TAT 1급 (Tax Accounting Technician 1) cheat sheet

Taxable income = accounting profit before tax + additions (익금산입) − deductions (손금불산입 adjustments reversed) ± tax-exempt income and non-deductible expenses, following the corporate tax law's inclusion/exclusion rules.

Reserve provisions (충당금) and accrued liabilities are generally deductible only when the amount is fixed and determinable; reserves for bad debts are deductible within the tax-law limits, while general provisions are added back.

Depreciation for tax purposes: straight-line or declining-balance by asset class; useful lives per Presidential Decree (e.g., buildings 20–40 years, machinery 5–12 years); the taxpayer may elect a method but must apply it consistently.

Donations: deductible up to the greater of 10% of income before donations or the limit calculated by type (charitable, public welfare, corporate); excess is carried forward for 5 years.

Entertainment expenses (접대비): limit = (basic amount based on revenue) + (5% of revenue for certain small/medium taxpayers); excess added back; documentation required.

Tax credits (세액공제) reduce tax payable after tax base is computed; credits include foreign tax credit, R&D credit, and investment credit; unused credits may carry forward per specific rules.

Deferred tax accounting: temporary differences between book and tax basis create deferred tax assets/liabilities; recognize DTA only when realization is probable; measure at enacted rates.

Reconciliation schedule: book profit → tax adjustments → tax base → tax rate → tax payable → credits → final tax; this schedule is the core working paper for TAT integration questions.

Taxable income = income for the business year − carried-forward losses − non-taxable income + non-deductible expenses; corporate tax rates are progressive: 9% up to 200 million KRW, 19% up to 20 billion, 21% up to 300 billion, 24% above (rates subject to annual law changes).

Tax base = taxable income − tax credits and losses carried forward; minimum tax (최저한세) applies at 10% (or 7% for SMEs) of taxable income before certain credits.

Loss carryforward: 10 years (15 years for losses incurred from 2020 onward per recent amendments); SME losses may carry forward longer under special rules; carryback not generally allowed except for SMEs in certain cases.

Donation limits: 10% of income before donations for general donations; separate limits for public welfare and charitable donations; excess carried forward 5 years.

Reserve limits: bad debt reserve up to 1% of receivables (or actual write-offs); retirement allowance reserve per actuarial assumptions; excess added back.

Consolidated tax return: allowed for domestic corporations meeting ownership (≥90%) and other conditions; election and de-election rules apply; intercompany transactions eliminated.

Withholding: domestic corporations pay corporate tax via withholding on interest/dividends; foreign corporations subject to 20% withholding (reduced by treaty).

Filing: within 3 months of fiscal year end; interim prepayment (중간예납) by 30 November or 3 months after half-year; amended returns within 1 year of filing.

VAT is a multi-stage tax on value added; standard rate 10%; zero-rated for exports and certain services; exempt for unprocessed food, medical services, education, etc.

Taxable period: first period 1 Jan–30 Jun, second 1 Jul–31 Dec; filing and payment within 25 days after period end; preliminary return (예정신고) by 25 April and 25 October for certain taxpayers.

Output tax = sales × 10%; input tax = purchases × 10%; payable = output − input − carried-forward input tax; input tax on exempt sales is not deductible (proportional deduction).

Input tax deduction denied for: non-business use, purchases related to exempt supplies, entertainment expenses, passenger cars (except certain), and invoices without required details.

Tax invoice (세금계산서): must be issued within the period; electronic invoices for corporations; late issuance penalty; buyer may deduct input tax only with valid invoice.

Zero-rating: exports, services to non-residents, international transport; input tax fully deductible; refund of excess input tax.

Simplified taxation (간이과세): for small businesses under revenue threshold (e.g., 80 million KRW); tax = sales × industry-specific rate (e.g., 1.5–4%) minus input tax; no invoice issuance.

Credit card sales and cash receipts: input tax deduction requires documentation; cash receipts issued for transactions over 30,000 KRW; penalties for non-issuance.

Global income tax: aggregate income from interest, dividends, business, employment, pension, and other income; progressive rates 6%–45% (2023 brackets: 6%, 15%, 24%, 35%, 38%, 40%, 42%, 45%).

Tax base = comprehensive income − deductions (personal, pension, special, etc.) − tax credits; tax credits include earned income tax credit (EITC), child tax credit, and standard tax credit.

Employment income: salary and bonuses; deductions include income deduction (earned income deduction) and personal deductions; year-end settlement (연말정산) by February of following year.

Business income: computed on accrual basis; expenses deductible if related to business; simplified expense rate for small businesses; income deduction for business income.

Capital gains: separate taxation for real estate and securities; rates vary (e.g., 6–45% for real estate, 20% for securities); basic deduction 2.5 million KRW; holding period requirements for exemption.

Withholding: employer withholds income tax on wages; self-employed pay interim prepayment (중간예납) by 30 November; final return by 31 May.

Deductions: personal deduction 1.5 million KRW per person; pension deduction limits; special deductions for medical, education, insurance, donations, etc.

Tax credits: earned income tax credit for low-income workers; child tax credit 150,000 KRW per child (varies); standard tax credit 130,000 KRW (7% of tax payable up to limit).

Accounting equation: Assets = Liabilities + Equity; double-entry bookkeeping ensures debits = credits.

Financial statements: balance sheet (statement of financial position), income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes.

Accrual basis: revenues recognized when earned, expenses when incurred, regardless of cash flow; matching principle applies.

Revenue recognition: five-step model (identify contract, performance obligations, transaction price, allocate price, recognize when obligation satisfied).

Depreciation methods: straight-line, declining balance, units-of-production; useful life and residual value estimates; impairment testing.

Inventory valuation: lower of cost or net realizable value; cost formulas: specific identification, FIFO, weighted average; LIFO not permitted under K-IFRS.

Provisions and contingencies: recognize provision when present obligation, probable outflow, and reliable estimate; disclose contingent liabilities.

Cash flow statement: operating, investing, financing activities; indirect method reconciles net income to operating cash flow.

Framework: National Tax Basic Act (국세기본법) governs interpretation, taxpayer rights, and procedures; individual tax acts (Corporate Tax Act, VAT Act, Income Tax Act) govern specific taxes.

Taxpayer rights: right to receive explanation, right to request correction, right to pre-assessment review, right to confidentiality; Taxpayer Advocate service.

Statute of limitations: assessment 5 years (10 years for fraud); collection 5 years; refund claims 5 years from payment date.

Penalties: underreporting penalty 10% (20% for fraudulent), late payment penalty 0.025% per day (capped), late filing penalty.

Tax appeals: request for pre-assessment review (이의신청) within 30 days, request for review (심사청구) within 90 days, or appeal to Tax Tribunal (조세심판원) within 90 days.

Tax audits: regular and special audits; taxpayer may request postponement; audit results issued as tax assessment; appeal rights.

Tax representative: licensed tax accountant (세무사) can represent taxpayers; power of attorney required; confidentiality obligations.

Electronic filing: HomeTax system (홈택스) for VAT, income tax, corporate tax; electronic tax invoices mandatory for corporations.