1.     Overview

From June 2011, residents or domestic corporations holding an overseas financial account opened at an overseas financial company, shall file information on the account if the aggregate balance exceeds KRW one (1) billion any day of a month the relevant year. The purposes of this reporting system are that National Tax Service (“NTS”) want to collect the information of offshore bank accounts and tax evasions which are holding by residents and Domestic Corporation.

This reporting system is already implemented in the USA, Australia and others. Early of 2014, 47 countries signed up to automatically share bank data. Especially Korea and USA agreed to share the bank account information. USA's system is called FACTA( Foreign Account Tax Compliance Act. Starting July, Korea's NTS will automatically send information to IRS on accounts with a balance higher than US$50,000.

2.     Legal Basis

-       Article 34 ~ 37 and Article 31-2 of Act for the Adjustment of International Taxes Act

-       Article 49 ~ 51 of Enforcement Decree of the Act for the Adjustment of International Taxes Act

3.     Who must file the report?

-       Subjects for disclosure are residents and domestic corporations.

l  principally, a resident is any individual who has his/her docile in Korea or place of residence for 1 year or more in Korea

l  If the nominal owner and the actual owner of an account are different, both are subject to reporting. If the account has joint owners, all of the owners are subject to reporting.

-       Persons and entities exempt from reporting are as follows.

l  A foreign residents who has/had his/her domicile or place of residence in the Republic of Korea for not more than five years in total from then years before the end of the relevant year subject to report.

l  A Korea national residing abroad in whose case the total period of having a residence in the Republic of Korea from two years before the end of the relevant year subject to report is not more than one year.

l  Public Organizations, financial companies, and other entities under the management and supervision of the State.

l  A person whose confirmation of information on his/her oversea financial account becomes available through a report by another person among the persons related to overseas financial accounts.

4.     Objects for disclosure

-       Accounts subjects to reporting: Any bank, bonds, Funds, securities, securities derivatives or other financial instruments account which is opened in the name of an oversea financial company.

-       Assets subjects to reporting: all assets owned in the accounts subject to reporting

5.     Contents of reporting

-       Information on the identity of account holder, such as name, address, etc;

-       Information on the account held, such as account number, name of the financial company, the highest account of the remaining balance of the account on the last day of each month.

-       Information on a person related to the overseas financial account.

6.     How to report

-       Taxpayers subject to reporting should file the “Reporting of Foreign Financial Accounts” to the competent tax office in June every year.

7.     Penalties on non-reporting of foreign financial accounts

-       Non-reporting or under-reporting will result in a penalty up to 10 % of the undisclosed amount and criminal punishments if the undisclosed amount is over KRW 5 billion.

  If you want to get the more information or filing service, please feel free to contact to Selim.