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RETURN AND PAYMENT

A. Tax Return

GENERAL

Under the 1994 tax reform, the individual income tax assessment system was converted

into a self-assessment system under which each taxpayer is required to file a return and

pay the proper amount of tax by the due date as prescribed by the individual income tax

law.

INTERIM PREPAYMENT FOR GLOBAL INCOME

A resident with global income is subject to pay, as interim prepayment, an amount

equivalent to half of the global income tax amount paid or payable in the preceding year,

by the end of November.

"The income tax amount paid or payable in the preceding year" is the aggregate of the

tax amount payable for interim prepayment in the preceding year, the tax amount finally

payable and the amount of penalty taxed.

FINAL RETURN AND PAYMENT

Return on tax base

A resident who has global income, retirement income, capital gains or timber income

in the taxable period is required to file a return to the superintendent of the competent

district tax office in the place of tax payment within the period from May 1 to May 31

in the following the year concerned.

Documentation

Tax returns are required to be accompanied by the following documentations:

· Documents certifying a person eligible for personal exemptions;

· Documents in which gross receipts and necessary expenses calculated are recorded;

· In the case of persons who have real estate income, business income or timber

income, a balance sheet, an income statement, a trial balance, and other required

documents;

· In the case where the gross receipt is less than 300,000,000 Won, the simplified

income account statement;

· Particulars of tax free reserves

Residents not liable for submitting final returns :

The following residents are not liable to submit final returns:

· A resident who has only ① wage and salary income, ② retirement income, or ③

both ① and ② ;

· A resident who has only capital gains and has filed a preliminary returns;

· A resident who has only ① interest income subject to separate taxation, ② dividend

income subject to separate taxation, ③ both ① and ②, or ④ other income subject to

separate taxation.

· A resident with Class B wage and salary income or retirement income who has paid

income tax using taxpayer association

B. Tax Payments

PAYMENT OF INDIVIDUAL INCOME TAX

A resident who has submitted a tax return shall pay an amount remaining after deducting

the amount enumerated below from the calculated tax amount of global income, retirement

income, capital gains or timber income for each taxable period within the return period:

Tax credit amount;

Interim prepayment;

Estimated tax payment by real estate dealer, or for capital gains;

Tax paid for occasional assessment;

Tax withheld at source;

Tax paid through a taxpayers association

In the case of a resident with tax liability exceeding 10 million Won, tax, as described

below, may be paid by installments within 45 days from the closing day of the payment

period.

If the tax amount is 20 million Won or less; the excess over 10 million Won;

If the tax amount exceeds 20 million Won: less than half of the tax amount payable

PAYMENT OF SPECIAL TAX FOR RURAL DEVELOPMENT

Taxpayer

An individual or corporation whose tax liability (corporation tax, customs duty,

acquisition tax, or registration tax as well as individual income tax) is reduced under the

Special Tax Treatment Control Law, Local Tax Law, or Customs Law.

Tax Base and Tax Rates

Basically, Special Tax for Rural Development is a surtax levied on the amount of

exemption of individual income tax, corporation tax, customs duty, special excise tax,

and securities transaction tax. The tax base of STRD is the exempted amount of the

above mentioned taxes, where the exemptions are stipulated in the Special Tax

Treatment Control Law etc. Tax rates are as follows ;

tax base

tax rate

reference

exemptions of individual income

20%

except for tax reduction for development

tax, corporation tax, etc.

technology, public project, etc.

reduction of eligible interest

10%

from savings account

Return and Payment

STRD is filed and paid at the same time global income return (tax) is filed (paid).

PAYMENT OF INHABITANT TAX FOR PRO RATA INCOME

Taxpayer

Individuals and corporations is liable to the payment of income tax, corporation tax, or

farmland tax

Tax Base

amount of income tax, corporation tax, or farmland tax. which means Inhabitant tax is

a income tax surtax, assessed on the basis of income tax.

Taxation period : one year

Tax Rates

10% of income tax

Return and Payment

In case where pro rata income tax is filed by the taxpayer, the taxpayer shall return

and pay the computed tax.

taxpayer association

Organization

class B wage and salary income earners, meat sellers, grain dealers, and vendors

may organize a taxpayer association for the purpose of tax payment

Obligation to collect tax

A taxpayer association shall collect income tax from its members each month.

Payment of tax

Income tax collected by a taxpayer association for each month will be paid by

the 10th of the following month

Tax credit for payment of tax by taxpayer association

10%

Penalty tax for non-payment by taxpayer association