TAT 1급 (Tax Accounting Technician 1) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Taxable income formula

Taxable income equals accounting profit before tax plus additions minus deductions, adjusted for tax-exempt income and non-deductible expenses per corporate tax law.

Reserve deductibility

Reserves are deductible only when fixed and determinable; bad debt reserves up to 1% of receivables; general provisions are added back.

Depreciation useful lives

Tax depreciation uses straight-line or declining-balance; useful lives per Presidential Decree: buildings 20–40 years, machinery 5–12 years; method must be consistent.

Donation deduction limit

Donations deductible up to the greater of 10% of income before donations or type-specific limits; excess carried forward for 5 years.

Entertainment expense limit

Entertainment expense deduction limited to basic amount based on revenue plus 5% of revenue for certain taxpayers; excess added back; documentation required.

Tax credit vs deduction

Tax credits reduce tax payable after tax base is computed; deductions reduce taxable income; credits include foreign tax credit and R&D credit.

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.

Corporate tax rates

Progressive rates: 9% up to 200 million KRW, 19% up to 20 billion, 21% up to 300 billion, 24% above; rates subject to annual law changes.

Minimum tax

Minimum tax applies at 10% (7% for SMEs) of taxable income before certain credits; ensures minimum corporate tax liability.

Loss carryforward period

Losses carry forward 10 years (15 years for losses from 2020 onward); SME losses may carry longer; carryback generally not allowed.

Consolidated tax return

Allowed for domestic corporations with ≥90% ownership and other conditions; election and de-election rules apply; intercompany transactions eliminated.

Corporate tax filing deadline

File within 3 months of fiscal year end; interim prepayment by 30 November or 3 months after half-year; amended returns within 1 year.

VAT standard rate

VAT standard rate is 10%; zero-rated for exports and certain services; exempt for unprocessed food, medical, education, etc.

VAT taxable period

First period 1 Jan–30 Jun, second 1 Jul–31 Dec; file and pay within 25 days after period end; preliminary return by 25 April and 25 October.

Input tax deduction denied

Input tax denied for non-business use, exempt supplies, entertainment, passenger cars, and invoices without required details.

Tax invoice issuance

Tax invoice must be issued within the period; electronic invoices for corporations; late issuance penalty; buyer needs valid invoice for input tax deduction.

Zero-rating

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

Simplified taxation

For small businesses under revenue threshold (e.g., 80 million KRW); tax = sales × industry rate (1.5–4%) minus input tax; no invoice issuance.

Income tax rates

Progressive global income tax rates 6%–45% (2023 brackets: 6%, 15%, 24%, 35%, 38%, 40%, 42%, 45%).

Employment income settlement

Salary and bonuses; deductions include earned income deduction and personal deductions; year-end settlement by February of following year.

Capital gains taxation

Separate taxation for real estate and securities; rates vary (6–45% for real estate, 20% for securities); basic deduction 2.5 million KRW; holding period for exemption.

Personal deduction

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

Earned income tax credit

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, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes.

Revenue recognition model

Five steps: identify contract, performance obligations, transaction price, allocate price, recognize when obligation satisfied.

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.

Statute of limitations

Assessment 5 years (10 years for fraud); collection 5 years; refund claims 5 years from payment date.

Tax appeals

Request pre-assessment review within 30 days, review within 90 days, or appeal to Tax Tribunal within 90 days.

Penalties

Underreporting penalty 10% (20% for fraudulent); late payment penalty 0.025% per day (capped); late filing penalty.