Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korea to defer tax audits of foreign firms boosting local investments
American Chamber of Commerce in Korea (AMCHAM) Chairman James Kim, left, and National Tax Service (NTS) Commissioner Lim Kwang-hyun walk into AMCHAM's office in Seoul, Friday, to attend a roundtable meeting. Courtesy of NTS
By Park Jae-hyuk
US businesspeople welcome Lee administration's support measures
The National Tax Service (NTS) will begin deferring routine tax audits of foreign companies for up to two years starting in December if they plan certain levels of increased investment in Korea. It marks the first time the country has introduced an audit deferral program specifically designed for foreign investors.
During a roundtable meeting hosted on Friday by the American Chamber of Commerce in Korea (AMCHAM), NTS Commissioner Lim Kwang-hyun announced a new package of tax support measures aimed at easing the compliance burden on foreign companies. He noted that the initiative aligns with the Lee Jae Myung administration’s agenda to encourage greater foreign direct investment.
Under the plan, small foreign firms that boost domestic investments by at least 10 percent from the previous year, as well as medium-sized firms that raise investments by 20 percent, will qualify for a routine tax audit deferral of up to two years.
NTS also plans to assist foreign nationals working in Korea by offering English-language guides for year-end tax settlements and launching artificial intelligence-based multilingual consultation services.
To help reduce the risk of double taxation for multinational corporations, the tax agency will accelerate the processing of advance pricing arrangements (APAs), which are advance agreements between taxpayers and tax authorities on the transfer pricing methods to be applied to transactions between related parties over a set period. APAs are intended to give companies greater certainty about how their cross-border, intragroup transactions will be taxed and to prevent future transfer pricing disputes.
“We want to create an environment where foreign companies can focus on business operations and invest in Korea with confidence,” Lim said, noting that seven major global companies unveiled plans during the Asia-Pacific Economic Cooperation meetings in late October to invest $9 billion in the country.
AMCHAM Chairman James Kim welcomed the new measures, saying they will significantly reduce uncertainty and strengthen Korea’s competitiveness against major investment hubs such as Singapore and Hong Kong.
“Foreign companies also hope to be treated under the same clear guidelines and principles that apply to local companies regarding potential audits and tax interpretations,” Kim said.
AMCHAM representatives added that these practical steps, including the expanded use of APAs, will meaningfully improve the operating environment for foreign businesses and support Korea’s efforts to attract high-quality investment.