Korea Now Fines a Liaison Office That Skips Its 10 February Report

The report was already mandatory. Now it has a price

If your group runs a representative office in Korea, someone has to file a liaison office status report with the district tax office by 10 February each year. That has been law since the 2022 tax year. What changed this year is that ignoring it now costs KRW 5 million, and the first filing under the new regime falls due on 10 February 2027.

The fine is not triggered by the missed deadline on its own. Article 124 of the Corporate Tax Act, as amended by the reform that passed in December 2025, works in two steps: the foreign corporation fails to submit the status data or submits false data, the head of the district tax office issues a correction order, and the fine attaches when that order is not complied with. Table 2 of the Enforcement Decree sets the amount at KRW 5 million against a statutory ceiling of KRW 10 million. The amended Decree was promulgated on 27 February 2026 and applies to failures occurring from 1 January 2026 onward.

Two steps sounds like a safety net. In practice it is a trap of a different shape, because the correction order goes to the foreign corporation, and the foreign corporation is the overseas head office. A letter in Korean, addressed to a parent company that does not have a Korean finance function, arriving at an office whose entire staff is two people doing market research, is not a letter that reliably gets read.

Fifty-six per cent of these offices have never filed

The reason the government attached a penalty is not subtle. National Tax Service data given to the National Assembly in October 2025 showed that of 3,304 liaison offices required to file the status report over three years, 1,867 did not. The submission rate was 40.7% in 2022, 45.2% in 2023 and 44.5% in 2024 — never half.

The concentration is worth knowing. US-owned offices accounted for 537 of the violations and Chinese-owned offices 296, together 44.7% of the total. Both nationalities exceeded the average non-filing rate, at 66.6% and 70.8% respectively.

That last point matters for anyone reading this from a head office. The compliance base rate here is so low that the usual reassurance — our Korean advisers would have told us — carries almost no weight. Many liaison offices were opened by an HR or facilities team, not a finance one, and have never had a Korean tax adviser attached to them at all.

What the status report actually asks

The 현황명세서 is not a return. It reports no income and calculates no tax. It is an evidence form, and understanding what it is testing tells you why the tax office cares.

It asks for the basic facts about the office, the current status of the overseas head office, any other Korean branches of the same foreign corporation, and — the part that matters — the head office’s Korean transaction position, its Korean customers and its contracting agents in Korea.

Those are the facts that would show the office is doing something other than liaison work. A representative office with a customer list, a Korean contract agent and a stream of head office invoices going to Korean buyers is describing a sales operation. The form is the National Tax Service asking every liaison office to state, in writing and annually, the facts on which its own non-taxable status depends.

Which is also why a false submission carries the same penalty as no submission. The regime was introduced in the 2021 tax reform for a stated reason: foreign corporations setting up a liaison office instead of constituting a permanent establishment, and then using it as one.

The line between liaison and taxable, and what crossing it costs

A liaison office may carry out preparatory or supporting activities for its overseas head office — business liaison, market research, information gathering, advertising. It may not conduct profit-making business in Korea. That is why it holds a unique identification number from the tax office rather than a business registration number, and why it files no corporate income tax return.

A domestic place of business, by contrast, is a fixed place where essential and important business activities are carried out. It also arises where a foreign corporation operates in Korea through a person who has authority to conclude contracts on its behalf, which is the version that catches a “liaison” office whose head negotiates and signs.

The consequence of being on the wrong side of that line is not the KRW 5 million. It is corporate income tax on the income attributable to the Korean operation, assessed retrospectively, with penalty tax on top, plus the VAT that should have been charged and the withholding that should have been operated. The fine is the cheapest item on the list, which is precisely why the government treated it as a way to force disclosure rather than as a punishment in itself.

The rest of the calendar

The status report is not the only thing a liaison office files, and the other items are easier to miss because they are conditional.

Where the office is issued tax invoices — which it will be, for rent, utilities and professional fees — it submits a sum of tax invoices by place of purchase for each half year: 1 January to 30 June is filed between 1 and 25 July, and the second half between 1 and 25 January. Where it is issued ordinary invoices, the sum of those is due by 10 February, for goods or services supplied on or after 1 January 2023.

If the office employs anyone in Korea and pays them, it is a withholding agent and files withholding returns on the same schedule as any other employer. Where staff are paid directly by the overseas head office instead, there is no Korean withholding agent at all, and the NTS guidance sets out the two routes that then apply: the employee joins a taxpayers’ association for wage income received from a non-resident, or files an annual return personally. This is one of the most commonly unmanaged exposures in a Korean representative office, because from the group’s point of view nothing about the payroll is Korean.

Our tax and VAT compliance work covers these filings for representative offices as well as for subsidiaries, and the permanent establishment question usually needs looking at alongside the entity structure that produced it.

What to check before February

The useful exercise here is not the form. It is the three years behind it.

If the answer to the first question is that nobody filed, the position is recoverable and much better addressed voluntarily than after a correction order lands at a head office that cannot read it. If the answer to the second is that the office has been selling, the liaison structure is the wrong one and has probably been the wrong one for some time — at which point the question becomes whether to convert to a branch or a foreign-invested subsidiary, and what the historical exposure looks like.

Neither of those is a February job. The February job is the form, and the form is now the cheap part.

Figures current as at 1 September 2026. The KRW 5 million fine is set by Table 2 of the Enforcement Decree of the Corporate Tax Act under Article 124 of the Act, promulgated 27 February 2026 and applying to submission failures from 1 January 2026. The filing deadlines are per Article 94-2 of the Corporate Tax Act and the National Tax Service’s published guidance; compliance statistics are National Tax Service data supplied to the National Assembly in October 2025. This is general information about how the Korean liaison office regime works and is not advice on any particular office’s position. Whether a specific Korean office constitutes a domestic place of business is a facts-and-circumstances question and should be assessed on its own facts. See also our Korean filing calendar for the equivalent obligations of a subsidiary.