Tax service to give int’l businesses audit breakThe National Tax Service said yesterday that it will give support to small and midsize foreign companies that have operations in Korea by exempting them from tax audits for up to five years.
The tax agency said that starting next year it will apply its advanced pricing agreement (APA), which many local conglomerates already use, to foreign companies. An APA is an agreement between a taxpayer and the tax authority regarding transfer pricing, which involves setting the price of goods and services transacted between a company’s headquarters and its overseas operations or among overseas operations.
The companies that will be eligible for APAs must have an annual revenue of 50 billion won ($45.9 million) or less. To apply for the exemption, a foreign company can fill out simple paperwork and submit it to the National Tax Service. The approval process will likely take less than a year.
The NTS estimated that roughly 7,000 foreign companies, about 76 percent of the more than 9,200 international companies operating here, will take advantage of the reduced tax burden and can focus more on their business management.
The APA tax audit exemption was a result of a meeting that the NTS held with representatives of foreign companies earlier this year.
Four tax agency officials and six foreign business representatives including heads of the U.S. and European chambers of commerce met in June and September after a preliminary meeting was held between the two in May.
The tax agency also said it plans to set up a communication channel exclusively for foreign companies to receive consultation on their audits. It said it will publish a guidebook to explain the audit system in Korea and will hold meetings with officials at foreign companies each quarter to discuss other ways to help with their taxes.
BY LEE HO-JEONG [email@example.com]
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