Korea Legislates for BEPS 5 Minimum Standard

(Tax-News) -- Among amendments announced recently to the country's tax reform plans, South Korea has legislated to exchange information received from taxpayers as part of applications for advance pricing agreements.

The Korean Ministry of Strategy and Finance said the move is intended to improve how Korea cooperates with other countries' tax agencies on the collection of tax from multinationals.

The changes are being introduced as part of Korea's commitment to incorporate into its tax law regime the recommendations of the OECD in its base erosion and profit shifting Action Plan. The changes relate to BEPS Action 5, which specifically called on countries to implement measures to counter harmful tax practices more effectively and provided that, as a minimum standard to be adopted by countries on a mandatory basis, countries should spontaneously exchange information on rulings that could give rise to BEPS concerns in other countries in the absence of such exchange.

Advance pricing agreements are typically concluded by companies with their home state authority (a unilateral APA), or with the company's home state authority and an overseas authority (a bilateral APA). These are intended to support multinational companies to secure tax certainty with regards to their future tax arrangements, and in particular to receive assurance from their home state authority or two authorities about the transfer prices for a series of transactions between two commonly controlled entities.

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