Data points
- Turnover limb of the combined master file and local file test[3]
- KRW 100bn
- Foreign related-party transaction limb of the same test[3]
- KRW 50bn
- After the month of year end to file the master file, local file and country-by-country report[2]
- 12 months
- After the month of year end for the three statements and the notification[3]
- 6 months
- Consolidated turnover that makes a Korean parent file a country-by-country report[1]
- KRW 1tn
- Administrative fine per report for non-submission or false submission[4]
- KRW 30m
- Assessment window on cross-border transactions[5]
- 7 years
South Korea files transfer pricing documentation rather than holding it, and it runs every deadline from the end of the month your business year ends, not from the tax return date. Groups used to produce-on-request regimes miss both facts.
The four facts to know:
- A master file and a local file are owed once turnover passes KRW 100 billion and foreign related-party transactions pass KRW 50 billion in the same year. Both tests have to be met.
- Both are filed within 12 months after the month the business year ends, so 31 December 2026 for a 31 December 2025 year end.
- Three international-transaction statements and the country-by-country notification are due within 6 months, so 30 June 2026.
- Failing to submit, or submitting falsely, costs KRW 30 million per report, and a local file filed on time shields you from underreporting penalty tax on an adjustment.
What transfer pricing documentation does South Korea require?
Four things, not three. The master file, the local file and the country-by-country report follow the standard three-tier model. On top of them Korea adds a package of international-transaction statements that reaches entities far below the master file threshold. All of it is submitted to the National Tax Service[1] rather than kept for an audit.
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| Deliverable | Trigger | Deadline for a 31 December year end | Language | Source |
|---|---|---|---|---|
| Master file | Turnover above KRW 100bn and foreign related-party transactions above KRW 50bn | 31 December 2026 | Korean, or English if Korean follows within one month | Korea Legislation Research Institute[2] |
| Local file | The same combined threshold | 31 December 2026 | Korean only | Korea Legislation Research Institute |
| Country-by-country report | Consolidated turnover above KRW 1 trillion for a Korean parent, or EUR 750 million for a foreign parent | 31 December 2026 | Korean and English | National Tax Service, Korea |
| Three international-transaction statements | Foreign related-party transactions above the exemption floors | 30 June 2026 | Korean | Korea Legislation Research Institute |
| Country-by-country notification | Being within country-by-country scope | 30 June 2026 | Korean | Korea Legislation Research Institute |
Two differences from the OECD baseline follow from that table. Korea actively files these documents rather than producing them on request, and it layers the statements on top of the three-tier package. Whether Korea formally adopts the OECD guidelines in domestic law is not confirmed.
Who has to file, and from what number?
A Korean company, or a foreign company's Korean place of business, once both tests are met in the same taxable year: turnover above KRW 100 billion and foreign related-party transactions above KRW 50 billion. One test alone is not enough, and the master file and local file share the trigger exactly, so an entity that crosses it owes both.
The exposure is wider than those two numbers suggest. A Korean subsidiary well below the threshold can still owe the three statements and the country-by-country notification, and it must answer a data request from the tax authority within 60 days, with one 60-day extension available.
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What is the combined report of international transactions?
A three-statement package filed within 6 months after the month your business year ends: the statement of international transactions, the summary income statement of foreign related parties, and the report on the arm's length pricing method. The deadline moved to its current form on 1 October 2025.
Each statement has its own exemption floor, and they are low enough that most Korean subsidiaries of foreign groups are inside at least one of them.
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| Statement | Exempt when annual amounts are at or below | Source |
|---|---|---|
| Statement of international transactions | KRW 500m goods, KRW 100m services, KRW 100m intangibles | Korea Legislation Research Institute[3] |
| Summary income statement of a foreign related party | KRW 1bn goods, KRW 200m services, KRW 200m intangibles | Korea Legislation Research Institute |
| Report on the arm's length pricing method | KRW 5bn goods, KRW 1bn services and KRW 1bn intangibles in total, or per related party KRW 1bn goods, KRW 200m services and KRW 200m intangibles | Korea Legislation Research Institute |
Does country-by-country reporting reach a Korean subsidiary?
Usually only through the notification. A Korean ultimate parent files the report once consolidated turnover passes KRW 1 trillion in the preceding taxable year. A Korean entity of a foreign-parented group follows the parent jurisdiction's threshold, or the EUR 750 million benchmark where the parent has no filing obligation of its own.
