Suggested citations
AGLC4 | 외국인투자기업 및 외국인세금법 2015 [Foreign Investment Enterprises and Foreigner Taxation Law of the Democratic People's Republic of Korea (2015)] [tr Daye Gang].
Bluebook | Oegugintujagieob mit oeguginsegeumbeob 2015 [Foreign Investment Enterprises and Foreigner Taxation Law of the Democratic People's Republic of Korea (2015)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on January 31, Juche 82 (1993), as Decision No. 26 of the Standing Committee of the Supreme People’s Assembly
Amended and supplemented on February 26, Juche 88 (1999), as Directive No. 484 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on May 17, Juche 90 (2001), as Directive No. 2315 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on November 7, Juche 91 (2002), as Directive No. 3400 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on April 29, Juche 97 (2008), as Directive No. 2688 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on August 19, Juche 97 (2008), as Directive No. 2842 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on December 21, Juche 100 (2011), as Directive No. 2048 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on September 9, Juche 104 (2015), as Directive No. 656 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF FOREIGN INVESTMENT ENTERPRISES AND FOREIGNER TAXATION LAW
Article 1 (Objectives of Foreign Investment Enterprises and Foreigner Taxation Law)
The Foreign Investment Enterprises and Foreigner Taxation Law of the Democratic People’s Republic of Korea shall serve to fairly levy tax on foreign country investment enterprises and foreigners and ensure taxpayers submit their taxes correctly and in time.
Article 2 (Tax administration institutions)
Tax administration for foreign country investment enterprises and foreigners shall be done by the central tax affairs guidance institution and the given tax affairs institution. The central tax affairs guidance institution and the given tax affairs institution are the supervision and control institutions implementing regulations related to tax affairs.
Article 3 (Duty of tax registration for foreign country investment enterprises and foreigners)
Foreign country investment enterprises shall do tax registration at the given tax affairs institution according to the designated order and shall be issued a tax registration card. In cases where foreign country investment enterprises are combined, divided, or dissolved, an amended tax affairs registration and registration cancellation procedure shall be done. Foreigners staying in our country and receiving an income shall also do tax registration.
Article 4 (Storage of financial accounting calculations and documents)
The fax affairs accounting of foreign country investment enterprises shall be done according to the financial accounting regulations related to foreign country investment enterprises. Foreign country investment enterprises shall store documents related to financial accounting calculations until the end of the designated period, and important calculations ledgers shall be stored until the dissolution of an enterprise is concluded.
Article 5 (Calculations currency of tax and party making the payment)
Taxes submitted by foreign country investment enterprises and foreigners shall be calculated in North Korean won or in a designated currency, and shall be directly paid by the person who made the profit to the given tax affairs institution or shall be paid as a deduction to the unit paying the profits.
Article 6 (Subject of application)
This law shall apply to foreign country investment enterprises (including investment banks of a foreign country) and foreigners (including overseas Koreans) doing economic transactions or receiving an income in the territory of our country.
Article 7 (Application of given treaties)
In cases where, in an agreement entered into between our country and a given country related to foreign country investment enterprises and foreigner taxation, there are particulars determined differently to this law, it shall be followed.
CHAPTER II. INCOME TAX
Article 8 (Duty to pay income tax)
Foreign country investment enterprises must pay income tax for income obtained by doing business activities in our country, and for other income.
Article 9 (Taxation subjects for income tax)
Taxation subjects for income tax include income received through business activities such as sales income for produced goods, construction delivery income, and freight charges and fee income, and other income such as interest income, distributed income, fixed assets leasing income, property sales income, income supplied for intellectual property rights and technical secrets, income for labour supplied related to business administration, and gift income. Income tax shall also be paid for income obtained by installing branch offices, offices, or agencies in other countries.
Article 10 (Tax rate of income tax)
The tax rate for income tax shall be 25% of net profits.
Article 11 (Income tax for other income of foreign country enterprises)
In cases where a foreign country enterprise has obtained other income in our country, such as distributed income, interest income, lease income, or patent usage fees, income tax shall be 20% tax rate applied to the income amount.
