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The South Korean PE Risk Under Pillar Two

With the enactment of the Pillar Two GloBE Rules in South Korea from January 1, 2024, the costs of an unintentional permanent establishment in South Korea may be significantly greater. 
 
The South Korean Corporate Tax Act uses the concept of a ‘domestic place of business’ as opposed to a permanent establishment. However, in practice it is defined in a similar manner to a PE in other jurisdictions. 
 
Under Article 9(2) of the Corporate Tax Act a foreign company with a domestic place of business is subject to Korean corporate income tax on the profits arising from that business. 
 
Article 94 of the Corporate Tax Act provides that, in general, a domestic place of business includes a fixed place of business in South Korea where all or part of its business is conducted. This specifically includes:

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