Consolidated report on international transactioninformation

Date: May 14, 2021

I. Introduction

The consolidated report on internationaltransaction information, one of the recommendations of OECD BEPS (Base Erosionand Profit Shifting) projects, was first introduce in 2015 and came into effectin 2017.

 

II. Types of Reports

(1) Individual business report (Local file)

The report should include organizationalstructure, details of business, itemization of transactions with his/herforeign related party, information on calculation of the price, and financialstatus;

 

(2) Consolidated business report (Master file)

The report should include organizationalstructure, details of business, details of intangible assets, financingactivities, and financial status.

 

(3) Country-by-country report (CRBC)

The report should include itemization of profitby country, pre-tax profit or loss by country, amount of tax payment bycountry, capital by country, major business activities by country.

 

III. Submission of Consolidated Reports onInternational Transaction Information

(1) Individual business report &consolidated business report

A domestic corporation or a foreign corporationhaving a domestic place of business which meet all of the following criteria:

☞ The total volume oftransactions of goods shall exceed 50 billion won

☞ The turnover in therelevant taxable year shall exceed 100 billion won

 

(2) Country-by-country report

Ataxpayer classified as follows: He/she shall meet the criteria specified in therelevant item:

☞ Ataxpayer determined and publicly notified by the Minister of Strategy andFinance. The turnover on the consolidated financial statements for theimmediately preceding taxable year shall exceed one trillion won;

☞ He/she shall not have anobligation to submit a report by country in accordance with the statutes of thecountry in which the foreign controlling stockholder is located;

☞ It shall be impossibleto exchange reports by country, due to reasons such as that no tax treaty isconcluded with the state in which the foreign controlling stockholder islocated.

 

 

IV. Report Submission

☞ Individual businessreports and a consolidated business report: in Korean;

☞Reports by country: in Koreanand English.

 

(1) A consolidated business report may beprepared and submitted in English. In such cases, a Korean version of theconsolidated business report shall be additionally submitted within onemonth after the submission of the English version.

 

(2) A domestic controlling enterprise and ataxpayer who has a foreign controlling stockholder determined and publiclynotified by the Minister of Strategy and Finance shall submit the data as thosepertaining to the person obligated to submit reports by country to the head ofthe tax office having jurisdiction over the place for tax within six monthsfrom the last day of the month in which the end date of each business yearfalls.

 

(3) Where a taxpayer who has a foreigncontrolling stockholder fails to submit the data before the expiration of thedeadline prescribed in the same paragraph, he/she shall submit reports bycountry within 12 months from the last day of the month in which the enddate of the business year falls.

 

 

V. Guidelines, etc. for Assessing AdministrativeFines

Any of the following persons who fails tosubmit data by the deadline without good cause or submits false data shall besubject to an administrative fine not exceeding 100 million won:

1) A person obligated to submit a statement ofinternational transactions or a consolidated report on internationaltransaction information

2) A person in receipt of a request to submitdata

 

 

VI. Laws and Regulations

Article 11 (Obligation to Submit Data onInternational Transactions)

(1)      Ataxpayer that conducts international transactions with a foreign related partyshall submit a statement of international transactions in the form prescribedby Ordinance of the Ministry of Strategy and Finance (hereinafter referred toas “statement of international transactions”) to the head of the tax officehaving jurisdiction over the place for tax payment by the deadline for filing atax return set under Articles 70, 70-2, 71, 73, and 74 of the Income Tax Act orArticles 60 (1) and 76-17 (1) of the Corporate Tax Act. <Amended by Act No.15221, Dec. 19, 2017>

(2)      Ataxpayer, if he/she meets the requirements prescribed by Presidential Decree inthe volume of international transactions with a foreign related party and theturnover therefrom, shall submit a consolidated business report, individualbusiness reports, and reports by country prescribed by Presidential Decreeregarding his/her business activities, the details of transactions, etc.(hereinafter referred to as “consolidated report on international transactioninformation”) to the head of the tax office having jurisdiction over the placefor tax payment within 12 months from the last day of the month in which theend date of the business year under Article 6 of the Corporate Tax Act falls.<Newly Inserted by Act No. 15221, Dec. 19, 2017>

