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Korea Tax Accounting Level 1 (세무회계 1급) study materials
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Korea Tax Accounting Level 1 (세무회계 1급) practice questions

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Question 1Corporate tax reconciliation and adjustment logic

During the tax year, Corporation A paid KRW 15,000,000 in traffic fines and personal administrative sanctions levied directly against its Representative Director (대표이사), recording the entire amount as administrative expenses (잡손실) on its income statement. What is the required corporate tax adjustment (세무조정) and income disposition (소득처분) under the Corporate Tax Act (법인세법)?

  1. 손금불산입 (Disallowance of Deductible Expense) KRW 15,000,000, disposed as 기타사외유출 (Other Outflow).
  2. 손금불산입 (Disallowance of Deductible Expense) KRW 15,000,000, disposed as 상여 (Bonus to Representative). Correct answer.
  3. 손금산입 (Inclusion of Deductible Expense) KRW 15,000,000, disposed as -유보 (Negative Retained Earnings).
  4. 익금산입 (Inclusion in Taxable Revenue) KRW 15,000,000, disposed as 유보 (Retained Earnings).

Explanation

When a corporation pays personal fines or penalties legally imposed upon its representative director, the expenditure constitutes a direct economic benefit conferred upon the representative without business justification. Under Article 19 and Article 67 of the Corporate Tax Act, this payment is non-deductible (손금불산입) and must be disposed as a deemed bonus (상여) to the representative, subjecting the individual to personal wage income tax.

Question 2Corporate tax reconciliation and adjustment logic

At the end of Year 1, Corporation E erroneously recorded its ending merchandise inventory at KRW 80,000,000 on its financial statements, whereas the statutory tax cost base under the reported FIFO method was KRW 95,000,000. In Year 2, this entire batch of inventory was sold to third parties. What are the required tax adjustments in Year 1 and Year 2?

  1. Year 1: 손금불산입 KRW 15,000,000 (기타); Year 2: 손금산입 KRW 15,000,000 (기타)
  2. Year 1: 손금산입 (재고자산) KRW 15,000,000 (-유보); Year 2: 익금산입 (전기재고자산) KRW 15,000,000 (유보)
  3. Year 1: 익금산입 (재고자산평가감) KRW 15,000,000 (유보); Year 2: 손금산입 (전기재고자산) KRW 15,000,000 (-유보) Correct answer.
  4. Year 1: 익금산입 KRW 15,000,000 (기타사외유출); Year 2: No adjustment required

Explanation

In Year 1, understating ending inventory by KRW 15,000,000 overstates cost of goods sold and understates accounting profit. For tax purposes, the asset value must be stepped up: 익금산입 (재고자산평가감) KRW 15,000,000 (유보). In Year 2, when the inventory is disposed of, the beginning tax asset difference reverses into cost of goods sold: 손금산입 KRW 15,000,000 (-유보).

Question 3Corporate tax reconciliation and adjustment logic

A major individual shareholder who holds 25% of Corporation F's shares withdrew KRW 100,000,000 from company bank accounts for personal real estate speculation, which was recorded on the books as an uncollectible loss (대손상각비) because the shareholder refused to repay. What is the corporate tax adjustment and income disposition?

  1. 손금불산입 KRW 100,000,000 (기타사외유출)
  2. 손금불산입 KRW 100,000,000 (배당) Correct answer.
  3. 손금불산입 KRW 100,000,000 (유보)
  4. 손금산입 KRW 100,000,000 (-유보)

Explanation

When corporate funds are appropriated by a shareholder without legitimate business cause and written off, the write-off cannot be recognized as a deductible bad debt loss (손금불산입). Because the economic benefit accrued to an equity shareholder (출자자) who is not an employee, the income disposition is categorized as a constructive dividend (배당) pursuant to Article 67 of the Corporate Tax Act.

Question 4Corporate tax reconciliation and adjustment logic

Corporation G received a national tax refund comprising principal tax overpayment of KRW 40,000,000 and national tax refund addition interest (국세환급금가산금) of KRW 2,400,000, recognizing both as non-operating revenue (영업외수익). What is the appropriate corporate tax adjustment?

  1. 익금산입 KRW 2,400,000 (유보)
  2. 익금불산입 KRW 42,400,000 (기타)
  3. 익금불산입 (국세환급금가산금) KRW 2,400,000 (기타) and 익금불산입 (법인세 환급액) KRW 40,000,000 (기타) Correct answer.
  4. No adjustment is required as both amounts constitute taxable operating revenue.

Explanation

Under Article 18 of the Corporate Tax Act, refunds of national taxes (such as corporate income tax) that were originally non-deductible when paid, along with statutory refund interest (국세환급금가산금), are explicitly classified as non-taxable revenue (익금불산입). Because both amounts were credited to accounting revenue, both must be excluded via 익금불산입, disposed as 기타 (or -유보 if adjusting a tax asset).

Question 5Corporate tax reconciliation and adjustment logic

Corporation H paid its Chief Executive Officer an annual base salary of KRW 300,000,000. The company's general shareholders' meeting had established a compensation cap of KRW 240,000,000 for the CEO. What tax adjustment must be made for the year?

  1. 손금불산입 KRW 60,000,000 (기타사외유출)
  2. 손금불산입 KRW 60,000,000 (상여) Correct answer.
  3. 손금산입 KRW 60,000,000 (유보)
  4. 익금산입 KRW 60,000,000 (배당)

Explanation

Under Article 26 Item 1 of the Corporate Tax Act and Article 43 of its Enforcement Decree, officer compensation paid in excess of the ceiling resolved by the articles of incorporation or general meeting of shareholders cannot be deducted as an expense (손금불산입). The excess of KRW 60,000,000 must be disposed as a bonus (상여) to the officer.

Question 6Corporate tax reconciliation and adjustment logic

Which of the following tax payments made by a domestic corporation during the fiscal year is recognized as a fully DEDUCTIBLE expense (손금) under the Corporate Tax Act?

  1. Corporate income tax expense (법인세 비용) paid on annual earnings
  2. Fines and surcharges for non-payment of road traffic regulations (도로교통법상 과태료)
  3. Input value-added tax disallowed due to failure to receive a statutory tax invoice (세금계산서 미수취 매입세액)
  4. Property tax (재산세) assessed on corporate factory real estate Correct answer.

Explanation

Under Article 21 of the Corporate Tax Act, local property tax (재산세) and comprehensive real estate holding tax (종합부동산세) assessed on operational corporate real estate represent ordinary business holding costs and are fully deductible (손금). In contrast, corporate income taxes, non-creditable input VAT due to invoice default, and regulatory fines are statutory non-deductible items (손금불산입).

Question 7Corporate tax reconciliation and adjustment logic

A tax audit reveals that Corporation J failed to record KRW 66,000,000 (VAT inclusive: supply value KRW 60,000,000, VAT KRW 6,000,000) of cash sales during the year. The cash proceeds were completely appropriated by the Representative Director for personal use, and no output VAT was reported. What is the correct corporate tax adjustment?