The Korean subsidiary is exempt from filing the report itself where it submits the notification data on time and its foreign parent's report is exchanged with Korea under a tax treaty. The notification is due within 6 months after the month the business year ends, and missing it is what turns an exemption into a filing obligation.
When are South Korea's 2026 filings due?
Everything runs from the end of the month your business year ends. For a 31 December 2025 year end, the 12-month documents land on 31 December 2026 and the 6-month ones on 30 June 2026. A taxpayer facing unavoidable circumstances may apply for an extension of up to one year.
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| Obligation | Deadline rule | 2026 date for a December year end | Source |
|---|---|---|---|
| Master file, local file, country-by-country report | 12 months after the month of year end | 31 December 2026 | Korea Legislation Research Institute |
| Country-by-country notification | 6 months after the month of year end | 30 June 2026 | Korea Legislation Research Institute |
| Three international-transaction statements | 6 months after the month of year end | 30 June 2026 | Korea Legislation Research Institute |
| Answer to a data request from the tax authority | 60 days, with one 60-day extension | On request | National Tax Service, Korea |
What language must the documentation be in?
Korean, with two exceptions. The master file may be submitted in English provided a Korean version follows within one month. The country-by-country report is filed in both Korean and English. The local file is Korean from the start, with no concession at all, which is the one most groups plan badly for.
What are the penalties, and what protects you from them?
Start with the protection, because it is worth more than the fine. No underreporting penalty tax applies to a transfer pricing adjustment where you kept the data supporting your method, or filed the local file on time and chose the method through rational decision-making, or where a mutual agreement procedure or a unilateral advance pricing agreement review finds no negligence. A timely, good-faith local file is a shield.
On the fine itself, the OECD transfer pricing country profile for Korea[4], updated January 2026, records an administrative fine of KRW 30 million per report for failing to submit, or falsely submitting, the master file, the local file or the country-by-country report, adjustable up or down by half according to severity. The fine scaling for the three statements is not confirmed from primary text. Documentation filed late without legitimate cause can be disregarded, and the tax authority may then estimate the arm's length price from comparables of its own choosing.
How far back can the tax authority reopen a year?
Much further than the ordinary period, which is the real exposure for a Korean entity. Cross-border transactions stay assessable for seven years as a baseline, and longer where a return is missing or tax was evaded.
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| Situation | Assessment period | Source |
|---|---|---|
| General | 5 years | Korea Legislation Research Institute[5] |
| Cross-border transactions | 7 years | Korea Legislation Research Institute |
| Cross-border, no return filed | 10 years | Korea Legislation Research Institute |
| Cross-border, tax evaded by improper acts | 15 years | Korea Legislation Research Institute |
Where a mutual agreement procedure has begun, the window stays open until the later of one year after it ends and the normal period. So a year's documentation matters long after its filing deadline has passed.
Can you get an advance pricing agreement in South Korea?
Yes, unilateral and bilateral. The application goes to the tax authority by the day before the first taxable year the agreement is to cover. Bilateral cases run through the mutual agreement procedure, and the agreed method can be applied to earlier years that are still within the assessment period. Multilateral agreements are not confirmed as available.
How we help with South Korea transfer pricing
Korea gives you two clocks, a Korean-only local file and a penalty shield you only get if the file was on time. We prepare the master file, the local file and the benchmarking behind them, handle the Korean language requirement, and surface the 6-month and 12-month windows before they close rather than after. See how our transfer pricing software works.
Book a demo to map every South Korea filing your group owes before the 2026 deadlines.
Official sources
5 sources
- 1.National Tax Service, Korea. Transfer pricing guidance
- 2.Korea Legislation Research Institute. Adjustment of International Taxes Act, English text
- 3.Korea Legislation Research Institute. Enforcement Decree of the Adjustment of International Taxes Act, English text
- 4.OECD. Transfer pricing country profile: Korea (January 2026)
- 5.Korea Legislation Research Institute. Framework Act on National Taxes, English text
Article by
Sam Suechting
Head of Product, Commenda
Sam is a seasoned expert in sales tax, leading Commenda's effort to build the worlds most comprehensive database of global tax rules and business regulations. At Silverhaze Partners, he worked in early-stage venture capital, where he saw firsthand how tax complexity and regulatory friction hold back startups from scaling internationally. That experience now powers his work at Commenda-bringing clarity, precision, and real-world insight to one of the most frustrating parts of doing business globally.
Disclaimer: Commenda and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
