Laws of the Democratic People's Republic of Korea (North Korea)

ENFORCEMENT REGULATIONS FOR FOREIGN-INVESTED BUSINESS
AND FOREIGN INDIVIDUAL TAX LAW

(Approved by the Administration Council of the
D.P.R.K. on February 21, 1994)

 

 

 

SUBJECT: TAXATION

ISSUING-DEPT: ADMINISTRATION COUNCIL OF CHINA

ISSUE-DATE: 02/21/1994

IMPLEMENT-DATE: 02/21/1994

LENGTH: 6182 words

TEXT:

CHAPTER 1. GENERAL PROVISIONS

Article 1. These regulations are intended to ensure the proper implementation of "The Law of the Democratic People's Republic of Korea on Foreign-Invested Business and Foreign Individual Tax. 

Article 2. These regulations shall be applied to foreign-invested enterprises and foreign individuals that carry out business transactions or earn income inside or outside the territory of the D.P.R.K. as well as to foreign firms and individuals that earn income inside the territory of the D.P.R.K.

These regulations shall also be applied to Korean compatriots living outside the territory of the D.P.R.K. who carry out economic transactions or earn income inside the territory of the D.P.R.K.

A foreign-invested enterprise includes contractual and equity joint ventures and wholly foreign-owned enterprises which are set up and run under The Law of the Democratic People's Republic of Korea on Foreign Investment" and a foreign Firm includes foreign companies, firms and other economic institutions which either carry out business activities with its permanent representative in the territory of the D.P.R.K. or have a source of income in the territory of the D.P.R.K. such as interest, dividend, lease and earnings from the licensing of industrial property rights and technical know-how without any permanent representative therein.

A foreign-invested enterprise and a foreign firm are hereinafter referred to as a foreign-invested business.

Article 3. Imposition and collection of tax on and the supervision and control over the payment of tax by foreign-invested business and foreign individuals shall be done by the financial organ.

The financial organ includes the Ministry of Finance of the D.P.R.K. and the financial divisions of provincial, city or county administration and economic committees.

A foreign-invested business and foreign individuals shall show in time documents and papers needed for the inspection on tax situation.

Article 4. A foreign-invested business shall make tax registration at the relevant financial organ and have the certificate of tax registration issued by it within 20 days from the date when it has been registered as a body corporate.

A foreign individual who obtained the approval to stay in the territory of the D.P.R.K. for more than 180 days shall make tax registration at the relevant financial organ within 30 days from the day of the approval.

In case of a change of its location, integration, separation, or a change in the amount of registered capital, the scope of business, categories of business and so on, registration of tax change shall be made at the relevant financial organ within 20 days from the change and a new certificate of tax registration shall be issued to the enterprise.

The foreign-invested business which is to be dissolved shall go through the formalities for the cancellation of its tax registration at the relevant financial organ 20 days prior to the cancellation of its business registration at the provincial administration and economic committee.

Article 5. For tax registration, a foreign-invested business shall submit the application for tax registration to the relevant financial organ.

The application shall be accompanied with a copy of the certificate of business registration, which reports the following:

l. Title and address of the business;

2. Date and number of business registration;

3. Mode of management and categories of business;

4. Period of business;

5. Total number of employees (including the number of foreigners);

6. Total area of the land the business covers;

7. Name of its bank and the number of the account;

8. Names of the manager and the chief accountant. A foreign individual's application shall include the full name, nationality, address, passport number, the date of the issuance of the certificate of stay and the period of stay.

Applications for a change or a cancellation of tax registration shall state the title and address of the business as well as the reasons for the change or the cancellation.

Article 6. Forms of documents used for tax administration shall be prescribed by the Ministry of Finance of the D.P.R.K. Tax documents shall be filed in Korean.

Where a foreign language is used Korean translation shall be given under each item. Tax documents shall have the registered seals of the business, the manager and the chief accountant of the business.

Article 7. Papers related to tax administration (tapes or diskettes in case of using a computer) shall be filed in the order of the date of transaction and be kept for 5 years from the creation of the paper (until the termination of the business in the case of financial statements and documents on fixed assets).