Article 12 (Calculation of income tax)
Income taxes shall be calculated from January 1 to December 31 every year by deducting costs from total income, including raw material and resources costs, fuel and power costs, labour costs, depreciation, purchasing supplies expenses, enterprise management costs, insurance premiums, or sales fees to finalize profits, then applying the determined tax rate to the net profits after deducting transfer tax, business tax, or other expenditure from those profits.
Article 13 (Scheduled payments of income tax)
Foreign country investment enterprises must make scheduled payments of income tax every quarter. In these cases, they must submit the enterprise income tax payment document to the given tax affairs institution within 15 days of the month after the quarter ends.
Article 14 (Confirmed payments of income tax)
Foreign country investment enterprises shall finalize income tax according to the annual settlement and make supplementary payments of unpaid amounts, and amounts paid in excess shall be repaid. In cases where an enterprise is dissolved, a tax payment guarantee shall be adopted with the given tax affairs institution within 20 days of the declaration day for dissolution, and income tax shall be paid within 15 days of the day the settlement ends. In cases where an enterprise is combined or divided, it shall be settled in enterprise revenues until that time and income tax shall be paid within 20 days of the declaration day for combination or division.
Article 15 (Income tax payment for other income of foreign country enterprises)
Income tax for other income of foreign country enterprises shall be reported and paid to the given tax affairs institution by the person who made the profit within 15 days of the income arising, or the unit paying the profits shall pay it as a deduction.
Article 16 (Preferences in income tax application)
Preferential measures in the application of income tax are as follows.
1. The tax rate of income tax for foreign country investment enterprises established in special economic zones shall be 14% of net profits, and the tax rate of income tax in encouraged sectors such as sectors with cutting edge techniques, the infrastructure construction sector, and the scientific research sector shall be decreased to 10% of net profits.
2. In cases where a government of another country or an international financial organisation has granted a loan or a bank of another country has granted a loan to an enterprise with profitable conditions, income tax for the interest income shall be waived.
3. For enterprises that have invested in encouraged sectors and have operated for more than 15 years, income tax shall be exempted for 3 years and for 2 years after may be reduced within the scope of 50%.
4. For enterprises that have invested in a production sector excluding in a type of business restricted by the State, and have operated for more than 10 years, income tax may be exempted for 2 years.
5. For enterprises that have invested in a designated labour sector and have operated for more than 10 years, income tax may be exempted for 1 year.
6. For enterprises that increased registered capital by reinvesting profits or have established new enterprises, and have operated for more than 10 years, 50% of the given income tax amount or the reinvested portion, and for enterprises in encouraged sectors the whole of the amount shall be returned.
Article 17 (Application of income tax reduction period)
The reduction period for income tax shall be applied from the year after the foreign country investment enterprise is established.
Article 18 (Submission of income tax reduction application document)
Foreign country investment enterprises seeking to have income tax reduced must submit to the given tax affairs institution an income tax reduction application document, and confirmation documents proving the business administration period and reinvestment amount. On the income tax reduction application document must be stated the name and establishment date of the enterprise, location, type of business, the year the profits were created, total investment sum, trading bank, and account number.
Article 19 (Conditions for recovering income tax approved to be reduced)
In cases where a foreign country investment enterprise has received an income tax reduction but is dissolved, combined, or divided during the reduction period or withdraws the reinvested capital, the income tax already reduced shall be recovered or supplementarily imposed.
CHAPTER III. INDIVIDUAL INCOME TAX
Article 20 (Duty to pay individual income tax)
Foreigners who have obtained income while staying long-term or residing in our country must pay individual income tax. Foreigners staying or residing in our country for more than 1 year must also pay individual income tax for income obtained outside of the territory of our country.
Article 21 (Taxation subjects for individual income tax)
The taxation subjects for individual income tax are as follows.
1. Income for labour remuneration
2. Interest income
3. Distributed income
4. Fixed assets leasing income
5. Property sales income
6. Income supplied for intellectual property rights and technical secrets
7. Income for labour supplied related to business administration
8. Gift income
Article 22 (Tax rate of individual income tax)
The tax rate of individual income tax is as follows.
1. The tax rate for individual income tax related to labour remuneration shall be 5~30% of income amount according to what has been decided.
