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  • Print publication year: 2012
  • Online publication date: November 2014

11 - Transfer pricing disputes in the Republic of Korea

from Part III - Asia Pacific



The Republic of Korea has adopted the civil law system. Korea became a member of the OECD in 1996, but even before then, it had been under the influence of the OECD Model Tax Convention and various reports on transfer pricing in the international tax arena.

The Convention between the Republic of Korea and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (‘Korea–Japan Tax Treaty’), entered into force in March 1970, is the first bilateral tax treaty for Korea, which was influenced by the 1963 draft of the OECD Model Tax Convention. The origin of the Korea–Japan Tax Treaty was the result of the efforts made by both countries since 1964 to solve the problems which had arisen where Japanese trading companies had been imposing high estimated taxes when providing goods to the Korean Public Procurement Service. Since the conclusion of the Korea–Japan Tax Treaty, Korea has successively signed tax treaties with other countries and, as of 15 July 2011, seventy-seven tax treaties are in force.

Tadashi, Murai, ‘Problems of Japan–Korea Tax Treaty from the Perspective of a Japanese Scholar’ (1997) 3 Tax Law Study (September), 92
Lee, Taero and Han, Mansu, Lectures on Tax Law (Pak-Young Publishing, 2010), p. 992
The Full text can be found in the NTS APA Annual Report 2009, (NTS, August 2010), p. 10
Lee, Kyung-geun and Kim, Beom-Jun, ‘Introduction to Tax Law-Interpreting Advance Rulings’ (2008) 14(2) Tax Law Study120
Lee, Chang-hee, ‘Taxation of Fixed Place of Business’ (2007) 13(2) Tax Law Study (August)
OECD Report on the Attribution of Profits to Permanent Establishments (December 2006)
NTS APA Annual Report 2009 (NTS, August 2010), p. 42
Park, Hun and Song, Seong Kwon, ‘Transfer Pricing and Intangibles: Republic of Korea’ (2007) 92a Cahiers de Droit Fiscal International401
Lee, Taero and Han, Mansu, Lectures on Tax Law (Pak-Young Publishing, 2010), p. 869
NTS APA Annual Report 2009, (NTS, August 2010), p. 30.
NTS, Explanation of Korea's Transfer Pricing Taxation (TP) and Advance Pricing Agreement (APA) (2002), p. 9.
APA statistics in this chapter are based on the NTS APA Annual Report 2009 (NTS, August 2010).
Oh, Yun and Kim, Jin-Su, ‘Ways to Promote Tax Law-Interpreting Advance Rulings’ in Collection of Tax Articles (International Fiscal Association of Korea, February 2009), vol. 25(1), pp. 152–4
Han, Sang-guk and Park, Hun, Study on the Improvement of Tax Relief System (Korean Institute of Public Finance, 2005), pp. 23–41
Kyung-geun, Lee and Beom-Jun, Kim, ‘Practices and Major Rulings of Transfer Pricing Taxation’ (2010) Monthly Tax (June) 79.