  1. 익금산입 (매출누락) KRW 60,000,000 (상여) Correct answer.
  2. 익금산입 (매출누락) KRW 60,000,000 (상여) and 익금산입 (부가가치세 예수금) KRW 6,000,000 (사외유출)
  3. 익금산입 (매출누락) KRW 60,000,000 (유보)
  4. 익금산입 (매출누락) KRW 66,000,000 (상여)

Explanation

For corporate income tax purposes, the omitted corporate revenue is the net supply price of KRW 60,000,000, as the KRW 6,000,000 VAT portion represents output VAT liability collected for the state. Because the representative appropriated the cash, the revenue addition of KRW 60,000,000 is disposed as a bonus (상여) to the representative. The KRW 6,000,000 output VAT will be assessed separately under the VAT Act with penalties.

Question 8Corporate tax reconciliation and adjustment logic

Corporation L owned 1,000 shares of Corporation M with a tax acquisition base of KRW 10,000 per share (total KRW 10,000,000). Corporation M completed a retirement of capital stock (감자), paying Corporation L KRW 16,000 per share in cash consideration. Under Article 16 of the Corporate Tax Act, what is the constructive dividend (의제배당) amount and its tax treatment for Corporation L?

  1. Capital gain of KRW 6,000,000; taxed under capital gains tax rules only
  2. Constructive dividend of KRW 6,000,000; included in gross taxable revenue as 익금산입 (기타 or 유보 adjustment) Correct answer.
  3. Constructive dividend of KRW 6,000,000; included in gross taxable revenue as 익금산입 (기타사외유출)
  4. No taxable income arises because capital retirement is an equity transaction

Explanation

Under Article 16 Paragraph 1 Item 1 of the Corporate Tax Act, when cash or other assets delivered to a shareholder upon retirement or reduction of capital exceed the tax acquisition cost of the extinguished shares, the excess constitutes a constructive dividend (의제배당). The excess of KRW 6,000,000 (KRW 16,000,000 consideration - KRW 10,000,000 tax cost) is taxable revenue (익금산입).

Question 9Corporate tax reconciliation and adjustment logic

Under K-IFRS accounting, Corporation N recorded an upward revaluation gain of KRW 50,000,000 on its operating land into other comprehensive income (기타포괄손익). For corporate tax purposes, what adjustment is required under the Corporate Tax Act?

  1. No adjustment is required because K-IFRS revaluation is recognized under tax law
  2. 손금불산입 KRW 50,000,000 (유보)
  3. 익금불산입 (or 손금산입) KRW 50,000,000 (-유보) with an offsetting equity adjustment, eliminating the revaluation gain for tax purposes Correct answer.
  4. 익금불산입 KRW 50,000,000 (-유보) and 손금산입 KRW 50,000,000 (기타)

Explanation

Under Article 18 Item 1 and Article 42 of the Corporate Tax Act, asset revaluation gains are not recognized for tax purposes unless specifically authorized by an express statutory provision (such as the Insurance Business Act). Any revaluation gain recognized on tangible non-current assets must be reversed via tax reconciliation (익금불산입 -유보) to maintain the historical tax cost base.

Question 10Corporate tax reconciliation and adjustment logic

Corporation R incurred KRW 20,000,000 during the year to replace the primary hydraulic elevator system of its operational headquarters, which significantly extended the building's economic useful life. Corporation R charged this entire amount to repair expenses (수선비) on the income statement. For tax depreciation purposes, how is this expenditure classified under the Corporate Tax Act?

  1. It must be adjusted as 익금산입 KRW 20,000,000 (기타사외유출) with no effect on depreciation.
  2. It is permanently disallowed from tax depreciation and added to non-deductible reserves.
  3. It is an immediate revenue expenditure (수익적 지출) and fully deductible without adjustment.
  4. It constitutes a capital expenditure (자본적 지출) treated as deemed immediate depreciation (즉시상각의제), adding KRW 20,000,000 to book depreciation and increasing asset acquisition cost. Correct answer.

Explanation

Under Article 23 of the Corporate Tax Act and Article 31 of its Enforcement Decree, expenditures that prolong the useful life or substantially increase the asset's economic value constitute capital expenditures (자본적 지출). When an enterprise expenses capital expenditure as repair costs, it is treated as deemed immediate depreciation (즉시상각의제). The amount is added to current book depreciation expense and simultaneously added to the asset's tax acquisition cost in the depreciation limit schedule.

Question 11Corporate tax reconciliation and adjustment logic

On July 1 of Year 3, Corporation S sold a production machine to an unrelated party for KRW 30,000,000. At the beginning of Year 3, the machine had an accumulated tax depreciation disallowance (전기말 상각부인누계액) of KRW 8,000,000. In Year 3, Corporation S recognized no book depreciation prior to the sale. What tax adjustment must be made in Year 3 regarding this machine upon disposal?

  1. No adjustment is made; the disallowance rolls over indefinitely.
  2. 손금불산입 KRW 8,000,000 (기타사외유출)
  3. 손금산입 (전기상각부인액 추인) KRW 8,000,000 (-유보) Correct answer.
  4. 익금산입 KRW 8,000,000 (유보)

Explanation

Under Article 23 of the Corporate Tax Act and Article 32 of its Enforcement Decree, when a depreciable asset is transferred or scrapped, any remaining unamortized tax depreciation disallowance (상각부인누계액) associated with that specific asset must be fully recognized and deducted as a deductible expense (손금산입 -유보) in the tax year of disposal to correct the gain/loss on asset transfer.

Question 12Corporate tax reconciliation and adjustment logic

Corporation T acquired a luxury passenger sedan for business use (업무용승용차) on January 1 of Year 1 for KRW 75,000,000. Under the Corporate Tax Act, depreciation for business passenger vehicles must be calculated using the straight-line method over a mandatory useful life of 5 years (annual statutory limit KRW 8,000,000). On its books, Corporation T recorded straight-line depreciation over 3 years of KRW 25,000,000. What is the tax adjustment for Year 1?

  1. 손금불산입 KRW 8,000,000 (유보)
  2. 손금불산입 KRW 17,000,000 (유보) Correct answer.
  3. 손금불산입 KRW 17,000,000 (기타사외유출)
  4. 손금불산입 KRW 10,000,000 (유보) and 손금불산입 KRW 7,000,000 (기타사외유출)

Explanation

Under Article 27-2 of the Corporate Tax Act, depreciation of business passenger cars must follow a 5-year straight-line schedule (KRW 75,000,000 ÷ 5 = KRW 15,000,000 standard limit). First, ordinary excess depreciation beyond the 5-year straight-line amount is disallowed: KRW 25,000,000 - KRW 15,000,000 = KRW 10,000,000 (손금불산입, 유보). Next, of the remaining KRW 15,000,000, the amount exceeding the annual passenger vehicle cap of KRW 8,000,000 (KRW 7,000,000) is also disallowed as excess depreciation: 손금불산입 KRW 7,000,000 (유보). Total disallowance is KRW 17,000,000 (유보).

