Korea To Announce More Friendly Policy Towards Foreign Investors

by Mary Swire, Tax-News.com, Hong Kong

11 February 2004

The Korean National Tax Service is to announce later this month a new, more lenient policy in its dealings with foreign companies, as the country attempts to present a more friendly face to foreign investors.

In particular, the NTS plans to reduce the number of transfer pricing investigations it carries out on foreign firms. The Tax Service has announced that these are to be merged into the standard corporate audit procedure from August of this year. In addition, the length of such investigations will be reduced from five fiscal years to three years.

The change in course by the tax authority was first heralded in a speech given to international business representatives at the American Chamber of Commerce in Korea in December 2003. NTS Commissioner, Lee Yong-sub emphasised the government’s commitment to increasing foreign participation in the economy, and achieving a level of $20,000 income per head within a decade.

"The NTS would not initiate tax investigations into foreign companies unless there is a clear indication of their tax evasion using transfer pricing manipulation," Lee declared.

"The NTS will hold more meetings with foreign business communities such as AMCHAM through which it will collect their opinions, ensuring that the NTS accommodates foreign taxpayer needs," he concluded.

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