South Korea’s Amended Enforcement Decree Provides for Detailed QDMTT Rules

On February 27, 2026, Korea issued issued Presidential Decree 36128 to amend its Enforcement Decree to the International Tax Adjustment Act. This provides for detailed provisions for the application of its QDMTT and will also extend the Transitional CbCR Safe Harbour by 1 year (as provided in the January 2026 OECD Side-by-Side Package). Below we provide a detailed analysis of the key amendment articles. 

Also see our 10 page members-only Article-by-Article PDF Download that provides a deeper analysis of the provisions, including implementation of the OECD Guidance and practical implications. 

General Pillar Two Amendments

Article 101(4)(1)(b) – 750 Million Threshold and Mergers

Before the amendment, the merger wording focused on a non-constituent enterprise being merged into another enterprise or group. The 2026 decree adds a new case where a non-constituent enterprise and another enterprise merge, and it treats the post-merger group as meeting the EUR 750 million threshold for any prior year in which the combined pre-merger revenues exceeded that amount. This is essentially a scope-preservation rule that prevents groups from falling outside Pillar Two simply because the group perimeter changed shortly before the relevant years. That is consistent with the OECD merger/deemed-consolidation guidance, which expressly treats mergers between two entities or an entity and a group by reference to combined pre-merger revenues.

Article 111 – Allocation of Covered Taxes

This is one of the key non-DMTT provisions in the decree. The title changes from “allocation of covered taxes among constituent entities” to “allocation of a constituent entity’s covered taxes.” Paragraph 1 is broadened so that covered taxes can be allocated not only to other constituent entities but also to joint ventures and JV subsidiaries, and the wording of paragraph 1(3) is widened to include entities in no-corporate-tax jurisdictions that are not treated as transparent under article 108(2)’s proviso. Paragraph 1(4) and paragraph 1(7) are also broadened so that the relevant covered taxes may be allocated in JV-related settings, not just CE-to-CE settings.

New article 111(2) then outlines out how taxes are allocated to a non-constituent enterprise or PE that is not itself in the paragraph 1 allocation set. In particular, where a constituent entity is subject to a foreign tax credit regime, the tax is allocated to the enterprise or PE that earned the underlying income; and where a shareholder constituent entity pays tax under the relevant CFC regime, that tax is allocated to the CFC that earned the corresponding income. That is standard GloBE logic: covered taxes are supposed to follow the income to which they relate.

New article 111(3) is Korea’s deferred-tax allocation provision. It leaves the detailed method to ministerial ordinance, but it also allows a five-year election to exclude accounting deferred-tax expense from inter-entity allocation; if that election is made, the deferred-tax expense is not included in the adjusted covered-tax computation of any constituent entity. That is closely aligned with the OECD’s June 2024 deferred-tax guidance, which introduced a Five-Year Election for deferred tax under article 4.3.2(a), (c), (d), and (e), and under which deferred tax is excluded and only current tax is allocated during the election period. The Korean text is directionally very close, although it is less explicit than the OECD examples on anti-cherry-picking across different tax regimes, so the ministerial ordinance will need to be reviewed.

New article 111(4) provides that, even where deferred tax is otherwise allocated under paragraph 3, accounting deferred-tax expense arising under a blended CFC regime is not allocated. This implements the OECD’s June 2024 guidance on blended CFC tax regimes, which states that because of accounting complexity and inconsistent treatment across standards, the accrual and reversal of deferred tax associated with a blended CFC regime should be disregarded and only current tax should be allocable. 

The interaction between article 111 and the new QDMTT provisions in article 125-3 should be noted. Article 111 keeps the ordinary GloBE push-down rules for current taxes . Article 125-3 then strips certain pushed-down taxes back out for domestic-top-up-tax purposes. That two-step design is in accordance with the OECD Guidance to apply the QDMTT-specific mandatory deviations in paragraphs 118.28 to 118.30.

Article 112(1)(1)-2(b)4) – DTL Reversal

The decree broadens the definition of “reversal”. Before, the provision referred to the payment period during which a deferred tax liability amount would reverse through current tax expense. After the amendment, “reversal” means the disappearance of a deferred tax asset or deferred tax liability as temporary differences unwind or otherwise cease to exist. That is a materially broader and more accounting-accurate concept. It is not a verbatim copy of any single OECD paragraph, but it is consistent with the OECD’s broader focus on the accrual and reversal of deferred-tax attributes in the June 2024 guidance and the January 2025 Article 9.1 guidance.

New domestic top-up tax computation provisions

New Chapter 5, Section 3; new articles 125-3 to 125-8: QDMTT Implementation

Before this decree, Korea had the statutory domestic top-up tax in the Act, but the Enforcement Decree did not yet contain the full implementing mechanics. The 2026 decree inserts a dedicated new section for “calculation and taxation of domestic top-up tax.” 

Article 125-3 – QDMTT Mandatory Deviations