Article 8. A foreign-invested business and a foreign individual shall calculate and pay tax in terms of Korean Won. The exchange rate of foreign currencies in Korean Won shall accord to the current rate issued by the foreign exchange control organ.

Article 9. Tax may be directly paid by the beneficiary or be withheld and paid by the unit which causes the income to be created.

Article 10. Tax shall be paid to the relevant bank with the tax statement confirmed by the financial organ. The bank which collected the tax shall issue the tax receipt to the direct payer or withholder (hereinafter referred to as tax payer) and the notice of tax payment to the financial organ.

Article 11. The foreign individual wishing to go back to his or her country (except a temporary exit) shall pay the tax outstanding before going through the

exit formalities.

Article 12. If any tax-related agreement concluded between the Government of the D.P.R.K. and the government of a foreign country contains tax provisions that differ from those stipulated in these regulations a foreign investor and a foreign individual may pay taxes pursuant to the agreement.

A foreign investor includes a body corporate and an individual of a foreign country that has made investment in the territory of the D.P.R.K.

CHAPTER 2. ENTERPRISE INCOME TAX

Article 13. A foreign-invested business shall pay enterprise income tax on the income earned within the territory of the D.P.R.K. The income includes income from business activities and other incomes. Income from business activities includes the proceeds of sale of the products in industrial sectors, incomes earned from construction prospecting and development projects, the proceeds of sale of commodities in commercial sectors (including trade), interests and commissions in financial sectors and freight rates and fares in service sectors like transport, telecommunication, restaurants, and repair and maintenance shops.

Other incomes include:

l. Interests;

2. Dividends;

3. Income from lease and conveyance of property;

4. Income from licensing and transfer of industrial property rights, technical know-how and copyrights;

5. Income from management service such as technical consultation, discussion and training;

6. Income from the disposal of wastes and side products;

7. Other incomes. A foreign-invested enterprise shall also pay enterprise income tax on the income earned outside the territory of the D.P.R.K.

Article 14. The fiscal year for enterprise income tax collection begins on January 1 and ends on December 31 of calendar year.

The first year in which the foreign-invested business starts its operation is from the day on which it begins its operation to December 31 of the same year, and the last year in which it is dissolved is from January 1 to the day of the year on which the dissolution is declared.

Article 15. Enterprise income tax shall be imposed on the taxable income, which means the remaining earnings after the deduction of cost, other expenditure and turnover tax from the gross revenue.

Cost includes:

l. In case of industrial sectors, cost of materials, fuel, power, expenses of purchase, development of new brands, wages, depreciation, overhead expenses of the factory and company, expenses of sale and insurance premium;

2. In case of commercial sectors, the cost of commodities and costs of circulation (transportation, storage, packaging, use-up of containers and repair, natural decrease of commodities, fuel and electric power used for operation, wages, expenses of commercial procedures for marketing abroad, furniture and office units, heating, lighting, water, secretarial work, telecommunication, and cost of travel, advertising, public relations, labor protection, cultural and recreational facilities, interests on loans, insurance premiums and the other costs of circulation);

3. In case of service sectors, raw materials for foodstuffs, circulation cost, transportation and telecommunication.

Other expenditures include loss caused by changes in exchange rates, debtors who have gone bankrupt, expenditures on re-processing and repackaging for the marketing of commodities which are accumulated due to narrow access to markets and so on.

Article 16. For the foreign-invested business which takes more than one year in undertaking a construction, assembling or installation work or in processing or manufacturing a large machine or equipment, enterprise income tax shall be imposed in each fiscal year on the remainder after deduction of expenditures from the revenue created according to the amount of work performed during the same year.

Article 17. Enterprise income tax rates shall be:

1. Fourteen per cent of the taxable income in case of a foreign-invested business established inside the Free Economic and Trade Zone;

2. Twenty five per cent of the taxable income in case of a foreign-invested business established outside the Free Economic and Trade Zone;

3. Ten per cent of the taxable income in the sectors of priority, ultra-modern technology, natural resources development, infrastructure construction, scientific research and technological development;

4. Ten percent of the amount of other incomes in case of a foreign firm operating inside the Free Economic and Trade Zone and 20 % of the amount of other incomes for a foreign firm operating outside the zone.

Article 18. Enterprise income tax shall be calculated by applying the set rate either to the taxable income or to the amount of income.