Question 13Corporate tax reconciliation and adjustment logic

At year-end, Corporation U recorded an inventory valuation loss (재고자산평가손실) of KRW 12,000,000 on its income statement because perishable raw materials in its warehouse had experienced natural physical decay and water damage. Corporation U reported its inventory valuation under the cost method (원가법). Under the Corporate Tax Act, how is this valuation loss treated?

  1. It is disallowed entirely: 손금불산입 KRW 12,000,000 (유보) because the company filed under the cost method.
  2. It is disallowed: 손금불산입 KRW 12,000,000 (기타사외유출).
  3. It is recognized as a deductible expense (손금) in the tax year of write-off, requiring no adjustment if booked correctly on the financial statements. Correct answer.
  4. It must be capitalized into the next year's finished goods cost base.

Explanation

Under Article 42 Paragraph 3 Item 1 of the Corporate Tax Act, inventory that has suffered physical damage, decay, obsolescence, or flooding may be written down to its net realizable market value at the end of the business year, regardless of whether the corporation originally elected the cost method or the lower-of-cost-and-market method, provided the loss is recognized on the corporate books (결산조정사항).

Question 14Corporate tax reconciliation and adjustment logic

Corporation V holds marketable equity securities in Company W (an unrelated domestic listed company). At year-end, the market price had dropped significantly, and Corporation V recorded an impairment loss on equity securities (매도가능증권/당기손익-공정가치측정금융자산 평가손실) of KRW 30,000,000. Company W is operating normally and is not bankrupt. What is the corporate tax adjustment?

  1. 손금산입 KRW 30,000,000 (-유보)
  2. 손금불산입 KRW 30,000,000 (유보) Correct answer.
  3. 손금불산입 KRW 30,000,000 (기타사외유출)
  4. No adjustment is needed because market declines on listed equities are tax deductible.

Explanation

Under Article 42 of the Corporate Tax Act, valuation losses on marketable securities are strictly non-deductible for tax purposes unless a specific statutory insolvency event occurs (such as formal bankruptcy under the Debtor Rehabilitation and Bankruptcy Act, delisting, or court-ordered rehabilitation). Because Company W is a going concern, the accounting loss must be disallowed: 손금불산입 KRW 30,000,000 (유보).

Question 15Corporate tax reconciliation and adjustment logic

Corporation AB transferred commercial inventory having an arm's-length market fair value of KRW 50,000,000 to a key long-term customer for KRW 35,000,000 without any justifiable business or commercial reason. For corporate tax purposes, what is the character of the KRW 15,000,000 price concession under the Corporate Tax Act?

  1. It constitutes a deemed entertainment expense (의제접대비) and must be included in the company's annual entertainment expense pool. Correct answer.
  2. It is a normal sales discount (매출에누리) fully deductible from gross revenue.
  3. It is an unfair trade transaction (부당행위계산의 부인) resulting in immediate 상여 to the customer.
  4. It is treated as a general charitable donation (지정기부금).

Explanation

Under Article 25 of the Corporate Tax Act and Article 42 of its Enforcement Decree, when a corporation transfers assets to a person directly related to its business at an abnormally low price without justifiable cause, the difference between fair market value and the actual transaction price constitutes a deemed entertainment expense (의제접대비). The KRW 15,000,000 difference is treated as entertainment spending subject to the statutory annual limitation.

Question 16Corporate tax reconciliation and adjustment logic

Corporation AC has an adjusted taxable income before donations (기부금 차감 전 기준소득금액) of KRW 200,000,000. It has an allowable tax loss carryforward (이월결손금) from prior years of KRW 40,000,000. During the year, Corporation AC donated KRW 90,000,000 to the national government for national defense (국방헌금, a statutory/special donation 특례기부금). What is the excess statutory donation disallowance (한도초과 손금불산입액)?

  1. KRW 90,000,000 (기타사외유출)
  2. KRW 20,000,000 (기타사외유출)
  3. KRW 10,000,000 (기타사외유출) Correct answer.
  4. KRW 0 (fully deductible within limits)

Explanation

Under Article 24 of the Corporate Tax Act, the statutory/special donation limit (특례기부금 한도액) is: (Adjusted Taxable Income - Deductible Loss Carryforward) × 50% = (KRW 200,000,000 - KRW 40,000,000) × 50% = KRW 160,000,000 × 50% = KRW 80,000,000. Since actual donations were KRW 90,000,000, the excess of KRW 10,000,000 (KRW 90,000,000 - KRW 80,000,000) is disallowed: 손금불산입 KRW 10,000,000 (기타사외유출).

Question 17Corporate tax reconciliation and adjustment logic

Using the data from Corporation AC (Adjusted Taxable Income KRW 200,000,000; Loss Carryforward KRW 40,000,000; Statutory Special Donation allowed KRW 80,000,000), assume Corporation AC also made qualifying general charitable donations (일반기부금/지정기부금) of KRW 12,000,000 to an authorized social welfare foundation. What is the allowable limit for these general charitable donations?

  1. KRW 20,000,000
  2. KRW 16,000,000
  3. KRW 12,000,000
  4. KRW 8,000,000 Correct answer.

Explanation

Under Article 24 Paragraph 2 of the Corporate Tax Act, the general charitable donation limit (일반기부금 한도액) is: [Adjusted Taxable Income - Deductible Loss Carryforwards - Statutory Donations Allowed] × 10% = [KRW 200,000,000 - KRW 40,000,000 - KRW 80,000,000] × 10% = KRW 80,000,000 × 10% = KRW 8,000,000. Because actual general donations were KRW 12,000,000, the excess KRW 4,000,000 is disallowed as 손금불산입 (기타사외유출).

Question 18Corporate tax reconciliation and adjustment logic

Corporation AD made a monetary contribution of KRW 15,000,000 to an unregistered private university alumni association (비지정기부금/기부금단체 외의 단체에 대한 기부금). How is this contribution treated in the corporate tax adjustment?

  1. Deductible up to 50% under public benefit promotion incentives.
  2. Deductible within the general charitable donation 10% limit.
  3. Disallowed as 손금불산입 KRW 15,000,000 (상여) to the representative.
  4. Fully disallowed: 손금불산입 KRW 15,000,000 (기타사외유출) without entering any limit computation. Correct answer.

Explanation

Donations made to organizations that are not designated as public interest or charitable entities under the Corporate Tax Act (비지정기부금) are completely non-deductible. The entire KRW 15,000,000 must be disallowed immediately: 손금불산입 KRW 15,000,000 (기타사외유출), without entering the statutory limit calculations and without being eligible for carryforward.

Question 19Corporate tax reconciliation and adjustment logic

Corporation AE holds trade accounts receivable of KRW 20,000,000 where the 3-year commercial extinctive prescription (상법상 소멸시효) expired during the current tax year. However, Corporation AE did not write off this receivable on its accounting books. Under the Corporate Tax Act, what is the required tax treatment?