(3)      Wherea taxpayer is unable to submit a statement of international transactions or aconsolidated report on international transaction information by the deadlinereferred to in paragraph (1) or (2) in extenuating circumstances prescribed byPresidential Decree and files an application to extend such deadline, the headof the tax office having jurisdiction over the place for tax payment may extendthe deadline for submission by up to 1 year. <Newly Inserted by Act No.13553, Dec. 15, 2015; Act No. 14384, Dec. 20, 2016; Act No. 15221, Dec. 19,2017>

(4)      Forthe purposes of Articles 4, 5, and 6-2, the tax authority may request ataxpayer to submit related data, such as the method of computing transactionprices, as prescribed by Presidential Decree.

(5)      Aperson in receipt of a request to submit data under paragraph (4) shall submitthe relevant data within 60 days of receipt of the request: Provided, Thatwhere the person files an application to extend the deadline for submission forgood cause prescribed by Presidential Decree, the tax authority may extend thedeadline by up to 60 days on one occasion only. <Amended by Act No. 13553,Dec. 15, 2015; Act No. 15221, Dec. 19, 2017>

(6)      Wherea person in receipt of a request to submit data under paragraph (4) fails tosubmit data by the deadline without good cause prescribed by PresidentialDecree and submits the data at the time of applying for appeal, or of themutual agreement procedure, the tax authority and related agencies need not usesuch data for assessing taxes. <Amended by Act No. 13553, Dec. 15, 2015; ActNo. 15221, Dec. 19, 2017>

(7)      Thedetailed scope of information to be contained in the statements ofinternational transactions or consolidated reports on international transactioninformation, the methods and procedures for submitting the same, and othernecessary matters, shall be prescribed by Presidential Decree. <Amended byAct No. 14384, Dec. 20, 2016; Act No. 15221, Dec. 19, 2017>

 

Article 51 (Guidelines, etc. for AssessingAdministrative Fines)

(1)      Theguidelines for imposition of administrative fines under Article 12 (1) of theAct shall be as follows: <Amended by Presidential Decree No. 26078, Feb. 3,2015; Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No.27837, Feb. 7, 2017; Presidential Decree No. 28643, Feb. 13, 2018>

1.       Wherea person fails to submit all or any of the statements of internationaltransactions under Article 11 (1) of the Act or submits a false statement ofinternational transactions: 5 million won per each foreign related party;

1-2.    Wherea person fails to submit all or any of a consolidated business report,individual business reports, and reports by country pursuant to Article 11 (2)of the Act or submits a false individual business report: 30 million won perreport;

2.       Wherea person fails to submit all or some of the data referred to in Article 19 (1)1 through 5, 7 through 9, 13, and 14 or submits any false data: 50 million won;

3.       Wherea person fails to submit all or some of the data referred to in Article 19 (1)6, 10, and 11 or submits any false data: 30 million won;

4.       Wherea person fails to submit all or some of the data referred to in Article 19 (1)12 or submits any false data: 70 million won.

(2)      Theguidelines for assessing administrative fines under Article 31-4 (1) of the Actare as follows: Provided, That where the head of a finance company, etc. makesa correction by a deadline in accordance with the request for correction madeby the competent authority under Article 47 (8), the finance company, etc. maybe exempted from the relevant administrative fine: <Amended by PresidentialDecree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5,2016>

1.       Wherea finance company, etc. fails to provide all of the financial informationrequested by the competent authority or provides any false financialinformation: 20 million won;

2.       Wherea finance company, etc. fails to provide part of the financial informationrequested by the competent authority: 10 million won.

