Get Application for Entitlement to Reduced Tax Rate on Domestic Source Income ( for Foreign Corporation) 2012-2024

A thinly capitalised entity is one whose assets are funded by a high level of debt and relatively little equity. An entity's debt-to-equity funding is sometimes expressed as a ratio. For example, a ratio of 1.5:1 means that for every $3 of debt, the entity is funded by $2 of equity.

Dividends and interest paid to resident individuals by corporations generally are subject to a 14% WHT rate. In addition to this, there is a resident surtax of 10% on the CIT liability.

Korea's thin capitalization rules impose a 2:1 debt-to-equity ratio (6:1 for financial companies) on a Korean subsidiary or a Korean branch of a foreign corporation for borrowing from a foreign controlling shareholder (defined – see below) or from a third party if guaranteed by a foreign controlling shareholder.

―Thin capitalisation‖ refers to the situation in which a company is financed through a relatively high level of debt compared to equity. Thinly capitalized companies are sometimes referred to as ―highly leveraged‖ or ―highly geared‖.

Thin-capitalization rules restrict the ability of Canadian corporations and trusts to deduct interest expense on debt owing to certain related non-residents. The thin-capitalization rules also apply to Canadian branches of foreign corporations.

One primary benefit of the US-Korea Tax Treaty is the relief from double taxation. In other words, the double taxation relief allows a person to claim a credit for taxes paid in the other country to avoid double-taxation. This helps to avoid and/or minimize having to pay tax in both jurisdictions on the same income.

Korea's thin capitalization rules impose a 2:1 debt-to-equity ratio (6:1 for financial companies) on a Korean subsidiary or a Korean branch of a foreign corporation for borrowing from a foreign controlling shareholder (defined – see below) or from a third party if guaranteed by a foreign controlling shareholder.

Korea enacted the 2023 Tax Reform Bill on 31 December 2022....Changes in the Corporate Income Tax (CIT) Rate. Taxable income (KRW)Previous rateEnacted rateOver 200 million to 20 billion (approx. US$14m)20%19%Over 20 billion to 300 billion (approx. US$208m)22%21%Over 300 billion and above25%24%1 more row • 11 Jan 2023