At the end of 2006 the National Assembly approved a package of tax law amendments for 2007. Among other changes, the amendments reduced the withholding tax rate applicable to interest paid to foreign investors. In addition, the Ministry of Finance and Economy has proposed further amendments that may affect foreign investors investing in Korea.
Following the revision of major Korean tax laws relating to domestic transactions at the end of 2005, the Ministry of Finance and Economy issued revised enforcement decrees to be incorporated into the Korean tax legislation for 2006. Enforcement decrees provide a more detailed description and explanation of how the relevant provisions of the law are to be interpreted and enforced.
After months of conducting tax audits of foreign investment funds, the National Tax Service has published a press release disclosing the interim result of five tax audits (the National Tax Service is currently conducting another tax audit of a foreign investment fund). So far a total of W214.8 billion has been assessed.
In September 2005 the Independent Commission against Corruption provided the tax authorities with its recommendations to improve the tax audit procedure and make tax audits more transparent and accountable. They include the codification of internal tax authority guidelines into law and the formal adoption of an auditor pool system by the end of 2005.
The Ministry of Finance and Economy has announced plans to revise certain provisions in the tax legislation, including the Law for the Coordination of International Tax Affairs, which sets out rules relating to the taxation of international tax transactions.
The government has introduced revisions to the customs legislation designed to streamline customs procedures in Korea, as well as to grant more administrative powers to the Korean Customs Service. The most notable amendment is the expansion of the Customs Service's jurisdiction over foreign exchange transactions.