Article 19. An estimated amount of enterprise income tax shall be paid for each quarter and the full amount shall be settled at the end of the year. Where it is impossible to calculate the accurate figure for any quarterly taxable income, the estimated amount equivalent to one quarter of the income tax paid for the previous year shall be paid. The annual settlement of the income tax shall be made through either a refund of the overpaid amount or an additional payment of the shortfall.

Article 20. A foreign-invested business shall pay the enterprise income tax within 15 days from the end of each quarter. In this case, the business shall submit quarterly financial statements to the relevant financial organ before the payment of enterprise income tax.

Article 21. A foreign-invested business shall, within 2 months from the end of each fiscal year, submit the enterprise income tax returns and financial statements for the year audited by an office concerned to the relevant financial organ and, thereafter, pay enterprise income tax for the year.

Article 22. Enterprise income tax returns shall state the name of its bank, number of account, taxable income, tax rates, the amount of tax to be paid and so on. Financial statements shall include balance sheets, cost accounts, production and sales revenue accounts, profit and distribution accounts, profit and lost accounts, overhead expenses accounts, depreciation accounts and so on.

Article 23. The withholder shall, within 15 days from the payment of the earnings, pay enterprise income tax with enterprise withholding tax returns. Enterprise withholding tax returns shall state the name of its bank, number of account, item of the payment, amount of the payment, tax rates, amount of tax to be paid and so on.

Article 24. In case of dissolution due to the termination of an enterprise, decision made by a court or due to unavoidable reasons such as natural disasters, the foreign-invested business shall, within 20 days from the declaration of the dissolution, have 50 % of the enterprise income tax payable retained by the financial organ as a guarantee for the tax and, within 15 days from the decision of liquidation procedures, pay the enterprise income tax.

The tax security can be used for the payment of the tax.

In case of integration or separation, the foreign-invested business shall settle accounts of the enterprise income earned till then and pay enterprise income tax within 20 days from the day of its declaration.

Enterprise income tax outstanding to be paid by a foreign-invested business that is dissolved, integrated or separated shall have priority over the other liabilities.

Article 25. Enterprise income tax on the other incomes of a foreign enterprise shall be withheld and paid by the unit which causes the income to be created within 15 days from the creation of the income.

Article 26. Enterprise income tax on the income earned by a branch of a foreign-invested enterprise shall be paid by the head office through consolidation and enterprise income tax on the income earned by a branch of a foreign firm shall be paid directly by itself.

In case enterprise income tax rates to be applied to the head office and branches of a foreign-invested enterprise set up inside the territory of the D.P.R.K. differ from each other due to the differences in categories of business and locations, these different rates shall be applied respectively.

Where enterprise income tax on the income earned by establishing a branch outside the territory of the D.P.R.K. has been paid in the country concerned. it may be deducted.

In case the amount of the enterprise income tax paid by it is equivalent to or less than the sum calculated on the basis of the tax rates stipulated in these regulations the amount which has actually been, paid abroad shall be deducted, and in case the amount paid is greater than the amount calculated, the surplus shall not be deducted.

Article 27. In case the government of a foreign country or an international financial organization grants loans to the Government of the D.P.R.K. or a state bank or in case a foreign bank gives loans to a bank or an enterprise of the D.P.R.K. on favorable terms such as low interest rates (lower than the LIBOR) and the return period of more than 10 years including a grace period the enterprise income tax on the interest on the loan shall be exempted.

Article 28. The foreign-invested business which operates for more than 10 years either in the sectors of priority or in the manufacturing sector inside the Free Economic and Trade Zone shall receive immunity from the enterprise income tax for 3 years from the first profit-making year and reduction of up to 50 % during two ensuing years. Priority sectors include ultra-modern technology, natural resource development and infrastructure construction as well as scientific research and technological development.

Article 29. The foreign-invested business operating in service sectors which is established in the Free Economic and Trade Zone and continues its operation for more than 10 years shall receive immunity from the enterprise income tax for one year from the first profit-making year and reduction of up to 50 % during two ensuing years. For an income earned by a financial enterprise e through offshore banking transactions income tax shall be exempted or reduced.