2. The tax rate for interest income, distributed income, fixed assets leasing income, income supplied for intellectual property rights and technical secrets, and individual income tax for labour supplied related to business administration shall be 20% of the income amount.
3. The tax rate for individual income tax related to gift income shall be 2~15% of the income amount according to what has been decided.
4. The tax rate for individual income tax for property sales income shall be 25% of the income amount.
Article 23 (Calculation of individual income tax related to labour remuneration)
Individual income tax for labour remuneration shall be calculated by applying a determined income tax to the monthly labour remuneration amount.
Article 24 (Calculation for individual income tax such as distributed income)
Individual income tax for distributed income, property sales income, income supplied for intellectual property rights and technical secrets, income for labour supplied related to business administration, or gift income shall be calculated by applying a determined income tax to the given income amount.
Article 25 (Calculation of individual income tax to interest income)
Individual income tax for interest income shall be calculated by applying the determined income tax to income obtained by making a deposit in a bank.
Article 26 (Calculation of individual income tax for fixed assets leasing income)
Individual income tax for fixed assets leasing income shall be calculated by applying the determined income tax to the remaining amount after deducting 20% for expenses such as labour costs, packaging costs, and fees from the lease fee.
Article 27 (Payment period and method for individual income tax)
The payment period and payment method of individual income tax are as follows.
1. Individual income tax for labour remuneration shall be deducted when the unit that pays labour remuneration pays the labour remuneration, to be paid within 5 days, or shall be paid within 10 days after the person who made the profit is paid the labour remuneration.
2. Individual income tax for property sales income or gift income shall be reported and paid by the person who made the profit within 30 days of the day the income was obtained.
3. Individual income tax for interest income, distributed income, fixed assets leasing income, income supplied for intellectual property rights and technical secrets, or income for labour supplied related to business administration shall be calculated every quarter and paid as a deduction by the unit paying the profits within the first ten days of the following month, or the person who made the profit shall report and pay it.
CHAPTER IV. PROPERTY TAX
Article 28 (Duty to pay property tax)
Foreign country investment enterprises and foreigners must pay property tax for property owned in our country.
Article 29 (Taxation subjects for property tax)
The taxation subjects of property tax are property registered in our country, such as buildings, ships, and airplanes.
Article 30 (Property registration)
Foreigners must register their property with the given tax affairs institution in the following manner.
1. It shall be registered at its evaluation price within 20 days of the day the property came into ownership.
2. In cases where the owner and registration price of the property has changed, an amended registration will be done within 20 days.
3. Property shall be evaluated every year as at January 1 and shall be re-registered within February.
4. In cases where property has been discarded, the registration cancellation procedure shall be done within 20 days.
Article 31 (Taxation amount of property tax)
The taxation amount of property tax shall be done at the price registered at the given tax affairs institution.
Article 32 (Tax rate of property tax)
The tax rate of property tax shall be 1~1.4% of the registered property price.
Article 33 (Calculation of property tax)
Property tax shall be calculated by applying a determined tax rate to the price registered with the given tax affairs institution from the month after registration is completed.
Article 34 (Payment of property tax)
Property tax shall be paid within January of every year by the property owner to the given tax affairs institution.
CHAPTER V. INHERITANCE TAX
Article 35 (Duty to pay inheritance tax)
A foreigner who has received an inheritance of property in the territory of our country must pay an inheritance tax. In cases where foreigners residing in our country have received property outside of the territory of our country as inheritance, they must also pay inheritance tax.
Article 36 (Taxation subjects of inheritance tax)
Taxation subjects of inheritance tax shall be the remaining sum of money after settling the debt of the person who gives the inheritance from the property the heir has inherited.
Article 37 (Evaluation of inheritance property price)
The evaluation of inheritance property price shall be at the price of the given property when it was inherited.
Article 38 (Tax rate of inheritance tax)
The tax rate of inheritance tax shall be 6~30% of the inherited sum of money.
Article 39 (Calculation of inheritance tax)
Inheritance tax shall be calculated by applying the determined tax rate to the taxation amount.
Article 40 (Payment of inheritance tax)
An heir must report and pay inheritance tax within 3 months of the day the inheritance was received. In cases where the inheritance tax amount exceeds a designated sum of money, it may be paid in instalments.