(3)      Theguidelines for assessing administrative fines under Article 35 (1) of the Actare as follows: <Amended by Presidential Decree No. 26078, Feb. 3, 2015>

1.       Wherethe amount unreported or under-reported does not exceed 2 billion won: 10/100of the relevant amount;

2.       Wherethe amount unreported or under-reported is more than 2 billion won but not morethan 5 billion won: 200 million won + 15/100 of an amount exceeding 2 billionwon out of the relevant amount;

3.       Wherethe amount unreported or under-reported exceeds 5 billion won: 650 million won+ 20/100 of the amount exceeding 5 billion won out of the relevant amount.

(4)      Anadministrative fine computed under paragraphs (1) and (3) and Article 35 (2) ofthe Act may be reduced or increased by up to half thereof, based on theseverity; frequency; motive and consequence; etc. of the relevant violation:Provided, That where increased, the administrative fine shall not exceed themaximum limit on administrative fine under Articles 12 (1), 31-4 (1), and 35(1) and (2) of the Act. <Amended by Presidential Decree No. 25200, Feb. 21,2014; Presidential Decree No. 26958, Feb. 5, 2016>

(5)      Wherean administrative fine computed pursuant to paragraphs (3) and (4) falls underany of the following, the amount thereof shall be determined by applying themitigation ratio prescribed in each subparagraph: <Amended by PresidentialDecree No. 26078, Feb. 3, 2015>

1.       Wherea revised report is filed pursuant to Article 37 (1) of the Act after thefiling deadline (hereafter referred to as “filing deadline” in this Article)prescribed in Article 34 (1) of the Act (excluding where a person files suchreport knowing in advance that an administrative fine will be imposed by thetax authority), the ratios in each of the following:

(a)      Wherea revised report is filed within six months after its filing deadline: 70/100of the amount of the relevant administrative fine;

(b)      Wherea revised report was filed within a period of more than six months but not morethan one year after its filing deadline: 50/100 of the amount of the relevantadministrative fine;

(c)      Wherea revised report is filed within a period of more than two years but not morethan four years after its filing deadline: 20/100 of the amount of the relevantadministrative fine;

(d)      Wherea revised report is filed within a period of more than two years but not morethan four years after its filing deadline: 10/100 of the amount of the relevantadministrative fine;

2.       Wherea later report is filed pursuant to Article 37 (2) of the Act after the filingdeadline (excluding where a person files such report knowing in advance that anadministrative fine will be imposed by the tax authority), the ratios in eachof the following:

(a)      Wherea later report is filed within one month after its filing deadline: 70/100 ofthe amount of the relevant administrative fine;

(b)      Wherea later report is filed within a period of more than one month but not morethan six months after its filing deadline: 50/100 of the amount of the relevantadministrative fine;

(c)      Wherea later report is filed within a period of more than six months but not morethan one year after its filing deadline: 20/100 of the amount of the relevantadministrative fine;

(d)      Wherea later report is filed within a period of more than six months but not morethan two years after its filing deadline: 10/100 of the amount of the relevantadministrative fine.

(6)      Whenassessing an administrative fine under paragraph (1), a person submitting datafails to submit some of the data due to a minor mistake or makes negligibleerrors in certain items, the tax authority may decide not to assess theadministrative fine after receiving supplementary materials, and if he/shefails to submit the data referred to in Article 19 (1) 15, it shall not assessthe administrative fine. <Amended by Presidential Decree No. 27837, Feb. 7,2017>

(7)      Whenassessing an administrative fine under paragraph (3), if there exists a reasonto believe that a failure of reporting occurs due to a minor mistake, includingan error in aggregating the balance of the accounts held, the relevant personmay be exempted from the administrative fine, and an administrative fine to beassessed when an additional account unreported or under-reported has been foundshall be an amount obtained by deducting the administrative fine alreadyassessed from the administrative fine to be assessed on the basis of the totalamount unreported or under-reported.

(8)      "Wherethere exists good cause prescribed by Presidential Decree, such as a naturaldisaster" referred to in Article 35 (2) of the Act means where it isimpossible for a person required to report to explain the source of the amountunreported due to an act of God, such as a natural disaster, or situation ofthe country where the overseas financial account is located. <Newly Insertedby Presidential Decree No. 25200, Feb. 21, 2014>

 

 

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