Korea to delay tax audits for foreign firms boosting investments

Korea will postpone regular tax audits for foreign companies that boost their investment in the country for up to two years, National Tax Service (NTS) Commissioner Lim Kwang-hyun said as he unveiled a new package of tax support measures at a business roundtable on Friday.

The director made the announcement while meeting with members of the American Chamber of Commerce in Korea (Amcham) in Yeouido, western Seoul. 

From Monday, companies set to increase domestic investment can apply for a two-year deferral of routine tax audits. Small firms must increase investment by at least 10 percent and mid-sized firms by at least 20 percent compared to the previous fiscal year. 

The NTS will also expand customized guidance for corporate tax filing, including support for international transactions and transfer pricing documents. For foreign employees, the agency plans to introduce AI-based multilingual filing assistance. 

To lower double taxation risks, the NTS will speed up Advance Pricing Arrangement processing and hold briefing sessions ahead of Korea’s first Global Minimum Tax filing deadline next year.

The measures align with the Lee Jae Myung administration’s efforts to attract more foreign direct investment, Lim said, adding that the NTS intends to “ensure an environment where foreign companies can focus on their business and expand investment with confidence.”

Amcham members welcomed the measures at the meeting, the association said.

“A fair and predictable tax environment is essential for Korea to compete for global capital and talent,” Amcham Chairman and CEO James Kim said, adding that deferring routine audits and easing double taxation risks would reduce uncertainty for foreign firms. 

"The steps [...] will strengthen Korea’s standing relative to regional hubs like Singapore and Hong Kong," Kim said.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]