CHAPTER VI. TRANSFER TAX
Article 41 (Duty to pay transfer tax)
Foreign country investment enterprises in the production sector and the construction sector must pay transfer tax.
Article 42 (Taxation subjects of transfer tax)
The taxation subjects of transfer tax shall include things like sales income for produced goods and income from construction handovers.
Article 43 (Tax rate of transfer tax)
The tax rate of transfer tax shall be 1~15% of the product sales amount or the construction delivery income amount. The tax rate of transfer tax for stimulants shall be 16~50% of the product sales amount.
Article 44 (Calculation of transfer tax)
Transfer tax shall be calculated by applying the determined tax rate to the product sales amount or the construction delivery income amount. In cases where a foreign country investment enterprise does production work and labour work together, transfer tax and business tax shall be separately calculated.
Article 45 (Payment of transfer tax)
Transfer tax shall be paid every time sales income for produced goods or income from construction handovers arises.
Article 46 (Preferences in application of transfer tax)
Transfer tax shall be waived for export products. However, for products for which exports are restricted, transfer tax shall be paid according to what has been decided.
CHAPTER VII. BUSINESS TAX
Article 47 (Duty to pay business tax)
Foreign country investment enterprises in the labour sector must pay business tax.
Article 48 (Taxation subjects of business tax)
The taxation subjects for business tax shall be labour income in sectors such as traffic and transportation, communication, power, commerce, trade, finance, insurance, tourism, advertising, inns, supply of necessities, entertainment, and hygiene services.
Article 49 (Tax rate of business tax)
The tax rate of business tax shall be 2~10% of the given income. However, the tax rate for special industries may be up to 50%.
Article 50 (Calculation of business tax)
Business tax shall be calculated by applying the determined tax rate to income by each type of business. In cases where foreign country investment enterprises do operations in many types of businesses, business tax shall be calculated according to each type of business.
Article 51 (Payment of business tax)
Business tax shall be paid to the given tax affairs institution every time labour income arises.
Article 52 (Preferences in application of business tax)
For foreign country investment enterprises operating by investing in infrastructure sectors such as roads, railways, ports, airports, and sewage and garbage treatment, business tax may be exempted or decreased for a set period. For enterprises in the cutting edge scientific techniques labour sector, business tax may be decreased for a set period within the scope of 50%.
CHAPTER VIII. RESOURCES TAX
Article 53 (Duty to pay resources tax and classification of resources)
In cases where foreign country investment enterprises export resources, or gather resources for the purpose of sales or their own consumption, they must pay resources tax. Resources include natural resources such as mineral resources, forest resources, animal and plant resources, marine resources, and water resources.
Article 54 (Taxation subjects for resources tax)
Taxation subjects for resource tax shall be done by the income arising from export or sales, or by the designated price.
Article 55 (Tax rate for resources tax)
The tax rate of resources tax according to the types of resources shall be determined by the Cabinet.
Article 56 (Calculation method for resources tax)
Resources tax shall be calculated by applying the given tax rate to the income arising from exporting or selling resources, or to a designated price. In cases where several resources are extracted together in the gathering process, it shall be calculated by each type of resource.
Article 57 (Payment of resources tax)
Resources taxes shall be paid to the given tax affairs institution every time income arises by exporting or selling resources, or every time resources are consumed.
Article 58 (Preferences in the application of resources tax)
In the following cases, resources tax may be reduced.
1. For enterprises developing resources such as crude oil or natural gases, resources tax may be exempted for 5~10 years.
2. In cases where high value manufactured products are made and exported based on modernized technical processes, or sold to institutions, enterprises and organizations in our country through State measures, without selling resources as they are, resources tax may be reduced.
3. For underground water used for production by foreign country investment enterprises in encouraged sectors, resources tax may be reduced.
CHAPTER IX. MUNICIPAL ADMINISTRATION TAX
Article 59 (Duty to pay municipal administration tax)
Foreign country investment enterprises and foreigners residing in our country must pay municipal administration tax.
