(1) Where a foreign corporation is paid with the domestic source income in Article 93 through a foreign investment scheme (referring to a scheme established in a foreign country, which conducts the activities of investments that acquire, dispose of, or operate by other means the assets subject to investment which have property values by attracting money, etc. for investment and distribute and revert the return to investors; hereinafter the same shall apply), the a foreign corporation shall be construed as a real beneficiary (referring to a person who actually holds ownership over the income, such as the right to dispose of the domestic source income by taking legal or financial risks; hereinafter the same shall apply); provided, where a foreign investment scheme falls under any of the following cases (limited to cases falling under subparagraphs 2 and 3 of this paragraph for a foreign investment scheme that is an organization which is not a corporation, other than an organization deemed a corporation in Article (2) 3 of the Income Tax Act), the foreign investment scheme shall be construed as a real beneficiary of the domestic source income: <Amended on Dec. 21, 2021>
1. Where the foreign investment vehicle meets all of the following requirements:(a) It shall be liable for tax payment in the country in which it was established under a tax treaty;(b) With respect to domestic source income, it shall be eligible for non-taxation, tax exemption or restrictive tax rates prescribed by a tax treaty (referring to the highest tax rate that can be applied to residents or corporations of a contracting party pursuant to a tax treaty; hereinafter the same shall apply);
2. Where a foreign investment scheme not falling under subparagraph 1 is treated under a tax treaty as the beneficial owner of domestic source income and meets the requirements for non-taxation, tax exemption, or restrictive tax rates prescribed in a tax treaty with respect to domestic income source;
3. Where the foreign investment scheme not falling under paragraphs (1) and (2) fails to verify an investor who has invested in the foreign investment scheme (where there are at least two investors, where it verifies a part of the investors, it shall be limited to the part unverified).
(2) Where a foreign investment scheme is deemed as a real beneficiary of the domestic source income as it falls under paragraph (1) 3, the non-taxation, tax exemption, and restrictive tax rates under the applicable tax treaty shall not apply to the foreign investment scheme. <Amended on Dec. 22, 2020; Dec. 21, 2021>[This Article Added on Dec. 24, 2018]