According to Yonhap News,

(SEOUL=Yonhap News) The National Tax Service (NTS) will reduce tax investigations on foreign and foreign-invested companies in Korea so that they can concentrate on their business.

The agency will also provide a counselling service to foreign companies under tax investigation so that they can fully represent their side to the tax investigator.

The NTS announced measures to support tax administration and resolve the tax issues of foreign companies November 6.

The NTS will adopt the advance pricing agreement (APA) for small and medium-sized foreign companies with sales below KRW 50 billion.

An APA is an ahead-of-time agreement on a normal price calculation method for international transactions between a taxpayer and a person in a foreign country (with a special relationship), after the submission of an application by the taxpayer and examination by a tax authority.

Foreign companies will not be subject to tax investigations for 3-5 years of transfer pricing experience when they declare income in accordance with the APA.

Considering that large-scale companies use an internal APA system, small- and medium-sized companies with sales of less than KRW 50 billion will have NTS approval within a year when they submit simplified documents to the agency.

The legal process period of an APA is two years, and it took an average of 1 year and 9 months last year.

Having admitted that there is a shortage of communication channels between foreign companies and the NTS, the agency will also provide a counselling service to the foreign company under tax investigation so that the company can fully represent its side to the tax investigator.

The NTS also established an English guidebook on tax investigations for foreign companies so that the companies will not be disadvantaged when they are under tax investigation due to differences in language, tax law and culture.

The guidelines include a detailed process of tax investigations and the protection of rights. The company will receive the guidelines when the tax investigation begins. The guidelines can also be downloaded from the NTS website.

choinal@yna.co.kr

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Source Text

Source: Yonhap News (November. 06, 2014)

** This article was translated from the Korean.