Article 30. For a foreign-invested business which invests more than 60,000,000 Won in total in infrastructure construction projects such as railways, road, telecommunication, seaports and airports inside the Free Economic and Trade Zone, enterprise income tax shall be exempted for 4 years from the first profit-making year and may be reduced by up to 50 % during three ensuing years.

Article 31. The period of enterprise income tax exemption or reduction shall be calculated in a continuous way from the first profit-making year.

Article 32. In case of a loss a foreign-invested enterprise can carry forward its loss to the next year, and if it is impossible to do, it can continue to carry it forward every year provided that the period shall not exceed 4 years.

Article 33. The enterprise wishing to have enterprise income tax exempted or reduced shall submit an application for enterprise income tax exemption and reduction to the relevant financial organ for review and approval. The application shall include the title and address of the company, categories of business, the year in which profit is made, the amount of total investment, name of its bank and number of account and be accompanied with a document confirmed by the relevant business licensing organ.

Article 34. In case the foreign-invested business operating in priority sectors or in the production and service sectors established inside the Free Economic and Trade Zone withdraws or is dissolved before 10 years have passed since its start-up, it shall repay the enterprise income tax which has been exempted or reduced.

Article 35. In case a foreign-invested business reinvests its legal profits earned from its business to increase its registered capital inside the territory of the D.P.R.K. or establishes another foreign-invested enterprise and runs it for more than 5 years 100 % (in the infrastructure construction sectors) or 50 % (in the other sectors) of the enterprise income tax which has been paid on the reinvested portion of the profit can be refunded or deducted from the enterprise income tax to be paid next time. In this case relevant to application shall be submitted with the document stating the amount of reinvestment and operation period confirmed by the business licensing organ. In case the reinvested capital is withdrawn within 5 years since the beginning of the operation, the enterprise income tax which has been refunded shall become payable.

CHAPTER 3. PERSONAL INCOME TAX

Article 36. The foreign individual who stays for more than 180 days inside the territory of the D.P.R.K. and earns income therein shall pay personal income tax. The foreign individual who stays or resides for more than 1 year inside the territory of the D.P.R.K. shall pay tax also on income earned by him outside the territory of the D.P.R.K.

In case of temporary exits during stay or residence, these days shall be included in the period of the stay or residence.

Article 37. Income on which personal income tax is payable includes labor remuneration, dividends, incomes from the licensing of industrial property rights: technical know-how and copyrights, interest, lease, proceeds of sale of property, income from donation and income earned by self-employed persons.

In case the income on which personal income tax is payable takes the form of property or commodity in kind or securities, the amount of income shall be considered to be equivalent to its purchasing price prevailing at the time of the purchase.

Labor remuneration includes wages, bonus, bounty, allowance, incomes created as a result of the performance of such work as lecture, address, contributions, translation, designing, drawing, installation, embroidery, sculpture, painting, writing, art performance, accounting, sports, medical service and consultation; dividends include dividends from retained profits, income from the distribution of surplus profits and so on.

Income from the licensing of industrial property rights includes incomes earned by the owner of patent, utility model, industrial design, and trade mark through their licensing or transfer, and income from the licensing of technical know-how includes incomes created as a result of the furnishing of technical literature and knowledge, skills, qualifications or experiences which have not gone through formalities for obtaining patent rights or which have not been made public.

Income from the licensing of copyrights includes incomes from the licensing of literature and artistic works such as novels, poems, painting, music, dance, film and dramas.

Income from interests includes interests on saving or credits.

Incomes from lease or proceeds of sale of property include incomes created as a result of the lease or sale of properties such as buildings, machines, equipment, vehicles and ships.

Income from donation includes incomes created as a result of the donation of properties or property rights including cash, property in kind, industrial property rights and technical know-how; income earned by self-employed persons includes incomes earned by foreign individuals who have obtained business license through the running of commercial and service businesses such as retail shops, restaurants and repair and maintenance shops.