  1. The receivable must be carried on the books until formal court liquidation is finalized.
  2. No tax adjustment is permitted because bad debt write-offs are strictly book settlement adjustments (결산조정사항).
  3. Corporation AE must make a mandatory return adjustment (신고조정사항): 손금산입 KRW 20,000,000 (-유보). Correct answer.
  4. Corporation AE must add the receivable to income as 익금산입 KRW 20,000,000 (유보).

Explanation

Under Article 19-2 of the Corporate Tax Act and Article 19-2 of its Enforcement Decree, bad debt claims where the extinctive prescription under the Commercial Act has expired constitute statutory mandatory deductible bad debts (신고조정사항). Even if the enterprise fails to record the write-off on its financial accounting books, it must recognize the deduction in the year of expiration via return adjustment: 손금산입 KRW 20,000,000 (-유보).

Question 20Corporate tax reconciliation and adjustment logic

Corporation AF has qualifying year-end trade receivables of KRW 1,000,000,000 for tax purposes. Its historical bad debt loss ratio (대손실적률) for the year is 0.8%. On its income statement, Corporation AF recognized a bad debt allowance provision of KRW 16,000,000, using the gross allowance method (총액법). Assuming all prior-year allowances were reversed into revenue, what is the tax allowance disallowance (대손충당금 한도초과액)?

  1. KRW 0 (fully deductible)
  2. KRW 6,000,000 (손금불산입, 유보) Correct answer.
  3. KRW 8,000,000 (손금불산입, 유보)
  4. KRW 10,000,000 (손금불산입, 유보)

Explanation

Under Article 61 of the Enforcement Decree of the Corporate Tax Act, the tax bad debt allowance limit is: Qualifying Receivables × MAX(1%, Historical Bad Debt Ratio). Here, MAX(1%, 0.8%) = 1%. The allowable ceiling is KRW 1,000,000,000 × 1% = KRW 10,000,000. Because the book provision is KRW 16,000,000, the excess disallowance is KRW 16,000,000 - KRW 10,000,000 = KRW 6,000,000: 손금불산입 KRW 6,000,000 (유보).

Question 21Corporate tax reconciliation and adjustment logic

Which of the following items must be EXCLUDED from the qualifying receivables tax base when computing the statutory bad debt allowance limit (대손충당금 설정대상 채권)?

  1. Trade notes receivable (받을어음) resulting from ordinary merchandise sales
  2. Trade accounts receivable (외상매출금) from regular commercial transactions
  3. Temporary non-business loans disbursed to a major shareholder (업무무관가지급금) Correct answer.
  4. Accrued rental income (미수임대료) recognized on operational leases

Explanation

Under Article 19-2 Paragraph 2 of the Corporate Tax Act and Article 61 of its Enforcement Decree, certain receivables are strictly excluded from the bad debt allowance base and bad debt deduction rules: (1) temporary non-business loans to related parties (업무무관가지급금), (2) receivables arising from illegal debt guarantees, and (3) discounted negotiable bills. Trade notes, trade receivables, and normal accrued business revenues are fully eligible.

Question 22Corporate tax reconciliation and adjustment logic

In Year 1, Corporation AG wrote off KRW 10,000,000 in receivables, but the tax authority disallowed the write-off as non-deductible: 손금불산입 KRW 10,000,000 (유보). In Year 2, the debtor unexpectedly paid Corporation AG KRW 10,000,000 in full settlement, which Corporation AG credited to non-operating income (대손충당금 환입액 / 잡이익). What is the appropriate tax adjustment in Year 2?

  1. No adjustment is required because the collection is taxable operating income.
  2. 손금불산입 KRW 10,000,000 (기타사외유출)
  3. 익금불산입 KRW 10,000,000 (-유보) Correct answer.
  4. 익금산입 KRW 10,000,000 (유보)

Explanation

Because the original bad debt write-off was disallowed for tax purposes in Year 1 (손금불산입 유보), the receivable remained an active asset on the tax balance sheet. When the cash is collected in Year 2 and recorded as accounting profit, recognizing it as taxable income would cause double taxation. Therefore, Corporation AG must eliminate the accounting income: 익금불산입 KRW 10,000,000 (-유보), reversing the prior Year 1 유보 balance.

Question 23Corporate tax reconciliation and adjustment logic

Corporation AJ incurred total interest expense of KRW 30,000,000 on general business borrowings during the year. The daily average balance of its interest-bearing borrowings was KRW 600,000,000. The daily average acquisition cost of non-business operational real estate (업무무관부동산) held by Corporation AJ was KRW 120,000,000. Under Article 28 of the Corporate Tax Act, what is the disallowed interest expense (지급이자 손금불산입액)?

  1. KRW 0 (fully deductible)
  2. KRW 12,000,000 (기타사외유출)
  3. KRW 6,000,000 (기타사외유출) Correct answer.
  4. KRW 6,000,000 (유보)

Explanation

Under Article 28 Paragraph 1 Item 4 of the Corporate Tax Act and Article 53 of its Enforcement Decree, interest expense allocated to non-business assets is non-deductible: Borrowing Interest × (Average Non-Business Assets ÷ Average Total Borrowings) = KRW 30,000,000 × (KRW 120,000,000 ÷ KRW 600,000,000) = KRW 30,000,000 × 20% = KRW 6,000,000. The disallowance is disposed as 기타사외유출: 손금불산입 KRW 6,000,000 (기타사외유출).

Question 24Corporate tax reconciliation and adjustment logic

Corporation AM paid foreign income taxes of KRW 15,000,000 to Country X on foreign source taxable income of KRW 60,000,000. Corporation AM's total worldwide corporate tax base (과세표준) is KRW 300,000,000, and its calculated corporate tax liability before credits (산출세액) is KRW 57,000,000. Under Article 57 of the Corporate Tax Act, what is the foreign tax credit limit (외국납부세액공제 한도액), and what amount of foreign tax is currently creditable?

  1. Limit: KRW 11,400,000; Creditable: KRW 11,400,000 (KRW 3,600,000 carried forward) Correct answer.
  2. Limit: KRW 11,400,000; Creditable: KRW 15,000,000
  3. Limit: KRW 15,000,000; Creditable: KRW 15,000,000
  4. Limit: KRW 9,500,000; Creditable: KRW 9,500,000

Explanation

Under Article 57 Paragraph 1 Item 1 of the Corporate Tax Act, the foreign tax credit limit is calculated as: Calculated Corporate Tax × (Foreign Source Taxable Income ÷ Total Corporate Tax Base) = KRW 57,000,000 × (KRW 60,000,000 ÷ KRW 300,000,000) = KRW 57,000,000 × 20% = KRW 11,400,000. Because actual foreign tax paid (KRW 15,000,000) exceeds the limit, the creditable amount is KRW 11,400,000, and the excess KRW 3,600,000 may be carried forward for 10 years.

Question 25Corporate tax reconciliation and adjustment logic

Under Article 63 of the Corporate Tax Act, a domestic corporation that operated for a full 12-month preceding business year files its interim prepayment (중간예납). Under the standard prior-year tax base method (직전 사업연도 산출세액 기준), what is the formula for calculating the interim prepayment tax liability?

