Enhanced Monitoring Report on the Implementation of the Standard on Transparency and Exchange of Information on Request 2026 Update (June)

Determinations

i.p.b.

i.p

i.p.b.

i.p

i.p.

i.p.

i.p.

i.p

i.p.

n.a.

LC

Ratings

PC

LC

LC

C

C

C

C

C

C

C

Recommendation (A.1, framework)

Korea is recommended to ensure that comprehensive beneficial ownership information in line with the standard is available in respect of all relevant legal entities and arrangements.

Underlying factor

While the vast majority of companies, partnerships and trusts would have an account with a Korean financial institution, which is required to keep beneficial ownership information, there is no obligation for companies, partnerships or trustees of personal trusts to engage a financial institution.

The definition of beneficial ownership for companies applied by financial institutions is in line with the standard; however, the determination for partnerships follows the approach for companies, including taking a 25% threshold as a starting point, which is not always in accordance with the form and structure of partnerships.

For trusts, it is not clear whether information on “any other natural person exercising ultimate control over the trust” will be available.

A considerable amount of information relevant for the identification of beneficial owners will be available with the tax administration; however, the scope of this information may not match the definition of beneficial owner under the standard.

(see paragraphs 66 et seq., 105 et seq., 129 et seq. of Korea’s 2020 Report for more information)

Summary of actions reported

Pursuant to a legislative amendment introduced in February 2022, the tax authorities have the power to seek information of representative(s) and executive(s) and a person who actually controls the company or organisation, when it is difficult to determine the actual owner based on the ownership stock or investment interest. Further, the Ministry of Economy and Finance is in discussions with relevant agencies to – i) set up a system that requires taxpayers to report and regularly update a business bank account within a specified period after filing for a business licence; and ii) amend the AML/CFT Regulations to include “any other natural person exercising ultimate control over the trust” in the method for identifying beneficial owners of trusts.

Conclusion

The access power available to the tax authorities does not compensate definitional gaps on beneficial ownership. Korea has taken preliminary steps to address the recommendation, but no material progress has been reported for more than three years since the recommendation was issued. It is urged to make substantive progress before the next self-assessment.

Status determined

Has not been addressed

Actions required

Korea should submit a schedule for completion of steps to address the recommendation and an update on the progress made by 31 March 2026. In particular, Korea should –

• Provide the actions taken to address the recommendation, i.e. relevant changes in the legal and regulatory framework that ensure the availability of beneficial ownership information of all relevant legal entities and arrangements.

• Provide the actions taken to ensure that beneficial owners of partnerships and trusts are identified in line with the standard.

• Report actions and supporting implementation details taken to enforce changes to the legal and regulatory framework.

Recommendation (A.1, practice)

Korea is recommended to review its system, whereby a significant number of inactive companies remain with legal personality on the commercial register, to ensure that legal and beneficial ownership information is available.

Underlying factor

There are a large number of inactive companies that maintain legal personality but are not being supervised by the tax administration. This raises concerns that legal and beneficial ownership information might not be available in all cases.

(see paragraphs 83 et seq. of Korea’s 2020 Report for more information)

Summary of actions reported

A legislative amendment has entered into effect on 28 February 2025, whereby information on annual corporate registrations will be shared with the tax authorities by 31 March each year. Procedurally, the tax authorities must send a request to the Register Office for the data. The first of such exchanges was completed on 26 May 2025. This will enable the tax authorities to identify the inactive entities and to monitor them effectively.

Conclusion

Korea has taken preliminary steps to address the recommendation through legislative changes to allow the Register Office to, upon request, exchange companies’ registration data with the tax authorities, but no material progress has been reported for more than three years since the recommendation was issued. It is urged to make substantive progress before the next self-assessment.

Status determined

Has not been addressed

Actions required

Korea should submit a schedule for completion of steps to address the recommendation and an update on the progress made by 31 March 2026. In particular, Korea should –

• Report substantive steps towards reducing the risk that the significant number of inactive companies that retain legal personality, pose to the availability of ownership information, including details on the supervisory measures taken by the tax authorities and their outcomes.

• Report material progress on addressing the recommendation to ensure that legal and beneficial ownership information is available in all cases.

