Taxationstandard for building on transferring both land and building

                                                                                                    26thJuly 2017.

                                                                                     Written by Yoon,Hyung Sun CTA.

                                                                                     Translated by Park, Eun Kyung.

Ⅰ. Outline

Transfering both land and building, if theamount for building is 0 price, we would like to review whether the value addedtax can be 0 or not.

Ⅱ Whether value added tax is charged ornot.

 1.Principle : Actual trading price (value added tax law 29.)

2. Exeption : Uncertainty for the distinguishbetween land and building (Value added tax law decree 64).

Case 1: There are standard market price bothland and building.

Calculated amount in proportion to standardmarket price in supplied contract date.

Case 2: There are not standard market priceboth of them or one of them.

Calculated amount in order as follows;

Appraisal and assessment price → book amount → acquisition amount.

3. Designating building amount as 0 price anddismantling building.

Build price is 0 price in contract and dismantledbuilding is shown as residual amount is 0 price, therefore 0 price of buildingis admitted.

Ⅲ. Related law

Value tax law 29

Value added tax decree 64

Judgement value added tax 2013-76 (2013.6.20)

Regulation value added tax 2014-508 (2014.11.12)