Under revised thin capitalization rules of South Korea proposed for 2015, overseas multinational companies performing business would have to pay a higher tax.
The existing thin capitalization rules reject the South Korean unit of a foreign multinational statutory tax deductions on interest paid to its parent on any portion of the debt derived from the overseas parent that exceeds a ceiling set at 3 times its equity, or 6 times for financial firms.
Effective from 1 January 2015 the multiple for non-financial firms would be reduced to 2 under the proposal for 2015.
