One of the special relationships between transaction parties:

• A relationship between both parties to a transaction where a third party owns directly or indirectly at least 50% of their respective voting stocks

Where a third party’s direct or indirect ownership ratio of both parties’ respective voting stocks is calculated, the ownership ratio of the persons having the following relationships with such third party should be included:

1. Blood relatives within the sixth degree of relationship;
2. Relatives by marriage within the fourth degree of relationship;
3. A spouse (including a person who is in a de facto marital relationship); and
4. A person who enters a family as an adopted child, his/her spouse, and lineal descendant

• Past fiscal years covered by bilateral APA: The immediate previous 5 years could be covered
• Past fiscal years covered by unilateral APA: The immediate previous 3 years could be covered

• Past fiscal years covered by bilateral APA: The immediate previous 7 years could be covered
• Past fiscal years covered by unilateral APA: The immediate previous 5 years could be covered

1. After the interest expenses incurred from the hybrid mismatch arrangement with a related party are treated as deductible for corporate income tax purpose at the expensed fiscal year, if the corresponding interest income is confirmed as non-taxable in the jurisdiction of such related party during a certain period, such interest expenses plus some interest equivalents will be added to the taxable income at the fiscal year just after such period is ended.
2. After the interest expenses incurred from the hybrid mismatch arrangement with a related party are treated as non-deductible for corporate income tax purpose at the expensed fiscal year, if the corresponding interest income is confirmed as taxable in the jurisdiction of such related party during a certain period, such interest expenses shall be deducted from the taxable income at the fiscal year just after such period is ended

1. Same as the current tax law in the left
2. The rule on the left is deleted; this means that the taxpayer needs to prepare and file amended tax returns for the deductibility of the already-denied interest expenses

Schedule on the international transactions between related parties and Summarised income statements of foreign related parties

By the filing due date of corporate (individual) income tax return

Within 6 months after the filing due date of corporate (individual) income tax return

Report on the acquisition/details of foreign real estate and report on the direct investment into the foreign companies

By the filing due date of corporate (individual) income tax return

With 6 months after the filing due date of corporate (individual) income tax return

APA annual report

Within 6 months after the filing due date of corporate income tax return

Within 12 months after the fiscal year is ended

The taxpayer can choose one of the following double tax avoidance methods on the foreign tax payment for its Korean income tax purpose:

1. Tax credit method: The taxpayer can claim the tax credit on the foreign tax payment within a statutory threshold amount.
2. Deductive expense method: The taxpayer can claim the foreign tax payment as deductible expense

• Method 2 on the left would be removed.