Article 60 (Taxation subjects for municipal administration tax)
The taxation subjects for municipal administration tax shall be the total cost of monthly employee’s wages of foreign country investment enterprises, or the monthly income amount of resident foreigners.
Article 61 (Calculation and payment of municipal administration tax)
The calculation and payment of municipal administration tax shall be done in the following manner.
1. Foreign country investment enterprises shall pay tax calculated by applying a tax rate of 1% of the total cost of monthly employee’s wages within the first 10 days of the following month.
2. Resident foreigners shall themselves report and pay tax calculated by applying a tax rate of 1% of their monthly income amount within the first 10 days of the following month to the given tax affairs institution. Depending on the case, the unit paying the wages may also pay it as a deduction.
CHAPTER X. CAR USE TAX
Article 62 (Duty to pay car use tax)
In cases where foreign country investment enterprises and foreigners use cars, they must pay car use tax.
Article 63 (Registration of cars)
Foreign country investment enterprises and foreigners must register cars with the given tax affairs institution within 30 days of the day the car came under their ownership. The subjects of registration include cars, buses, cargo trucks, special cars, and motorcycles.
Article 64 (Car use tax amount)
The use tax amount associated with each category of car shall be determined by the central tax affairs guidance institution.
Article 65 (Payment of car use tax)
Car use taxes shall be paid by the car user before the end of February every year. An exemption for car use tax may be received for periods in which the car is not used.
CHAPTER XI. GUIDANCE AND CONTROL FOR TAX AFFAIRS WORK
Article 66 (Basic requirements of guidance and control)
The standardized guidance of the State for tax affairs work shall be done by the central tax affairs guidance institution. The central tax affairs guidance institution must normally command and guide the work of the given tax affairs institutions.
Article 67 (Tax affairs supervision)
The central tax affairs guidance institution and given tax affairs institutions shall conduct tax registration, tax collection, and tax affairs investigation work according to the tax regulations, and must strengthen supervision and control so that acts of tax evasion and unlawful acts do not appear within foreign country investment enterprises and foreigners.
Article 68 (Levy of arrears charges)
In cases where foreign country investment enterprises and foreigners have not paid tax within the determined time limit, arrears charges shall be imposed amounting to 0.3% for every day the tax amount is not paid from the day the time limit for payment passed.
Article 69 (Suspension of operations)
In cases where tax is not paid for more than 6 months without a lawful reason, or a penalty notification is received but the penalty was not paid for more than 1 month, or the proper investigative work of a given tax affairs institution is not complied with, or the required materials have not been provided, operations may be suspended.
Article 70 (Confiscation)
In cases where an intentional act of tax evasion has been revealed, the given property shall be confiscated.
Article 71 (Penalty)
In the following cases, a penalty shall be levied.
1. In cases where tax registration, property registration, or car registration has not been done in time without a lawful reason, or tax affairs documents such as tax payment declarations or annual accounting settlement documents have not been submitted in time, a penalty shall be levied of between 100~5000€ for foreign country investment enterprises, and between 10~1000€ for foreigners.
2. In cases where the person with the duty to pay as a deduction has deducted less tax or has not paid the deducted tax, a penalty shall be levied of up to 2 times the unpaid tax amount.
3. In cases where ledgers and materials have been recorded or changed inconsistently with the facts for an unfair purpose, or double bookkeeping has been used, or ledgers have been removed, a penalty shall be levied of between 1000~100,000€ for foreign country investment enterprises, and between 100~1000€ for foreigners.
4. In cases where the tax affairs investigation of a tax affairs worker has been intentionally interfered with, a penalty shall be levied between 100~5000€ depending on the gravity.
5. In cases where tax has intentionally not been paid or less has been paid, or where property or income has been pocketed or hidden, a penalty shall be levied of up to 5 times the unpaid tax amount.
Article 72 (Administrative or criminal responsibility)
In cases where grave consequences have been caused by violating this law, administrative or criminal responsibility shall be imposed depending on the gravity.
Article 73 (Complaints and their handling)
In cases where foreign country investment enterprises and foreigners have an opinion related to the payment of tax, they may complain to the central tax affairs guidance institution and the authorities concerned. Authorities concerned that have received a complaint must investigate and resolve it within 30 days.
Last updated 2 March 2021