The Korean National Assembly passed the Tax Bills for 2017 on 2 December 2016 which was announced by the Ministry of Strategy and Finance (MOSF) on 28 July of 2016.
According to the adopted Bill the amount of loss carried forward that a foreign company can deduct has been limited to 80% of the income earned in the relevant business year and this rule will be effective from the beginning of the 2017 business year.
Income arising from provision of “technical services” will be subject to a 3% withholding tax if suggested by an applicable treaty where the consideration for such services is paid in Korea even if the services are provided outside of Korea.
This amendment will affect those companies which are planning to conclude a technical services agreement with an Indian company and this will be applicable to applicable services provided after 1 January 2017.
Previously, non-resident taxpayers for applying a treaty-reduced withholding tax rate had to file a request for refund within 3 years from the last day of the month in which the tax was withheld as Korean withholding tax on income.
The adopted Tax Bill has extended the refund request period from 3 years to 5 years and this will be applicable to requests for refund made after 1 January 2017.