  1. Preceding Year Total Tax Paid × 100%
  2. Preceding Year Net Taxable Base × 50% × Current Flat Tax Rate
  3. Current First-Half Book Net Profit × Applicable Tax Rate
  4. [Preceding Year Calculated Tax - Deductions/Credits - Preceding Withholding Taxes] × (6 ÷ Preceding Year Months) - Current Interim Withholding Taxes Correct answer.

Explanation

Under Article 63 Paragraph 1 of the Corporate Tax Act, under the prior-year tax baseline method, the interim tax payable is: [Preceding year corporate tax determined (산출세액) - Deductions, exemptions, and withholding taxes of the preceding year] × (6 ÷ Preceding business months) - Current interim period tax credits and withholding taxes. For a standard 12-month entity, this equals 50% (6/12) of the net determined preceding-year corporate tax liability.

Question 26Earned income, withholding and settlement

Taxpayer Park, a university professor, provides specialized technical consulting to IT companies on an ongoing, recurring, and continuous commercial basis throughout the year without an employment contract. How should the remuneration received by Park be classified under the Income Tax Act?

  1. Business Income (사업소득) because the consulting services are provided continuously and repeatedly with commercial independence Correct answer.
  2. Earned Wage Income (근로소득) subject to year-end payroll settlement
  3. Other Income (기타소득) because Park's primary occupation is a university professor
  4. Retirement Income (퇴직소득) exempt from global tax aggregation

Explanation

Under Articles 19 and 21 of the Income Tax Act, the boundary between Business Income (사업소득) and Other Income (기타소득) depends on whether the personal service is rendered independently on a continuous, repeated basis (계속적·반복적) or merely on a temporary, intermittent basis (일시적·우발적). Because Park delivers consulting continuously and repeatedly for profit, it constitutes Business Income regardless of their other employment.

Question 27Earned income, withholding and settlement

How is retirement severance income (퇴직소득) taxed under the Korean Income Tax Act?

  1. Aggregated with other global income (종합과세) and taxed at progressive rates of 6% to 45%.
  2. Classified separately as a distinct category (분류과세), applying service-year deductions and a 12-times conversion divisor to mitigate bunched progressive taxation. Correct answer.
  3. Subject exclusively to a final flat withholding tax of 14% without any return filing.
  4. Tax-exempt up to KRW 500,000,000 and fully aggregated thereafter.

Explanation

Under Article 14 Paragraph 2 and Article 55 of the Income Tax Act, retirement income (퇴직소득) is taxed under classified taxation (분류과세) rather than comprehensive global taxation. Because retirement payouts accumulate over decades, taxing them in a single year under progressive rates would create an unfair tax penalty (결집효과). The law grants service-year deductions (근속연수공제) and converts the base using an annualized 12-multiplier system.

Question 28Earned income, withholding and settlement

Resident Kang has the following financial income items during the tax year: (1) Domestic bank deposit interest of KRW 8,000,000; (2) Non-business private loan interest (비영업대금의 이익) of KRW 14,000,000; (3) Tax-exempt national bond interest of KRW 3,000,000. Kang has no other financial income. How is Kang's financial income taxed?

  1. Because bank interest is only KRW 8,000,000, all financial income is taxed separately at 14%.
  2. Each category is withheld separately at its own rate, with no comprehensive taxation because non-business loan interest is excluded from the threshold.
  3. Total qualifying financial income is KRW 22,000,000; because it exceeds KRW 20,000,000, Kang is subject to comprehensive financial taxation (금융소득종합과세). Correct answer.
  4. Total qualifying financial income is KRW 25,000,000, including the bond interest.

Explanation

Tax-exempt interest (KRW 3,000,000) is excluded from gross financial income. Qualifying taxable financial income includes both bank interest (KRW 8,000,000) and non-business loan interest (KRW 14,000,000), totaling KRW 22,000,000. Because this exceeds the statutory threshold of KRW 20,000,000, Kang is subject to mandatory comprehensive financial taxation (금융소득종합과세) under Article 14.

Question 29Earned income, withholding and settlement

Sole proprietor Yoon operates a retail business. During the year, Yoon charged KRW 12,000,000 in grocery purchases for his personal family household consumption and KRW 8,000,000 in personal life insurance premiums to business expenses on his bookkeeping ledger. Under Article 33 of the Income Tax Act, what is the tax adjustment for these expenses?

  1. Deductible up to 50% as proprietor welfare expenses.
  2. Treated as an executive bonus (상여) subject to corporate tax rules.
  3. 필요경비 불산입 (Disallowance of Necessary Expenses) KRW 20,000,000, added to business income. Correct answer.
  4. 필요경비 산입 KRW 20,000,000 as basic business owner allowances.

Explanation

Under Article 33 Paragraph 1 Item 5 of the Income Tax Act, household living expenses (가사의 경비) and related expenditures paid for the personal benefit of the business owner or their family are strictly non-deductible (필요경비 불산입). Both the household grocery expenses (KRW 12,000,000) and personal life insurance premiums (KRW 8,000,000) must be disallowed and added back to taxable business income: 필요경비 불산입 KRW 20,000,000.

Question 30Earned income, withholding and settlement

Sole proprietor Kwon recorded an annual salary of KRW 60,000,000 paid to himself as managing proprietor, along with KRW 40,000,000 in salaries paid to regular unrelated employees, as labor expenses on his bookkeeping ledger. What is the tax treatment of Kwon's own salary under the Income Tax Act?

  1. Deductible up to the executive compensation ceiling of KRW 50,000,000.
  2. Disallowed as a necessary expense: 필요경비 불산입 KRW 60,000,000, increasing net business income. Correct answer.
  3. Fully deductible as an ordinary business expense under Article 19.
  4. Treated as earned wage income subject to year-end tax settlement.

Explanation

Under Article 33 of the Income Tax Act, a sole proprietor cannot be their own employee. Payouts designated as salary or remuneration to the sole proprietor (대표자 본인에 대한 급여) represent a withdrawal of business profits rather than an expense incurred to generate revenue. Therefore, Kwon's salary of KRW 60,000,000 must be disallowed (필요경비 불산입), while the KRW 40,000,000 paid to bona fide employees is fully deductible.

Question 31Earned income, withholding and settlement

Sole proprietor Moon holds an unsecured commercial trade receivable of KRW 15,000,000 from Customer X. Customer X experienced corporate bankruptcy under the Debtor Rehabilitation and Bankruptcy Act during the year, leaving no recoverable assets. Moon recognized a bad debt expense of KRW 15,000,000 on his bookkeeping ledger. How is this treated under Article 33 of the Income Tax Act?

  1. Allowed only upon complete final liquidation of Customer X's corporate entity 5 years later.
  2. Deductible up to 50% only.
  3. Disallowed entirely because bad debt deductions are exclusive to corporations.
  4. It is recognized as a fully deductible necessary expense (필요경비 산입) in the year of book write-off as a book settlement item (결산조정사항). Correct answer.

