💡 Are foreign company branches or liaison offices in Korea eligible for tax deductions or exemptions?
Branches or liaison offices of foreign companies cannot receive tax deductions under the Special Taxation Limitation Law.
Tax deductions and exemptions are generally applicable to domestic companies, and foreign companies' branches or liaison offices in Korea are considered foreign corporations if their actual management location is in a foreign country, even if they are physically located in Korea.
Corporate Income Tax Act Article 57 (Deduction of Foreign Tax Paid, etc.)
Corporate Income Tax Act Article 58 (Tax Deduction for Disaster Losses)
💡 How is actual management location determined?
Actual management location refers to the place where major decisions related to business management and operations are actually made.
In other words, it refers to the place where basic policies of the company are established, where major assets are managed or disposed of, and where decisions and management of main income-generating activities are made.
According to these standards, liaison offices mainly perform auxiliary tasks such as business communication with the head office and market research, so it is difficult to consider them domestic corporations.
Branches are recognized as fixed places of business as they engage in revenue-generating activities in Korea, but foreign company branches in Korea are considered foreign corporations due to their corporate nature, so it is difficult for them to receive tax benefits applicable to domestic companies.
💡 Are foreign company branches or liaison offices in Korea eligible for tax deductions or exemptions?
Branches or liaison offices of foreign companies cannot receive tax deductions under the Special Taxation Limitation Law.
Tax deductions and exemptions are generally applicable to domestic companies, and foreign companies' branches or liaison offices in Korea are considered foreign corporations if their actual management location is in a foreign country, even if they are physically located in Korea.
Corporate Income Tax Act Article 57 (Deduction of Foreign Tax Paid, etc.)
Corporate Income Tax Act Article 58 (Tax Deduction for Disaster Losses)
💡 How is actual management location determined?
Actual management location refers to the place where major decisions related to business management and operations are actually made.
In other words, it refers to the place where basic policies of the company are established, where major assets are managed or disposed of, and where decisions and management of main income-generating activities are made.
According to these standards, liaison offices mainly perform auxiliary tasks such as business communication with the head office and market research, so it is difficult to consider them domestic corporations.
Branches are recognized as fixed places of business as they engage in revenue-generating activities in Korea, but foreign company branches in Korea are considered foreign corporations due to their corporate nature, so it is difficult for them to receive tax benefits applicable to domestic companies.