Article 38. Personal income tax rates shall be as follows:

l. Tax rates on the income from labor remuneration shall be exempted if the amount of income is not greater than 2,000 Won per month and the progressive rates contained in the Annex I to these regulations shall be applied if the amount of income is greater than 2,000 Won per month;

2. In case of incomes from dividends, the licensing of industrial property rights, technical know-how and copyrights, interests and lease, the personal income tax rates shall be 20 % of the amount of the income;

3. Income tax on the income created as a result of donation shall be exempted if the amount of income is not greater than 10,000 Won and calculated by applying the rate contained in the Annex II to these regulations if the amount of income is greater than 10,000 Won;

4. In case of incomes from the sale of properties and incomes earned by self-employed persons, personal income tax rates shall be 25 % of the amount of income.

Article 39. Personal income tax shall be calculated by applying the relevant rate to the amount of income. Personal income tax on the income from the lease of fixed assets shall be calculated by applying the relevant rate to the remainder after deduction of 20 % (as the cost of lease such as labor, packaging and commissions) from the total amount of rents. Personal income tax on the income earned by self-employed persons shall be calculated by applying the relevant rate to the remainder after deduction of turnover tax from the amount of income.

Article 40. Personal income tax shall be paid in the following manner:

1. Personal income tax on labor remuneration and interests shall be calculated by each month and paid within 15 days from the end of the assessment month by the withholder which causes the income to be created;

2. Personal income tax on the income earned from the sale of property inside the territory of the D.P.R.K. by the person living outside the territory of the D.P.R.K., shall be calculated quarterly and be paid within 10 days from the end of the assessment quarter by the withholder which causes the income to be created.;

Personal income tax on the incomes earned from the sale of property and donation by the person living inside the territory of the D.P.R.K. shall be paid directly by him or her:

3. Personal income tax on the income earned by self-employed persons shall be calculated monthly and paid directly by him or her within 15 days from the end of the assessment month:

4. Personal income tax on the incomes earned from dividends, licensing of industrial property rights, technical know-how and copyrights and lease inside the territory of the D.P.R.K. by the person living outside the territory of the D.P.R.K. shall be calculated quarterly and withheld and paid within 10 days from the end of the assessment quarter by the withholder which causes the incomes to be created. In case the income earner is living inside the territory of the D.P.R.K. personal income tax on the incomes mentioned shall be paid directly by him or her;

The withholder shall keep the papers showing assessments and calculations of personal income taxes which have been withheld.

Article 41. Personal income tax on the income earned outside the territory of the D.P.R.K. by the foreign individual who stays or lives inside the territory of the D.P.R.K. for over one year shall be directly paid by him or her within the first month from the end of the quarter in which the income is created. In case the earner has already paid income tax outside the territory of the D.P.R.K. he or she can apply for a deduction against the income tax already paid abroad provided that the deduction shall be limited to the amount of income tax calculated and payable under these regulations. The application shall be accompanied with the original of tax documents issued by the tax administration body of the country in question.

Article 42. A foreign individual shall not pay personal income tax on the following incomes:

1. Incomes on which personal income tax is not payable in accordance with the agreement concluded between the Government of the D.P.R.K. and the government of a foreign country;

2. Interests on saving deposits, insurance money and insurance compensation money received from the financial institution of the D.P.R.K.:

3. Interests on deposits made by non-residents at banks which are engaged in offshore banking within the Free Economic and Trade Zone.

CHAPTER 4. PROPERTY TAX

Article 43. A foreign individual-shall pay property tax on buildings, vessels and airplanes, which are owned by him or her and located inside the territory of the D.P.R.K.

Buildings include houses and residential flats, villas and attached buildings, and vessels and airplanes include those for private use.

Article 44. Property tax shall be paid by the owner. Even if the property in question has been leased or mortgaged the property tax shall be paid by the owner. In case the owner of the property is absent on the spot, the property tax shall be payable by its manager or user.

Article 45. A foreign individual who owns buildings, ships or airplanes inside the territory of the D.P.R.K. shall submit the application for property registration to and register the price of property at the relevant financial organ within 20 days from the day on which he or she becomes the owner of the property.

In case the person who has inherited a property or to whom a property has been donated is outside the territory of the D.P.R.K. the owner or the manager of the property shall register the property. The application for property registration shall contain the name, nationality, race and address of the applicant, property unit, quantity, floor space (tonnage), initial value, the cost of overhauling, designed life-span, a term of years for which it has been used, the year of construction (manufacturing), price assessed and the like.