Explanation

Under Article 33 of the Income Tax Act and Article 55 of its Enforcement Decree, uncollectible trade receivables resulting from the debtor's bankruptcy under the Debtor Rehabilitation and Bankruptcy Act constitute allowable bad debt losses. When recorded on the proprietor's books, it is recognized as a deductible necessary expense (필요경비 산입) as an authorized book settlement adjustment (결산조정사항).

Question 32Earned income, withholding and settlement

Under Article 96 and Article 97 of the Income Tax Act, what is the foundational principle for determining the transfer price (양도가액) and acquisition cost (취득가액) in calculating individual capital gains tax on real estate?

  1. Actual transaction value (실지거래가액) principle based on verified contract and payment evidence Correct answer.
  2. Assessed property tax value principle
  3. Book accounting value under IFRS
  4. Government-published benchmark price (기준시가) principle

Explanation

Under Article 96 Paragraph 1 and Article 97 Paragraph 1 of the Income Tax Act, the fundamental statutory principle for capital gains taxation is the actual transaction value rule (실지거래가액 원칙). Both the transfer value and the acquisition cost must be determined using the actual verified consideration paid and received in the transaction.

Question 33Earned income, withholding and settlement

Taxpayer Oh sold a commercial building. During his ownership period, Oh incurred the following expenditures: (1) KRW 30,000,000 for installing an external emergency fire evacuation staircase and reinforcing the building structure; (2) KRW 5,000,000 for interior painting and wallpaper replacement; (3) KRW 3,000,000 in real estate brokerage commissions upon sale. Which expenditures qualify as deductible necessary expenses (필요경비) in computing capital gains?

  1. KRW 3,000,000 (Brokerage fee only)
  2. KRW 33,000,000 (Capital expenditure KRW 30M + Brokerage fee KRW 3M) Correct answer.
  3. KRW 35,000,000 (Capital expenditure KRW 30M + Painting KRW 5M)
  4. KRW 38,000,000 (All expenditures)

Explanation

Under Article 97 of the Income Tax Act and Article 163 of its Enforcement Decree, deductible necessary expenses for capital gains tax include capital expenditures (자본적 지출: structural enhancements, elevator installations, fire staircases) and direct transfer expenses (양도비용: brokerage commissions, legal notary fees). Ordinary maintenance and cosmetic repairs (수익적 지출: painting, wallpaper, minor maintenance) are strictly non-deductible. Deductible total = KRW 30,000,000 + KRW 3,000,000 = KRW 33,000,000.

Question 34Earned income, withholding and settlement

Taxpayer Jo transferred an ordinary commercial shopping unit that he had owned for exactly 8 full years. His gross capital gain (양도차익) is KRW 100,000,000. Under Article 95 of the Income Tax Act, what is the special deduction for long-term holding (장기보유특별공제) for this general real estate asset?

  1. KRW 32,000,000 (32%)
  2. KRW 24,000,000 (24%)
  3. KRW 16,000,000 (16%) Correct answer.
  4. KRW 10,000,000 (10%)

Explanation

Under Article 95 Paragraph 2 Table 1 of the Income Tax Act, for general real estate held for 3 years or more, the long-term holding special deduction rate is 2% per year of holding, starting at 6% for 3 years up to a maximum of 30% for 15 years or more. For an 8-year holding period, the statutory deduction rate is 8 years × 2% = 16%. Special deduction = KRW 100,000,000 × 16% = KRW 16,000,000.

Question 35Earned income, withholding and settlement

Taxpayer Han sold a high-value residential house (1세대 1주택 고가주택) after holding it for 10 years and residing in it (거주기간) for 8 years. Under Article 95 of the Income Tax Act, what is Han's special deduction rate for long-term holding (장기보유특별공제율) applied to the taxable portion of capital gains?

  1. 40% (Holding period only)
  2. 60% (Flat residential rate)
  3. 72% (Holding period 40% + Residence period 32%) Correct answer.
  4. 80% (Maximum statutory cap)

Explanation

Under Article 95 Paragraph 2 Table 2 of the Income Tax Act, for a qualifying single-household home held for at least 3 years with at least 2 years of actual residence, the deduction rate combines: (1) Holding period deduction: 4% per year (10 years = 40%, maximum 40%); (2) Residence period deduction: 4% per year (8 years = 32%, maximum 40%). Total deduction rate = 40% + 32% = 72%.

Question 36Earned income, withholding and settlement

In Year 1, Husband acquired land for KRW 200,000,000. In Year 4, Husband gifted the land to Wife when its appraised market value was KRW 500,000,000 (covered by the spousal gift tax exemption). In Year 6 (within 10 years of the gift), Wife sold the land to an unrelated third party for KRW 700,000,000. Under the carryover basis taxation rule (이월과세) of Article 97-2 of the Income Tax Act, what acquisition cost must Wife use to calculate her capital gain?

  1. KRW 200,000,000 (Husband's original acquisition cost) Correct answer.
  2. KRW 350,000,000 (Average of acquisition cost and gift value)
  3. KRW 500,000,000 (Fair market value at the date of the gift)
  4. KRW 700,000,000 (Sales value resulting in zero gain)

Explanation

Under Article 97-2 of the Income Tax Act, under the carryover basis taxation regime (이월과세), when a resident transfers real estate within 10 years of receiving it as a gift from their spouse or direct lineal ascendant/descendant, the acquisition cost is deemed to be the original acquisition cost paid by the donor spouse (KRW 200,000,000), and the holding period is measured from the donor's original acquisition date, preventing tax avoidance through intermediate gifts.

Question 37Value-added tax, invoices and transaction classification

Company BP operates both a VAT-taxable manufacturing business and a VAT-exempt agricultural packaging business. During the tax period, it incurred KRW 40,000,000 in common input VAT (공통매입세액) on administrative computing systems serving both divisions. During the period, taxable supply value was KRW 600,000,000 and tax-exempt supply value was KRW 400,000,000 (total supply value KRW 1,000,000,000). What is the non-deductible common input tax (불공제 공통매입세액) under Article 40 of the VAT Act?

  1. KRW 0
  2. KRW 16,000,000 Correct answer.
  3. KRW 24,000,000
  4. KRW 40,000,000

Explanation

Under Article 40 of the Value-Added Tax Act and Article 81 of its Enforcement Decree, the non-deductible portion of common input tax is calculated based on the tax-exempt supply ratio: Common Input VAT × (Tax-exempt Supply Value ÷ Total Supply Value) = KRW 40,000,000 × (KRW 400,000,000 ÷ KRW 1,000,000,000) = KRW 40,000,000 × 40% = KRW 16,000,000. The remaining KRW 24,000,000 (60%) is creditable input tax.

Question 38Value-added tax, invoices and transaction classification

Under Article 81 Paragraph 2 of the Enforcement Decree of the VAT Act, in which of the following scenarios is a taxable person operating mixed taxable and exempt businesses EXEMPT from performing proportional allocation of common input tax, allowing FULL deduction of the input tax?

