Undertaxed Payments Rule
Undertaxed Payments Rule (UTPR)
According to the revised tax law plan submitted by the government to the National Assembly in September 2023, as a supplementary regulation to IIR, UTPR is scheduled to be implemented from 2025.
The above plan includes the following:
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Governments are not subject to UTPR and IIR.
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Even if a company only holds certain PE (which is not taxed there), it is also not subject to UTPR and IIR.
PE concept for IIR and UTPR
According to the revised tax law plan submitted by the government to the National Assembly in September 2023, the concept of permanent establishment will change from a local concept to actively accepting the OECD concept. It is not effective until it is passed by the National Assembly.
However, even if this plan is passed, it is not clear whether the tax authorities' interpretation of permanent establishments and the court's ruling will change.
Therefore, foreign companies that believe they do not have a permanent establishment in Korea need to pay attention to updates to these interpretations and laws.
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GTI's support partner in Korea
JUDONG OH
Judong is a partner supporting the Korean section of "Global Tax Inside". He was in charge of tax affairs for foreign corporations as a senior manager at one of the Big 4 accounting firms, and is now working as an international tax partner at Daseung Tax Firm.