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A Korean subsidiary files the same returns as any domestic company. What differs is everything attached to the parent relationship.
On paper, your Korean entity looks like any other Korean company. The same bookkeeping, the same VAT returns, the same corporate income tax return in March. That is precisely why a general practice can take it on and handle it perfectly well – until the transactions with head office begin.
The question worth asking is not whether your adviser can file a Korean tax return. It is whether anyone is looking at the items that exist only because the company is foreign-invested.
The Problem
None of these arise for a purely domestic company. All of them arise the moment a Korean entity starts transacting with its parent.
Management fees, royalties and similar charges may be subject to Korean withholding tax, depending on how the payment is characterised under the applicable treaty. The determination has to be made, and recorded, before the money moves.
Learn moreInvoices issued to a foreign parent are routinely zero-rated for VAT. Zero-rating is granted subject to conditions, and where it is denied the ten percent cannot be recovered from anyone.
Learn moreDealings with an overseas parent trigger separate filings due six months after the fiscal year end, capital transactions included. Group transfer pricing documentation does not discharge them.
Learn moreThese are the three that arise in almost every case. Others depend on how the group actually operates in Korea.
What We See
In practice, problems here rarely begin with a wrong answer. They begin where no one was asked the question.
International tax determinations and filings frequently sit outside a standard bookkeeping or advisory engagement. The adviser treats them as out of scope; the company assumes they are covered. Neither party has said anything untrue.
The treatment applied to the first head office invoice becomes the standard. When a new type of charge is added years later, it lands in the same box without a fresh assessment.
No letter arrives to signal a missed filing or an incorrect rate. The position holds on paper year after year, and is then examined across every open year at once.
Working with a general practice is not the problem. The risk is that the items which exist only because the company is foreign-invested have never been assigned to anyone.
What to Ask
Each of these has a definite answer. What matters is whether it can be produced.
An adviser does not need to handle every one of these in house. But before the next filing season, each of them should have a name attached to it.
Send us your engagement scope, or simply tell us which of the seven questions above you cannot answer today. We will identify where the gaps are.
No confidential figures are required for an initial review.