Article 46. The price of the property shall be estimated by the state price assessment body and attested by the notary's office.

Article 47. The registration of property shall be renewed every year at the relevant financial organ by February of that year at the price assessed and notarized as of January 1 of that year. Article 48. In case the owner of or the registered value of the property has changed or in case the property been scrapped, due procedures shall be completed for the change or the cancellation of the registration through the attestation by the notary's office within 20 days from that day.

Article 49. The chargeable value of the property shall be the price registered at the relevant financial organ.

Article 50. Property tax shall be calculated from the month following the registration by applying the rate set in Annex III to these regulations to the price registered at the relevant financial organ.

Article 51. The tax payer shall pay property tax within 20 days from the end of the assessment quarter. In case it is impossible to pay property tax within the set period of time due to unavoidable reasons the payment can be postponed or made in addition to the payment for the next quarter with the consent of the relevant financial organ.

Article 52. For a building purchased or built within the Free Economic and Trade Zone by a foreign individual with the use of his or her own capital, the property tax shall be exempted for 5 years from the month of its purchase or its completion.

CHAPTER 5. INHERITANCE TAX

Article 53. A foreign individual who has inherited the property located inside the territory of the D.P.R.K. shall pay inheritance tax. In case a foreign individual residing inside the territory of the D.P.R.K. has inherited the property which is located outside the territory of the D.P.R.K., he or she shall also pay the tax on it. Properties inherited include such properties and property rights as personal and real estates, cash, securities, deposits, savings, insurance money, industrial property rights, copyrights, right to use land, and claims.

Article 54. The price of the property inherited shall be assessed on the basis of the local market price of the property at the time of inheritance.

Article 55. Inheritance tax shall be calculated by applying the rate prescribed in the Annex IV to these regulations to the remainder after deduction from the value of the inherited property of the inherittee's liabilities, cost of funeral ceremony covered by the inheritor, cost of preservation and management of the property incurred during the period of inheritance and notary fee related to the inheritance.

In case the inherittee's liabilities, cost of funeral ceremony, preservation and management cost are deducted attestation shall be given by the notary's office.

Article 56. The inheritor shall, within 3 months from the day on which he or she inherited the property, submit to the relevant financial organ the inheritance tax returns stating the amount of inherited property, the amount of deduction, taxable amount, the amount of inheritance tax and other relevant items as well as the application for inheritance tax deduction attested by the notary's office and thereafter pay inheritance tax. In case there are more than 2 inheritors of the same property inheritance tax shall he paid separately by each of them. The application for inheritance tax deduction shall contain the name and address of the inheritor, items and amounts of deduction.

Article 57. Inheritance tax shall be paid in cash. In case it is to be paid in kind for unavoidable reasons the application stating the reasons, kinds of property, price and other relevant items shall be submitted to the relevant financial organ for approval.

In this case. the property in kind for the payment shall be part of the property inherited.

Article 58. In case the amount of inheritance tax exceeds 50,000 Won the payment may be made by installments within 3 years through the presentation of an application to the relevant financial organ. Inheritance tax shall be exempted for the property inherited whose value is not greater than 200,000 Won.

CHAPTER 6. TURNOVER TAX

Article 59. A foreign-invested business and a foreign individual who is self-employed s hall pay turnover tax on the following earnings:

l. In the industrial sector, proceeds of sale of products and imported goods inside the territory of the D.P.R.K.;

2. In the commercial sector (including trade) proceeds of sale of commodities;

3. In the service sectors including transport, finance, tourism and hotel, freight and passenger fares, the difference between interests on loans and interests on deposits, fares for service and other earnings.

Article 60. Turnover tax shall be calculated by applying the rate set in the Annex V to these regulations to the amount of revenue earned in the industrial, commercial and service sectors. Rates for detailed classification of items shall be set by the Ministry of Finance of the D.P.R.K. on the basis of the rates set by categories of business.

Article 61. The tax payer shall calculate the total amount of revenue created during each month and, within 10 days from the end of the assessment month, submit turnover tax returns to the relevant financial organ for confirmation and thereafter pay turnover tax.

Article 62. In case the foreign-invested business operating in the industrial sectors exports its products or sells them inside the territory of the D.P.R.K., as requested by the State the turnover tax shall be exempted.

