National Tax Service Resolves 125 Cases of Double Taxation for Domestic and Foreign Taxpayers through Mutual Consultation with 16 Tax Authorities

The National Tax Service (NTS) announced on the 27th that it has resolved 125 cases of double taxation through mutual agreement procedures with tax authorities from 16 countries up to November this year.

An NTS official explained, "We have resolved and prevented double taxation, where income generated from international transactions is taxed more than once in different countries. We aimed to support economic vitality by providing a business environment that allows Korean companies operating overseas to focus on local management, and tax stability that enables foreign-invested companies to confidently expand their domestic investments."

Among the 125 cases of double taxation resolved this year, 85 cases involved Advance Pricing Agreements (APA), which prevent transfer pricing taxation in advance through prior agreements between tax authorities. This represents a 32.8% increase compared to the same period last year, marking the highest record since the first APA was approved in 1997.

According to the NTS, the number of double taxation cases resolved by country was highest with major trading partners Japan, China, and the United States, in that order. Additionally, 14 cases of double taxation were resolved with Malaysia, Vietnam, Indonesia, and India, where Korean companies’ investments have been steadily increasing.

Furthermore, in line with the diversification of corporate overseas investments, the NTS held its first mutual agreement meetings with Mexico in January, Peru in September, and Kuwait in December, establishing footholds to swiftly resolve double taxation issues for companies operating abroad.

Alongside this, the NTS is making multifaceted efforts to support Korean companies operating overseas from a tax administration perspective, including active tax diplomacy and expanding communication and trust with foreign-invested companies in Korea.

Face-to-face commissioner meetings, which had been suspended due to the pandemic, were resumed in June with Japan after five years, and in December with China after four years, to convey tax difficulties faced by Korean companies operating abroad and to request tax support such as holding explanatory sessions for Korean companies.

An NTS official stated, "Going forward, the NTS will continue to support domestic and foreign companies to freely conduct economic activities across borders without excessive tax risks through mutual agreements between tax authorities and expanded tax diplomacy."