(1) Where a non-profit domestic corporation (limited to organizations prescribed by Presidential Decree in cases of an organization deemed a corporation; hereafter in this Article, the same shall apply) appropriates reserve funds for proper purpose business as the deductible expenses to expend them for its proper purpose business or general donations referred to in Article 24 (3) 1 (hereafter in this Article, referred to as "proper purpose business, etc.") when settlement of accounts is fixed for the relevant business year, such reserve funds for proper purpose business shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, which shall not exceed the sum of the amounts by any of the following classifications (referring to the amount computed by subtracting a loss from the sum of income referred to in each item of subparagraph 1, where a loss has been incurred from the profit-making business referred to in subparagraph 4): <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022>
1. The following amounts:(a) The amount of interest income referred to in each subparagraph of Article 16 (1) of the Income Tax Act (excluding profits from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act);(b) The amount of dividend income referred to in each subparagraph of Article 17 (1) of the Income Tax Act; provided, excluded herefrom is the amount of dividend income accruing from stocks, etc., which is included in the taxable value of the inheritance tax or gift tax or is subject to gift tax pursuant to Article 16 or 48 of the Inheritance Tax and Gift Tax Act;(c) The amount of interest incurred from loans to members or associates for welfare projects of a non-profit domestic corporation established under any special Act.
2. The amount computed by multiplying the income from other profit-making business by 50/100 (80/100 for a corporation established under the Act on the Establishment and Operation of Public Interest Corporations, which expends at least 50/100 of the expenditures for its proper purpose business, for scholarships).
(2) In applying paragraph (1), a non-profit domestic corporation subject to audit by an auditor under subparagraph 7 of Article 2 and Article 9 of the Act on External Audit of Stock Companies appropriates a reserve fund for proper purpose business in the tax settlement invoice in Article 60 (2) 2, and the relevant reserve fund is accumulated as reserve funds for proper purpose business in disposing of the profits accruing during the relevant business year, such amount shall be deemed included in deductible expenses when the settlement of account is fixed. <Added on Dec. 24, 2018>
(3) Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) has the amount expended for proper purpose business, it shall offset the amount in sequential order beginning with the reserve funds for proper purpose business appropriated for the business year. In such cases, where the amount expended for proper purpose business, etc. in the relevant business year exceeds the balance in the reserve funds for proper purpose business as at the end date of the immediately preceding business year, such excess shall be deemed expended from the reserve funds for proper purpose business to be appropriated for the relevant business year. <Amended on Dec. 24, 2018>
(4) Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) is dissolved after it comprehensively transfers all rights and duties concerning its business to other non-profit domestic corporation, the balance in the reserve funds for proper purpose business as at the registration date of the dissolution may be succeeded to by the other non-profit domestic corporation. <Amended on Dec. 24, 2018>
(5) Where any of the following events occurs in relation to a non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), the balance (referring to an amount used for purposes other than its proper purpose business, etc. in cases of subparagraph 5; hereafter in this Article the same shall apply) shall be included in gross income for the purpose of calculating the amount of income for the business year in which the relevant event occurs: <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022>
1. Where the non-profit domestic corporation is dissolved (excluding where the balance in the reserve funds for proper purpose business is succeeded under paragraph (4));
2. Where the non-profit domestic corporation wholly discontinues its proper purpose business;
3. Where the approval of an organization deemed a corporation is revoked or it is changed to a resident under Article 13 (3) of the Framework Act on National Taxes;
4. Where the non-profit domestic corporation fails to use the reserve funds for proper purpose business appropriated as deductible expenses for proper purpose business, etc., by the fifth anniversary of the end date of the relevant business year (limited to a balance unused within such five years).
5. Where the reserve funds for proper purpose business are used for a purpose other than the proper purpose business, etc.;(6) A non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), may partially reduce the balance and include it in deductible expenses within five years from the end date of the business year in which the reserve funds for proper purpose business was appropriated as deductible expenses. In such cases, the balance first included in deductible expenses for a certain business year shall be deemed first reduced and then the remainder shall be deemed reduced successively. <Added on Dec. 24, 2018>
(7) Where the balance of reserve funds for proper purpose business is included in gross income pursuant to paragraphs (5) 4 and 5 and (6), an amount equivalent to the interest calculated as prescribed by Presidential Decree shall be added to corporate tax to be paid in the relevant business year. <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022>
(8) Paragraph (1) shall not apply to circumstances prescribed by Presidential Decree, where reductions, exemptions, etc. are granted under this Act or other statutes. <Amended on Dec. 24, 2018>
(9) A non-profit domestic corporation which intends to apply paragraph (1) shall keep and maintain a statement on the appropriation and expenditure of the relevant reserve funds and submit it to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>
(10) The scope and succession of proper purpose business and the calculation of income accrued from profit-making business pursuant to paragraphs (1) through (5), and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>[This Article Wholly Amended on Dec. 30, 2010][Title Amended on Dec. 24, 2018]