Article 63. In case a foreign-invested bank gives a loan to a bank or an enterprise of the D.P.R.K. on favorable terms such as low interest rate (lower than the LIBOR) and return period of more than 10 years including a grace period, turnover tax may be exempted or reduced with the consent of the Ministry of Finance of the D.P.R.K.

Article 64. For service sectors such as commerce, transport, finance and tourism operating inside the Free Economic and Trade Zone, turnover tax shall be reduced by 50 % of that in the other parts of the D.P.R.K.

CHAPTER 7. LOCAL TAXES

Article 65. A foreign-invested business and a foreign individual Shall pay local taxes. Local taxes include city management tax, registration and license tax and tax on use of vehicle.

Article 66. Taxable amount for city management tax shall be the total amount of labor remuneration in case of a foreign-invested business and the total amount of monthly income in case of a foreign individual.

Article 67. City management tax shall be calculated and paid in the following manner:

1. The foreign-invested business shall pay each month 1 % of the total amount of labor remuneration of the enterprise within 10 days from the end of the assessment month;

2. In case of the foreign individual who stays for more than 180 days. 1 % of the monthly income including labor remuneration, interests, dividends, lease and proceeds of sale of property shall be paid within 10 days next month either directly by the earner or by the withholder which causes the income to be created.

Article 68. The foreign-invested business which makes business registration or registers its mining rights or fishing rights and the foreign individual who receives a license or a qualification card shall pay registration and license tax.

Registration and license tax includes registration tax and license tax.

Article 69. Registration and license tax shall be paid pursuant to the rate set in the Annex VI to these regulations on a case-by-case basis.

Article 70. The foreign-invested business and the foreign individual who own the vehicle shall pay vehicle tax for its use. A vehicle includes car, bus, lorry, motorcycle and special vehicle.

A special vehicle includes crane car, tanker, cement carrier, forklift, excavator, bulldozer, tractor and so on.

Article 71. A foreign-invested business and a foreign individual shall, within 30 days from the day on which they become the owners of the vehicle, submit the application for tax registration for the use of the vehicle to the relevant financial organ.

The application for tax registration for the use of the vehicle shall state the name. nationality, race, address of the owner, number and type of the vehicle, number of seats or loading weight and date of acquisition.

Article 72. Vehicle tax shall be paid each year in accordance with the amount set in Annex VII to these regulations within 2 months from the end of the assessment year.

Article 73. In case the vehicle is not used continuously for more than 60 days, declaration can be made to the relevant financial organ to have the vehicle tax exempted for these periods.

CHAPTER 8. SANCTION AND PETITION

Article 74. In case a foreign-invested business and a foreign individual fail to pay tax within the specified time limit, the financial organ shall levy the penalty of 0.3 % per day of the overdue taxes beginning from the next day of the specified date for the tax payment. Article 75. The financial organ shall fine the tax payer in the following cases:

1. In case of the failure to complete tax procedures, or to submit income tax returns. income tax deduction returns, or financial statements within the specified time limit, the fine up to 2,000 Won shall be levied on the person who is to blame for the failure;

2. In case the withholder fails to deduct the full amount of tax or to pay the amount withheld to the State, the fine up to double the tax outstanding shall be levied in addition to the payment of the amount overdue;

3. In case of a tax evasion through the falsification, or destruction of books of account, tickets or coupons and documentary evidence or through the miscalculation of costs, expenses, incomes and the like, the fine up to 4 times the amount outstanding shall be levied in addition to the payment of the original amount.

Article 76. The financial organ shall send the notice of fine to the person to be fined and the person shall pay the fine within 30 days after the reception of the notice.

Article 77. In case of any severe breach of these regulations , the person concerned shall bear penal responsibility.

Article 78. The foreign-invested business and the foreign individual who have complaints or grievances regarding tax payment may present a petition to the organ superior to the financial organ which has collected the tax in question within 30 days from the day on which the tax is paid. The financial organ which has received the petition shall examine and settle the case within 30 days from its reception.

Article 79. The foreign-invested business and the foreign individual who are dissatisfied with the settlement of the petition may bring the case to the court in the area of operation or residence within 10 days from the day of settlement.

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