  1. Whenever the total common input tax is under KRW 500,000,000
  2. When the taxpayer files under the simplified taxation scheme
  3. When the taxable supply value ratio is exactly 50%
  4. When the tax-exempt supply value ratio is less than 5% for the tax period, provided total common input tax is less than KRW 5,000,000 Correct answer.

Explanation

Under Article 81 Paragraph 2 Item 1 of the Enforcement Decree of the VAT Act, omission of allocation (안분계산 생략) is granted and the full common input tax is deductible if the tax-exempt supply value ratio for the relevant tax period is less than 5%, provided that the common input tax for that period is less than KRW 5,000,000. (If the common input tax is KRW 5,000,000 or more, allocation is mandatory even if below 5%).

Question 39Value-added tax, invoices and transaction classification

An enterprise operating a commercial department store purchased gasoline and maintenance parts with creditable input VAT, but subsequently used these supplies to operate a small non-commercial passenger vehicle reserved for the private use of company executives (비영업용 소형승용차). Under Article 10 of the VAT Act, how is this internal use classified?

  1. A permanent reduction of paid-in capital.
  2. Deemed self-supply of goods (자가공급: 비영업용 소형승용차와 그 유지를 위한 재화), recognized as a taxable supply subject to 10% output VAT. Correct answer.
  3. Loss of inventory deductible under corporate tax only.
  4. Tax-free internal corporate consumption.

Explanation

Under Article 10 Paragraph 2 of the VAT Act, when goods acquired with creditable input VAT are consumed or used for the purchase, lease, or maintenance of small passenger vehicles for non-operating purposes (whose input VAT is non-creditable by law), the use constitutes a deemed self-supply of goods (자가공급). The enterprise must recognize output VAT on the market fair value of the consumed goods.

Question 40Value-added tax, invoices and transaction classification

Manufacturing Corporation BS transfers manufactured merchandise with a cost of KRW 50,000,000 and fair market value of KRW 70,000,000 from its production factory to its retail outlet showroom located in another district for direct consumer sales (직매장 반출). Corporation BS has NOT applied for combined tax payment (총괄납부) or consolidated business unit taxation (사업자단위과세). Under Article 10 Paragraph 3 of the VAT Act, what is the VAT treatment of this internal transfer?

  1. It triggers permanent disallowance of input VAT.
  2. It is recognized as a zero-rated export supply.
  3. It is an internal non-taxable inventory relocation exempt from all invoice and tax obligations.
  4. It is a deemed supply of goods (재화의 공급의제); Corporation BS must issue a statutory tax invoice for KRW 70,000,000 (or cost basis KRW 50,000,000 under the special decree rule) and report output VAT. Correct answer.

Explanation

Under Article 10 Paragraph 3 of the VAT Act and Article 19 of its Enforcement Decree, transferring manufactured goods to a separate direct retail sales venue (직매장 반출) without combined payment or single business unit registration constitutes a deemed supply of goods. This prevents cash flow friction and ensures proper VAT collection at the retail branch. The factory must issue a tax invoice (at cost or book transfer price under Article 19) and report output VAT.

Question 41Value-added tax, invoices and transaction classification

A business operator operating an electronics wholesale company distributed 10 laptop computers (cost KRW 1,000,000 each, market retail value KRW 1,400,000 each) as free gifts to key commercial purchasing clients for promotional goodwill. The input VAT on these laptops was fully credited upon purchase. Under Article 10 Paragraph 4 of the VAT Act, how is this distribution treated?

  1. It constitutes a deemed business gift (사업상 증여), creating a taxable supply of KRW 14,000,000 subject to KRW 1,400,000 in output VAT. Correct answer.
  2. It is an ordinary non-taxable business advertising expense.
  3. It is deemed a retail sale at cost (KRW 10,000,000) with zero output VAT.
  4. It is treated as an exempt donation.

Explanation

Under Article 10 Paragraph 4 of the VAT Act, when goods acquired with creditable input VAT are gifted to clients or business counterparties without receiving consideration (사업상 증여), it constitutes a deemed supply of goods. The taxable base is the market fair value of the gifts (10 units × KRW 1,400,000 = KRW 14,000,000), and the operator must report and pay output VAT of KRW 1,400,000.

Question 42Value-added tax, invoices and transaction classification

Sole proprietor Cha closed his retail business (폐업) on June 30. On the closing date, the business retained unsold inventory with an acquisition cost of KRW 20,000,000 and current market fair value of KRW 25,000,000, for which input VAT had been deducted. Under Article 10 Paragraph 6 of the VAT Act, what is the output VAT liability arising on this remaining inventory upon closure?

  1. KRW 0 because the goods have not been sold to an external customer
  2. KRW 500,000 (10% of the unrealized markup)
  3. KRW 2,000,000 (10% of cost)
  4. KRW 2,500,000 (10% of market fair value) Correct answer.

Explanation

Under Article 10 Paragraph 6 of the VAT Act, inventory and depreciable assets remaining on hand at the time of business discontinuance (폐업 시 잔존재화) are deemed to be supplied by the business operator to themselves on the closing date. For non-depreciable inventory, the statutory tax base is the current market fair value at the date of closure: KRW 25,000,000 × 10% = KRW 2,500,000 output VAT payable.

Question 43Value-added tax, invoices and transaction classification

In Year 1, Corporation BU supplied taxable merchandise for a total invoice value of KRW 110,000,000 (supply value KRW 100,000,000, VAT KRW 10,000,000) on credit. In Year 3, the buyer was declared bankrupt by a court under the Debtor Rehabilitation and Bankruptcy Act, rendering the entire receivable uncollectible. Under Article 45 of the VAT Act, what is the bad debt tax credit (대손세액공제) allowable to Corporation BU, and what is the statutory time deadline for claiming this relief?

  1. Credit: KRW 1,000,000; allowable indefinitely
  2. Credit: KRW 10,000,000; allowable if the bad debt occurs within 10 years from the original supply date Correct answer.
  3. Credit: KRW 10,000,000; allowable only within 3 years from the original supply date
  4. Credit: KRW 11,000,000; allowable if the bad debt occurs within 5 years

Explanation

Under Article 45 of the VAT Act and Article 87 of its Enforcement Decree, when a trade receivable becomes uncollectible due to statutory insolvency (such as bankruptcy), the supplier may deduct a bad debt tax credit calculated as: Uncollected Receivables (VAT inclusive) × (10 ÷ 110) = KRW 110,000,000 × (10 ÷ 110) = KRW 10,000,000. Under the amended law, the bad debt must occur within 10 years from the closing date of the tax period in which the taxable supply occurred.

Question 44Value-added tax, invoices and transaction classification

Corporation BV previously received a bad debt tax credit of KRW 5,000,000 on an uncollectible receivable of KRW 55,000,000. In the current tax period, Corporation BV successfully collected KRW 33,000,000 (VAT inclusive) of this written-off debt from the guarantor. Under Article 45 Paragraph 4 of the VAT Act, how must Corporation BV account for this collection in its VAT return?

