When initiating a Tax Due Diligence (TDD) process, the first and most critical step is the Information Request List (IRL), often called the PBC (Prepared by Client) List.

Transparency is key. To help you understand the scope of a standard tax review in Korea, we are sharing a comprehensive checklist of the documents typically requested. This list is designed to uncover potential risks and verify compliance across all major tax categories.

Here is the breakdown of the essential documents and why we need them.

1. General Corporate Documents

These documents establish the legal and administrative foundation of the company. Tax deductibility often depends on whether internal procedures (such as board resolutions) were properly followed.

The Checklist:

• Articles of Incorporation (정관)

• Organizational Chart (회사조직도)

• Corporate Registry (Certified Copy) (법인등기부등본)

• Business Registration Certificate (사업자등록증)

• Minutes of Board of Directors & Shareholders Meetings (이사회 및 주주총회 의사록)

• List of Shareholders (주주명부)

• Payroll & Salary Regulations (급여규정)

• Welfare & Benefits Regulations (복리후생규정)

• Bonus Payment Regulations (Executive/Employee) (성과상여금 지급규정)

• Severance Pay Regulations (Executive/Employee) (퇴직급여 지급규정)

• Regulations for Voluntary Retirement/Consolation Pay (명예퇴직금/퇴직위로금 지급규정)

• Final Rulings on Litigation (소송관련 확정 판결문)

• Opinions or Analysis Reports from External Tax Advisors (외부 자문사 의견서)

• Expert Note: We closely examine the Board Minutes and Payment Regulations. If executive bonuses or severance payments were made without these pre-existing regulations or valid resolutions, they may be denied as deductible expenses (Non-Deductible Expenses).

2. Financial & Corporate Income Tax (CIT)

This section forms the core of the quantitative analysis. We generally review data from the past 3 to 5 fiscal years (based on the statute of limitations).

The Checklist:

• Financial Statements (BS, PL, Cash Flow) (재무제표)

• Independent Auditor’s Reports (감사보고서)

• Corporate Income Tax Return Adjustments (법인세 세무조정계산서)

• Value Added Tax (VAT) Returns (부가가치세 신고서철)

• Results of Tax Audits & Notice of Assessment (세무조사 적출내역 및 결정통지내용)

• Documents related to Tax Appeals/Disputes (조세불복자료)

• Certificate of Tax Payment (National Tax) (국세완납증명서)

• Statement of Related Parties (특수관계자명세서)

• Transaction Details with Related Parties (특수관계자와의 거래내역)

• Copies of Amended Tax Returns & Rectification Claims (수정신고 및 경정청구 내역)

• Asset Revaluation Reports (유형자산재평가내역 및 보고서)

• General Ledger (GL) for PL Accounts (손익계산서 각 계정원장)

• Expert Note: The Tax Adjustment Statement reveals the difference between accounting profit and taxable income. We also scrutinize Related Party Transactions to identify potential Transfer Pricing risks.

3. Local Tax & Withholding Tax

Local taxes and property-related taxes are often overlooked but can carry significant liabilities, especially in M&A scenarios involving real estate.

The Checklist:

• Local Tax Returns & Payment History (지방세 세목별 신고/납부현황)

• Certificate of Tax Payment (Local Tax) (지방세 완납증명서)

• Documents related to Local Tax Appeals (지방세 불복자료)

• Results of Local Tax Audits & Explanations (지방세 세무조사 적출 내역)

• Details of Local Tax Exemptions/Reductions (지방세 감면 내역)

• Ledger of Acquisition & Disposal of Tangible Assets (Land, Buildings, Structures) (유형자산 취득 및 처분 내역)

• Details of Assets Subject to Heavy Taxation (Acquisition/Registration Tax) (취득세 및 등록세 중과세 대상 자산 내역)

• Statement of Withholding Tax Filing & Receipts (원천징수이행상황신고서 및 원천징수영수증)

• Expert Note: For companies owning real estate, Acquisition Tax is critical. If the buyer becomes a majority shareholder (over 50%), a "Deemed Acquisition Tax" liability may be triggered. We use the Tangible Asset Ledgers to calculate this potential cost.

Conclusion

A thorough TDD relies on the completeness of these documents. This checklist serves as the starting map for identifying risks and ensuring a smooth transaction.