(1) Notwithstanding Article 127, any person (excluding any resident or nonresident who pays domestic source capital gains on real estate under subparagraph 9 of Article 119) who pays, to a nonresident, domestic source income under subparagraphs 1, 2, 4 through 6, and 9 through 12 of Article 119, which is neither substantially related to any domestic place of business nor attributed to such domestic place of business (including the amount paid to a nonresident who has no domestic place of business), shall withhold each of the following amounts as income tax on domestic source income of the nonresident when he/she pays such income, and pay such income tax to the competent tax office, the Bank of Korea, or a postal service office by no later than the tenth day of the month following the month in which the date of such withholding falls, as prescribed by Presidential Decree: Provided, That income on which a tax may be levied as domestic source business income in accordance with a tax treaty among income under subparagraph 5 of Article 119, shall be excluded: <Amended by Act No. 11611, Jan. 1, 2013; Act No. 14389, Dec. 20, 2016; Act No. 16104, Dec. 31, 2018; Dec. 31, 2019; Dec. 29, 2020>
1. Domestic source interest income under subparagraph 1 of Article 119: the amount as classified in the following items;(a) Interest income accrued from the bonds issued by the State, a local government, or a domestic corporation: 14/100 of the amount paid;(b) Interest income other than that prescribed in (a): 20/100 of the amount paid;
2. Domestic source dividend income under subparagraph 2 of Article 119: 20/100 of the amount paid;
3. Domestic source lease income from leasing ships, etc. under subparagraph 4 of Article 119 and domestic source business income under subparagraph 5 of that Article (excluding the income that may be subject to taxation as domestic source business income pursuant to a tax treaty): 2/100 of the amount paid;
4. Domestic source personal services income under subparagraph 6 of Article 119: 20/100 of the amount paid: Provided, That, in case of any income generated by providing any services specified by Presidential Decree which is deemed to be generated within the Republic of Korea under a tax treaty, among personal services provided in a foreign country, the amount withheld shall be 3/100 of the amount paid for such personal services;
5. Domestic source capital gains on real estate under subparagraph 9 of Article 119: 10/100 of the amount paid; Provided, That where the acquisition value and transfer expenses of the transferred assets are verified pursuant to Article 126 (1) 1, the amount withheld shall be an amount equivalent to 10/100 of the amount paid, etc. or an amount equivalent to 20/100 of capital gains on such asset, whichever is lesser;
6. Domestic source royalty income under subparagraph 10 of Article 119: 20/100 of the amount paid;
7. Domestic source capital gains on securities under subparagraph 11 of Article 119: 10/100 of the amount paid (in cases falling under Article 126 (6), referring to the arm's length price under that paragraph: hereinafter the same shall apply in this subparagraph): Provided, That the acquisition value and transfer expenses of the relevant securities are verified pursuant to Article 126 (1) 1, the amount withheld is an amount equivalent to 10/100 of the amount paid or an amount equivalent to 20/100 of the amount calculated pursuant to that subparagraph, whichever is lesser;
8. Domestic source other income under subparagraph 12 of Article 119: An amount classified as follows:(a) Income specified in subparagraph 12 (k) of Article 119: 15/100 of the amount paid;(b) Income specified in subparagraph 12 (l) of Article 119: An amount according to the following classifications: Provided, That in the case of exchanging or withdrawing virtual assets, it shall be the following amount expressed in units of virtual assets, as prescribed by Presidential Decree:(i) If the necessary expenses of virtual assets are confirmed under Article 126 (1) 3: an amount equal to 10/100 of the amount paid or an amount equal to 20/100 of the amount calculated under the same subparagraph, whichever is less;(ii) If the necessary expenses of virtual assets are not confirmed under Article 126 (1) 3: 10/100 of the amount paid;(c) Other income other than those referred to in items (a) and (b): 20/100 of the amount paid (in the case of prize money, supplementary prize, etc. mentioned in Article 126 (1) 2, it shall be the amount calculated in accordance with the same subparagraph).
(2) Deleted. <Dec. 31, 2022>
(3) Where domestic source income prescribed in paragraph (1) is paid overseas, if the payer has a domicile, a place of residence, the head office, the principal office, or a domestic place of business (including a domestic place of business prescribed in Article 94 of the Corporate Tax Act) in the Republic of Korea, it shall be deemed that the payer pays the relevant domestic source income in the Republic of Korea, and paragraph (1) shall apply accordingly.
(4) Any person who pays domestic source income under subparagraphs 1, 5, 6, and 10 of Article 119 using foreign loan funds to a nonresident with no domestic place of business shall deduct a withholding tax pursuant to paragraph (1), each time such income is paid pursuant to the terms and conditions of payment on the contract, even where he/she does not pay such income directly according to the relevant terms and conditions of the contract. <Amended by Act No. 10408, Dec. 27, 2010>
(5) When any person who is a domestic agent of a nonresident operating a vessel or aircraft navigating to and from foreign countries and does not fall under Article 120 (3) pays to the nonresident income generated from navigation of the vessel or aircraft navigating to and from foreign countries, he/she shall deduct withholding tax from the domestic source income of the nonresident pursuant to paragraph (1).
