Korea introduces contemporaneous documentation requirements and penalty rules
February 02, 2009
The new transfer pricing documentation-related penalty rules in the law for the coordination of international tax affairs (LCITA) are effective from December 26 2008. Under the new rules, a Korean taxpayer with related-party transactions is required to prepare and maintain contemporaneous documentation to avoid the 10% penalty on underreported tax.
The new rules make it clear that the following conditions should be met to qualify for exemption from the 10% penalty:
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