Sourcing the South Korean Pillar Two Law to the OECD Model Rules

On December 31, 2022, South Korea passed Law 19191 to amend the International Tax Adjustment Act to provide for the Pillar Two Global Minimum Tax from January 1, 2024. Unlike some jurisdictions (eg Switzerland and Liechtenstein), South Korea doesn’t just transpose the OECD Model Rules into domestic law. Instead it recreates the GloBE rules with a separate body of tax law.

In many places this does not track the OECD Model Rules and instead focuses on achieving the same result as the relevant provisions in the Model Rules (and other OECD Guidance). As such sourcing the South Korean law to the relevant provision in the Model Rules can be complex. 

In the table below we source all of the global minimum tax provisions in the South Korean law back to the OECD Model Rules (or other guidance, eg the Administrative Guidance). We also includes notes where there are differences from the provisions in the Model Rules.

It should be noted that whilst South Korea may have been the first country to enact a global minimum tax law, the sourcing table below makes it clear that there are significant gaps in the implementation and detailed Presidential Decrees will be essential to effective implementation.