiness year shall report thereon to the head of the tax office havingjurisdiction over the place of tax payment within three months from the enddate of the immediately preceding business year, as prescribed by PresidentialDecree.

(2) Where a corporation fails to file a report bythe deadline specified in paragraph (1), the corporation's business year shallbe deemed unchanged: Provided, That for a corporation, the business year ofwhich is determined by statutes, its business year shall be deemed changed atthe time the amended provisions concerning the change of the business year insuch statutes have effected, although no report is filed under paragraph (1).

(3) Where a business year is changed pursuant toparagraph (1) or the proviso to paragraph (2), the period from the start dateof the previous business year to the date preceding the start date of thechanged business year shall be deemed one business year: Provided, That wheresuch period does not exceed one month, it shall be included in the changedbusiness year.

III. Preparation of Articles of Incorporation

(1) Incorporatorsshall prepare the articles of incorporation and enter the following matters inthe articles of incorporation, and each of them shall write his/her name andaffix his/her seal, or affix his/her signature: <Amended by Act No. 3724,Apr. 10, 1984; Act No. 5053, Dec. 29, 1995; Act No. 6488, Jul. 24, 2001; ActNo. 10600, Apr. 14, 2011>

1. objectives;

2. Tradename;

3. Thetotal number of shares authorized to be issued;

4. Parvalue per share where par value shares are issued;

5. Thetotal number of shares to be issued at the time of incorporation;

6. Thelocation of a principal office;

7. Methodof giving a public notice by the company;

8. Thename, resident registration number and address of each incorporator;

IV. Related Laws and Regulations

Article 7 (Change of Business Year)

(1)  A corporation which intends to change itsbusiness year shall report thereon to the head of the tax office havingjurisdiction over the place of tax payment within three months from the enddate of the immediately preceding business year, as prescribed by PresidentialDecree.

(2)  Where a corporation fails to file a report bythe deadline specified in paragraph (1), the corporation's business year shallbe deemed unchanged: Provided, That for a corporation, the business year ofwhich is determined by statutes, its business year shall be deemed changed atthe time the amended provisions concerning the change of the business year insuch statutes have effected, although no report is filed under paragraph (1).

(3)  Where a business year is changed pursuant toparagraph (1) or the proviso to paragraph (2), the period from the start dateof the previous business year to the date preceding the start date of thechanged business year shall be deemed one business year: Provided, That wheresuch period does not exceed one month, it shall be included in the changedbusiness year.

Article 4 (Reports on Change of Business Year)

A corporationwhich intends to report a change in its business year under Article 7 (1) ofthe Act shall file a report on change of business year (including submissionthrough the national tax information and communications network) to the head ofthe tax office having jurisdiction over the place of tax payment by the filingdeadline, in the form stipulated by Ordinance of the Ministry of Economy andFinance. <Amended by Presidential Decree No. 18312, Mar. 17, 2004;Presidential Decree No. 20720, Feb. 29, 2008>

Article 63 (Interim Prepayment)

(1)  Where each business year of a domesticcorporation (excluding an educational foundation that operates a private schooldefined by Article 3 of the Higher Education Act, an industry-academiacooperation group under the Industrial Education Enhancement andIndustry-Academia-Research Cooperation Promotion Act, the Seoul NationalUniversity established under the Act on Establishing and Administrating SeoulNational University, and the Incheon National University established under theAct on Establishing and Administering Incheon National University) exceeds sixmonths (excluding the first business year after the incorporation of acorporation, if newly incorporated without a merger or division), the domesticcorporation shall determine the period of six months from the beginning of therelevant business year as an interim prepayment period and shall pay the amountcomputed by multiplying six by the amount computed by dividing the amount oftax (including penalty tax, but excluding corporate tax on capital gains on thetransfer of land, etc. under Article 55-2, corporate tax on unappropriatedearnings under Article 56, and corporate tax computed by applying special taxprovisions for promoting investment and collaborative cooperation under Article100-32 of the Restriction of Special Taxation Act) determined as corporate taxfor the business year immediately preceding the relevant business year, lessthe following amounts, by the number of months in the immediately precedingbusiness year (hereinafter referred to as "interim tax") within twomonths after the expiration of the interim prepayment period to the tax officehaving jurisdiction over the place of tax payment, the Bank of Korea (includingany of its agents), or a post office (hereinafter referred to as "taxoffice, etc., having jurisdiction over the place of tax payment"), asprescribed by Presidential Decree: Provided, That, if a domestic corporation(excluding corporations referred to in Article 51-2 (1)) liable to pay interimtax has no calculated amount of tax finally assessed as corporate tax for theimmediately preceding business year, if the amount of corporate tax for theimmediately preceding business year has not been finally assessed by the end ofthe relevant interim prepayment period, or if the relevant business year is thefirst business year after the relevant corporation is newly incorporatedthrough a division or its counter-party corporation to a division is mergedthrough a division, such corporation shall compute interim tax and pay itpursuant to paragraph (5): <Amended by Act No. 11128, Dec. 31, 2011; Act No.12166, Jan. 1, 2014; Act No. 12850, Dec. 23, 2014; Act No. 13230, Mar. 27,2015; Act No. 15222, Dec. 19, 2017>

 

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