2015. 6.23

                                                                                 Jung Eun, Park

I. Foreign Account Tax Compliance Report.

 

1. Definition of Foreign Account Tax Compliance Report

When domestic residence or domestic corporation has foreign account, if its balance excess KRW 1,000,000,000 even one day at the end of each month in the year shown, its information should be reported to the competent tax office from 1st June to 30^th June next year.

 

2. How to Judge whether excess KRW 1,000,000,000.

 

According to the each retained asset in foreign account the balance (every account belonged in the year shown, even no trade performance account, terminated account etc. are included in every account) is calculated after total up as each exchange rate ( the basic exchange rate daily or cross exchange rate regarding on Foreign Exchange Transaction Act).

 

3. How to fill out report.

 

When total up balance of every account at the end of each month on the basis of the date of which total up balance is the largest. When report this amount make sure the date of which the total up amount every account is the largest  not the month of which the total up amount is the largest.

 

The exchange rate is applied according to the exchange rate at the end of each month not annual average exchange rate.

 

II. The Definition of Balance on Foreign Account.

1. Related law

0. International Tax Adjustment Act enforcement ordinance section 50 schedule 2.

In the basis of the Law section 34 schedule 1, filer's balance at the end of each month of retained foreign account by each asset as follows;

The sum is calculated daily by exchange rate or cross exchange rate according to the law of Foreign Exchange Transaction Act.

In the year shown etc. every foreign account in the year shown are included, but according to the Law of Insurance as insurance product and similar overseas insurance products, if its products consist of risk premium for the net premium, it is excluded.

1) Cash : belonged current balance at the end of each month.

2) Stock market, similar stock in similar overseas stock and deposit receipt related it according to the law of capital market and financial investment: quantity at the end of each month x final price at the end of each month (If final date is not transaction date, apply to the previous day.)

3) Bond in stock market or similar overseas market according to the law of capital market and financial investment. Final quantity at final time at the end of each month x final price at the end of each month. ( If final date is not transaction date, apply to previous date's price.)

4) Gathering stock investment or similar overseas gathering stock investment according to the law of capital market and financial investment. : final time quantity at the end of each month x standard price at the end of each month ( If there is not standard price of final date at the end of each month, apply to redemption price at the end of each month or standard price of a couple of days ago at the end of each month.)

 

5) Insurance product or similar overseas insurance product according to the Law of Insurance : final time amount at the end of each month.

 

6) The asset except from 1) to 5) : final time quantity at the end of each month x market price at the end of each month. ( If market price is not known, apply acquisition cost.)

 

2. Q & A

1) Question.

There is overseas account used for operating investment stock, asset in the filing overseas account. Only asset in the filing overseas account is to be filed, debt is not reducted. Purchase stock with money in the overseas account but if there is rack of balance, we borrow money from the other account automatically in related bank. For example, balance of account is KRW 500,000,000 actual stock price is 700,000,000 and loan is 200,000,000. I wonder what amount I should file among KRW 500,000,000 or KRW 700,000,000.

 

 

2) Answer

 

When domestic residence or domestic corporation has foreign account, if its balance excess KRW 1,000,000,000 even one day at the end of each month in the year shown, its information should be reported to the competent tax office from 1st June to 30^th June next year.

 

- Cash : belonged current balance at the end of each month.

- Stock market, similar stock in similar overseas stock and deposit receipt related it according to the law of capital market and financial investment: quantity at the end of each month x final price at the end of each month (If final date is not transaction date, apply to the previous day.)

- Bond in stock market or similar overseas market according to the law of capital market and financial investment. Final quantity at final time at the end of each month x final price at the end of each month. ( If final date is not transaction date, apply to previous date's price.)

- Gathering stock investment or similar overseas gathering stock investment according to the law of capital market and financial investment. : final time quantity at the end of each month x standard price at the end of each month ( If there is not standard price of final date at the end of each month, apply to redemption price at the end of each month or standard price of a couple of days ago at the end of each month.)

 

-      Insurance product or similar overseas insurance product according to the Law of Insurance : final time amount at the end of each month.

 

-      The asset except from 1) to 5) : final time quantity at the end of each month x market price at the end of each month. ( If market price is not known, apply acquisition cost.)

 

III. Conclusion

 

When file overseas account, total amount of asset related to asset should be reported not balance on the bankbook account.