Problems relating to Trade and Investment on Korea

14. Taxation Systems
Issue	Issue details	Requests	Reference

(1) The Risk of Additional Duty from Differences between Tax Office and Customs

- It would appear difficult to share the common understandings between National Tax Service (NTS) and Korean Customs Service (KCS) in the context of Japan-ROK tax treaty in regard to profit margin under the Advance Pricing Agreement (APA).
Furthermore, from the customs perspective, low import unit price could pose problems, while NTS would look into low profitability, in any event, always at the risk of double taxation for the group of companies under a member firm's umbrella.

- It is requested that GOK takes step to:
-- synchronise the mutual understandings on national tax and customs duty, and
-- perfects the advance pricing agreement system.

(2) The Risk of Double Taxation due to Differences in the TPTS Rules

- A member firm as a group company is under the double taxation risk, especially under the TPTS as the rules vary from one nation to another and so do the interpretation on the rules between the countries.

- It is requested that GOK:
-- overhauls TPTS guidelines, etc. of the world standard,
-- embellishes advance pricing agreement system.

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