(6) Where securities under subparagraph 11 of Article 119 are transferred through an investment trader or investment broker under the Financial Investment Services and Capital Markets Act, the investment trader or investment broker shall deduct withholding tax pursuant to paragraph (1): Provided, That where stocks are listed on the stock market under the Financial Investment Services and Capital Markets Act, and stocks already issued are transferred, a corporation that has issued such stocks shall deduct withholding tax.
(7) Any person who pays, to a nonresident, domestic source income in return for works, such as building works, construction works, the installation or fabrication of machines, or services provided for the direction or supervision of such works or domestic source income in return for personal services provided in accordance with subparagraph 6 of Article 119 (including where such income shall be classified into business income under a tax treaty), shall deduct withholding tax under paragraph (1) from the income, even if the nonresident has a place of business in the Republic of Korea: Provided, That the foregoing shall not apply where a nonresident has his/her business registered under Article 168. <Amended by Act No. 11611, Jan. 1, 2013; Act No. 12169, Jan. 1, 2014>
(8) Article 84 shall apply mutatis mutandis where paragraph (1) applies to income referred to in subparagraph 12 (f) (only applicable to a refund of a horse racing ticket, winner wager ticket, bullfighting match wager ticket, and sports promotion wager ticket) and (g) of Article 119.
(9) Where a nonresident receives the domestic source income under Article 119 by means of an auction under the Civil Execution Act or a public sale under the National Tax Collection Act, a withholding tax shall be collected in accordance with paragraph (1) up to the amount actually paid to the nonresident by a person who distributes the amount obtained at auction or at public sale. <Newly Inserted by Act No. 10408, Dec. 27, 2010; Act No. 12169, Jan. 1, 2014>
(10) Paragraphs (1) through (9) shall apply to any act performed by a person who acts on behalf of a withholding agent under paragraphs (1) through (9) or is delegated with the authority therefrom, deeming such act to be performed by oneself or by delegating person within the scope authorized or delegated. <Newly Inserted by Act No. 10408, Dec. 27, 2010>
(11) Where a financial company, etc. underwrites, trades, mediates, or represents bills, debt certificates, stocks, or collective investment securities issued by a domestic person, paragraph (10) shall apply to such financial company, etc., deeming that there is relationship of procuration or trust between such financial company, etc. and the relevant domestic person. <Newly Inserted by Act No. 10408, Dec. 27, 2010>
(12) For the purpose of deducting withholding tax, a withholding agent under paragraphs (1) through (11) and (16) shall issue a withholding tax receipt prescribed by Ordinance of the Ministry of Strategy and Finance, stating the amount of such domestic source income and other necessary matters, to a recipient of such domestic source income. <Amended by Act No. 10408, Dec. 27, 2010; Dec. 29, 2020>
(13) With respect to the domestic source income under subparagraph 12 (i) of Article 119, a domestic corporation which has issued stocks or investment shares shall deduct withholding tax at the time prescribed by Presidential Decree from a foreign related person holding such stocks or investment shares. <Amended by Act No. 11146, Jan. 1, 2012>
(14) Detailed methods for deducting withholding tax under paragraph (13) shall be prescribed by Presidential Decree. <Amended by Act No. 10408, Dec. 27, 2010>
(15) When applying paragraph (1), where a nonresident with domestic source capital gains on real estate under subparagraph 9 of Article 119 has pre-paid income tax on such income, or evidences that such income is non-taxable or below taxation threshold, as prescribed by Presidential Decree, no income tax on such income shall be withheld. <Amended by Act No. 10408, Dec. 27, 2010; Act No. 16104, Dec. 31, 2018>
(16) Notwithstanding paragraph (1), other domestic source income of a nonresident under subparagraph 12 (l) of Article 119 that is generated through a virtual asset business entity, etc. shall be paid to the tax office having jurisdiction over the place for tax payment, the Bank of Korea, or a postal service office, as prescribed by Presidential Decree, by the 10th day of the month following the month in which the virtual asset business entity, etc. withdraws virtual assets or cash after withholding the amount specified in paragraph (1) 8 (b) (January 10 of the following year if the withdrawal is not made from January 1 to December 31 of each year). <Newly Inserted on Dec. 29, 2020>
(17) For the purpose of applying paragraph (16), the method for determining whether a person transferring, lending, or withdrawing virtual assets is subject to withholding under paragraph (1) 8 (b) shall be prescribed by Presidential Decree. <Newly Inserted on Dec. 29, 2020>[This Article Wholly Amended by Act No. 9897, Dec. 31, 2009][Enforcement Date: Jan. 1, 2025] Articles 156 (1) 8, 156 (12), 156 (16), and 156 (17)