  1. Add KRW 3,000,000 to output tax (매출세액에 가산) in the tax period of collection. Correct answer.
  2. Deduct KRW 3,000,000 from input tax in the tax period of collection.
  3. File an amended return (수정신고) for the past tax period in which the bad debt credit was claimed.
  4. No VAT adjustment is required; the recovery is treated solely as corporate income.

Explanation

Under Article 45 Paragraph 4 of the VAT Act, when a taxpayer recovers all or part of a bad debt claim for which a bad debt tax credit was previously granted, the recovered VAT portion [Recovered Amount × (10 ÷ 110) = KRW 33,000,000 × (10 ÷ 110) = KRW 3,000,000] must be added back to output tax (매출세액에 가산) in the tax period in which the recovery actually occurred.

Question 45Value-added tax, invoices and transaction classification

What is the fundamental statutory difference between Zero-Rating (영세율) and Tax Exemption (면세) under the Value-Added Tax Act?

  1. Both systems provide identical full refund of input VAT.
  2. Tax exemption allows input VAT refund, whereas zero-rating does not.
  3. Zero-rating applies a 0% tax rate with full refund of input VAT (complete exemption 완전면세); tax exemption exempts output tax but disallows input VAT deduction (incomplete exemption 불완전면세). Correct answer.
  4. Zero-rating is for non-profit entities, whereas tax exemption is exclusively for exporters.

Explanation

Under Articles 21–24 and Article 26 of the VAT Act, Zero-Rating (영세율) applies a 0% rate to output supplies while permitting full refund of all input VAT incurred (완전면세), designed to implement the destination principle on international exports. In contrast, Tax Exemption (면세) frees supplies from output VAT but strictly denies any input VAT deduction or refund (불완전면세), embedding input VAT into cost for social welfare or basic necessities.

Question 46Value-added tax, invoices and transaction classification

Under Article 34 Paragraph 3 of the VAT Act, a business supplier delivers goods repeatedly to a single business customer throughout a calendar month. What is the statutory deadline for issuing a single combined monthly tax invoice (월합계 세금계산서) using the last day of the month as the write-up date (작성연월일)?

  1. Within 7 days of each individual physical delivery
  2. By the last day of the transaction month
  3. By the 25th day of the month following the end of the tax period
  4. By the 10th day of the month immediately following the transaction month Correct answer.

Explanation

Under Article 34 Paragraph 3 Item 1 of the VAT Act, where transactions are combined on a monthly basis with the write-up date designated as the end of the calendar month, the tax invoice may be issued on or before the 10th day of the month following the calendar month in which the goods or services were supplied.

Question 47Value-added tax, invoices and transaction classification

Corporation BW supplied taxable merchandise on April 15 (Year 1) for KRW 100,000,000 (exclusive of VAT). Under the law, the tax invoice should have been issued by May 10. Corporation BW issued the electronic tax invoice on July 20 of Year 1 (after the 확정신고 deadline of the first tax period, which was July 25, but before closing). What is the penalty tax (가산세) assessed against Corporation BW under Article 60 of the VAT Act?

  1. 0% if the recipient accepts the invoice
  2. Late issuance penalty tax (지연발급가산세) of 1% (KRW 1,000,000) Correct answer.
  3. Non-filing penalty tax of 20%
  4. Unissued penalty tax (미발급가산세) of 2% (KRW 2,000,000)

Explanation

Under Article 60 Paragraph 2 of the VAT Act, when a supplier fails to issue a tax invoice by the statutory issuance deadline (May 10) but nevertheless issues the invoice on or before the final tax return deadline for that tax period (July 25), the violation is classified as Late Issuance (지연발급). The penalty tax is 1% of the supply value: KRW 100,000,000 × 1% = KRW 1,000,000. (If issued after July 25, it is classified as Failure to Issue 미발급 with a 2% penalty).

Question 48Value-added tax, invoices and transaction classification

Under the Framework Act on National Taxes (국세기본법), what is the difference regarding the timing of tax liability determination (납세의무의 확정시기) between Corporate Income Tax (법인세) and Inheritance Tax (상속세)?

  1. Both taxes are determined automatically upon the occurrence of the taxable event.
  2. Both taxes require formal administrative assessment by the district tax director.
  3. Corporate tax liability is determined automatically upon the taxpayer's return filing (신고납세제도); Inheritance tax liability is determined when the government formally assesses and decides the tax liability (부과과세제도). Correct answer.
  4. Inheritance tax is determined upon filing; corporate tax is determined upon government audit.

Explanation

Under Article 22 of the Framework Act on National Taxes, taxes operating under the return-assessment system (신고납세제도: Corporate Tax, Individual Income Tax, VAT) have their tax liability determined immediately when the taxpayer files the statutory tax return. In contrast, taxes operating under the government-assessment system (부과과세제도: Inheritance Tax and Gift Tax) are determined only when the tax authority formally assesses and decides the tax liability.

Question 49Value-added tax, invoices and transaction classification

Domestic Corporation BX (an unlisted entity) has outstanding unpaid corporate tax liabilities of KRW 100,000,000. Corporation BX has exhausted all its corporate assets, which yielded only KRW 40,000,000 upon administrative tax collection. Individual Han and his related parties own 70% of Corporation BX's total voting shares and exercise substantive control over corporate operations (과점주주). What is Han's secondary tax liability (제2차 납세의무) under Article 39 of the Framework Act on National Taxes?

  1. KRW 42,000,000 Correct answer.
  2. KRW 60,000,000
  3. KRW 70,000,000
  4. KRW 100,000,000

Explanation

Under Article 39 of the Framework Act on National Taxes, when an unlisted corporation's assets are insufficient to satisfy national tax liabilities, oligarchic shareholders (과점주주: owning >50% of shares with related parties) bear secondary tax liability. The liability is calculated as: Deficient Corporate Tax × Oligarchic Shareholding Ratio. Deficient tax = KRW 100,000,000 - KRW 40,000,000 = KRW 60,000,000. Han's secondary liability = KRW 60,000,000 × 70% = KRW 42,000,000.

Question 50Value-added tax, invoices and transaction classification

Under Article 25 of the Framework Act on National Taxes, in which of the following circumstances do the involved parties bear JOINT AND SEVERAL tax liability (연대납세의무)?

  1. A commercial bank holding deposits on behalf of a taxpayer
  2. An employee with respect to corporate tax owed by their employer
  3. An unlisted company's minority shareholder holding 1% of shares
  4. Co-owners (공유물) or joint business operators (공동사업자) with respect to national taxes related to the co-owned property or joint business Correct answer.

Explanation

Under Article 25 Paragraph 1 of the Framework Act on National Taxes, co-owners of property, persons sharing expenses, and joint business operators (공동사업자) bear joint and several tax liability (연대납세의무) for national taxes, surcharges, and collection fees assessed on the co-owned property or joint enterprise.