1. Article 57(1)1 of the Corporate Tax Act provides for a method of deducting the amount of foreign corporate tax from the amount of corporate tax for the relevant business year, where any foreign source income is included in the tax base of a domestic corporation for each business year, and any foreign source income is paid or payable, if any, within a limit of deduction;

In addition, Article 57 (3) provides that the amount equivalent to the tax amount reduced or exempted on the relevant foreign source income in the other country to the tax treaty shall be deemed the foreign corporate tax amount subject to the said tax credit within the scope prescribed by the relevant tax treaty.

It is stipulated in individual treaties on the deduction of tax paid abroad.

Article 23(3) of the Agreement between the Government of the Republic of Korea and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter “Korea-China Tax Treaty”), which was concluded in 2006, was replaced by Articles 2 and 5(1) of the Agreement between the Government of the Republic of Korea and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter “instant provisions”).

Article 23(1)(a) of the Korea-China Tax Treaty (amended by Article 4 of the Protocol No. 2) provides that “The taxes paid by one Contracting Party referred to in the former part of Article 23(1)(a) shall be deemed to include taxes that would have had been paid if there had been no other relevant provisions in the tax incentives for the reduction, exemption, or the promotion of economic development.”