Investment, M&A & Exit
Diligence and Korean tax for an investor buying into a Korean company, from the decision to invest through to the closing of the exit.
How We Work
What you are buying, and what you can take out
What has to be examined before investing in a Korean company runs from financial, tax and legal diligence through to the taxation of the holding period and the exit. It is not a decision that can be taken on one part of that in isolation.
We carry out the diligence and the tax review with the same team. What is established in diligence – the financials, the contracts, the shareholding – becomes the premise of the tax analysis, and is not asked for a second time.
The tax answer is available before you invest. The treaty wording is the same at entry as at exit. The target’s asset composition is visible at diligence. The fund’s investor base is already fixed. What requires the exit to have started is the price, and little else. So we settle the position at the front, put it in writing with the basis recorded, and keep it in a form that can be handed to a buyer and, later, to the tax office. A conclusion that cannot be evidenced does not produce relief at closing.
And we treat it as a position to be revisited rather than a document to be filed. A follow-on round, a dividend that was not planned, an amendment to the law – each removes a premise the earlier conclusion rested on.
Our published analysis on this area starts with Korean Tax Across the Investment Lifecycle.
Service Scope
Key Services Included
Due diligence
- Financial Due Diligence (FDD) – Quality of Earnings
- Tax Due Diligence (TDD) – exposure and indemnity scoping
- Legal Due Diligence (LDD) – labour and contracts
- Valuation (DCF, market approach)
- Deal structuring and its Korean tax consequences
Investment and exit taxation
- Pre-investment Korean tax review, with the after-tax exit position set out
- Beneficial owner analysis for fund and multi-tier structures
- Treaty entitlement review, investor by investor
- Deemed acquisition tax testing at entry and at each follow-on round
- Dividend withholding and treaty rates where a distribution is contemplated
- Exit withholding computation, and alignment with the buyer ahead of closing
- Applications for non-taxation or exemption, including the overseas investment vehicle report
- Refund claims where tax was withheld despite treaty relief
- Securities transaction tax, and the tax provisions of the transaction documents
- Post-merger integration support