Guide on completing the Schedule of Beneficial Owner [Annex to Form No.29-13]
If the Applicant is a non-public Overseas Investment Vehicle (OIV), the Applicant must complete the Schedule of Beneficial Owner in order to enjoy the reduced tax rate under double taxation treaty with Korea.
The OIV is required to provide information regarding each of the underlying beneficiaries investing in the OIV. In order for the OIV to complete the Schedule of Beneficial Owner, each individual and/or corporation investing in the OIV will be required to complete the applicable application form and submit it to the OIV.
Additionally, if any of the underlying entities within the OIV is itself an OIV, then a separate Report of Overseas Investment Vehicle is also required plus the Schedule of Beneficial Owner which will again require to be completed based on the application forms completed by individuals and corporations. In this case, regulations do not require an underlying OIV to provide all the applications received by individuals or corporations to the next level OIV. Under the current regulations, the underlying OIV will require to keep hold of all the applications forms received by individuals and corporations. However, upon request from the Korea Tax Authority, such OIV will be required to provide the applications submitted by individuals and corporations accordingly.
Schedule of Beneficial Owner
The below Schedule of Beneficial Owner will need to be completed for each income event in the event of a change in the underlying beneficiaries details. That means that two schedules will be required for each OIV. If a schedule for a particular OIV is not received, then the default tax rate will be applied.
The percentage rate needs to be rounded up at the fifth digit and the foreign investor needs to quote up to 4 digits in percentage points.
Please indicate the tax residential address of the Applicant, do not use a PO Box and provide the address in the following order: street number, street name, city, state, postal code and country.
Schedule of Beneficial Owners (Type of Income Dividend Income) (Front) | |||||||||
(Unit: %) | |||||||||
1 Classification | 2 No. | 3 Name of individual or overseas investment vehicle | 4 Taxpayer Identification No. | 5 Address | 6 Country of Residence | 7 Date of Birth | 8 Tax Rate To Be Applied | 9 Investment Ratio | 10 Tax Rate (8 x 9) |
BO (Individual) | 1 | ABC DEF | 1234 | Xxx Chicago | USA | YYYYMMDD | 16.5% | 10% | 1.6500 |
BO (Individual) | 2 | ABC DEF | 1235 | Xxxx San Diego | USA | YYYYMMDD | 16.5% | 10% | 1.6500 |
BO (Individual) | 3 | ABC DEF | 1236 | Xxx Los Angeles | USA | YYYYMMDD | 16.5% | 10% | 1.6500 |
BO (Individual) | 4 | ABC DEF | 1238 | Xxx New York | USA | YYYYMMDD | 16.5% | 20% | 3.3000 |
BO (Corporation) | 5 | ABC Company | 1290 | Xxxx New York | USA | YYYYMMDD | 16.5% | 25% | 4.1250 |
BO (Corporation) | 6 | ABC Company | 12956 | XXX Cayman Islands | Cayman Islands | YYYYMMDD | 22% | 25% | 5.5000 |
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| 11 Total | 100% | 17.8750% | ||||||
If an Overseas Investment Vehicle chooses not to disclose part of its beneficial owners in the Schedule of Beneficial Owners list, can the Overseas Investment Vehicle claim reduced tax rate on a pro rata basis for those beneficial owners who have declared?
Yes, it is possible. The undisclosed beneficial owners will be treated as tax resident of a country where there is no DTT with Korea, that is, they will need to declare the default maximum tax rate (15.4% of bond interests, 22% for dividends) in relation to the undisclosed beneficial owners in the Schedule of Beneficial Owners list.
Tax exemption and non-taxation under the treaty
Under a double taxation treaty, if the Applicant is able to enjoy tax exemption, then the Application for non-taxation tax exemption for Corporations on Korean Source Income under the Tax Treaty Form No. 29-2(1) has been required to be submitted to Korea Tax Authority since 2002.