Recommendation (A.2, practice)

Korea is recommended to review its system, whereby a significant number of inactive companies remain with legal personality on the commercial register, to ensure that accounting records are available.

Underlying factor

There is a large number of inactive companies on the commercial register that maintain legal personality and may not be complying with the obligation to maintain accounting records.

(see paragraphs 163 et seq. of Korea’s 2020 Report for more information)

Summary of actions reported

A legislative amendment has entered into effect on 28 February 2025, whereby information on annual corporate registrations will be shared with the tax authorities by 31 March each year. Procedurally, the tax authorities must send a request to the Register Office for the data. The first of such exchanges was completed on 26 May 2025. This will enable the tax authorities to identify the inactive entities and to monitor them effectively.

Conclusion

Korea has taken preliminary steps to address the recommendation through legislative changes to allow the Register Office to, upon request, share companies’ registration data with the tax authorities, but no material progress has been reported for more than three years since the recommendation was issued. It is urged to make substantive progress before the next self-assessment.

Status determined

Has not been addressed

Actions required

Korea should submit a schedule for completion of steps to address the recommendation and an update on the progress made by 31 March 2026. In particular, Korea should –

• Report substantive steps towards reducing the risk that the significant number of inactive companies that retain legal personality, pose to the availability of accounting information, including details on the supervisory measures taken by the tax authorities and their outcomes.

• Report material progress on addressing the recommendation to ensure that accounting records are available in all cases.

Recommendation (A.3, framework)

Korea is recommended to ensure that beneficial ownership information in line with the standard is available in respect of partnerships and trusts.

Underlying factor

Financial institutions hold a significant amount of information on the beneficial owners of a partnership and a trust; however, the determination for partnerships follows the approach for companies, including taking a 25% threshold as a starting point which is not always in accordance with the form and structure of partnerships. For trusts, it is not clear whether information on “any other natural person exercising ultimate control over the trust” will be available.

(see paragraphs 174 and 175 of Korea’s 2020 Report for more information)

Summary of actions reported

Korea considers that since February 2022, the power available to tax authorities to seek information of representative(s) and executive(s) and a person who actually controls the company or organisation, when it is difficult to determine the actual owner based on the ownership stock or investment interest addresses the recommendation.

Further, the Ministry of Economy and Finance is in discussions with relevant agencies to amend the AML/CFT Regulations to include “any other natural person exercising ultimate control over the trust” in the method for identifying beneficial owners of trusts.

Conclusion

No material progress has been reported for more than three years since the recommendation was issued. The access power available to the tax authorities does not compensate definitional gaps on beneficial ownership (more so in respect of bank accounts as bank accounts may also be held by persons who do not fall into the category of “taxpayers” in Korea). Korea has taken preliminary steps to address the recommendation. It is urged to make substantive progress before the next self-assessment.

Status determined

Has not been addressed

Actions required

Korea should submit a schedule for completion of steps to address the recommendation and an update on the progress made by 31 March 2026. In particular, Korea should –

• Provide the actions taken to address the recommendation as applicable in the context of banks, i.e. relevant changes in the legal and regulatory framework that will allow identification of beneficial owners of all bank account holders in line with the standard.

• Report actions and supporting implementation details undertaken to enforce changes to the legal and regulatory framework.

Recommendation (C.1, practice)

Korea is recommended to continue clearly communicating with all of its EOI partners to ensure that its interpretation of the foreseeable relevance standard is consistent with Article 26(1) of the OECD Model Convention.

Underlying factor

Korea had problems communicating with one EOI partner regarding the interpretation of the foreseeable relevance standard in 3.5% requests received during the review period.

(see paragraphs 231 et seq. of Korea’s 2020 Report for more information)

Summary of actions reported

Korea has been engaging with EOI partners to enhance mutual understanding of foreseeable relevance of requests. In all cases where the foreseeable relevance of the request was not established, clarifications were sought from partners. If no clarifications were received in 30 days, the requests were recorded as “declined for valid reasons”. During the monitoring period, clarifications were sought in 6.55% cases (i.e. 15 requests).

Conclusion

Korea has made progress to address the recommendation and has been engaging with EOI partners to have a mutual understanding of foreseeable relevance. Nevertheless, no internal guidelines are available on establishing foreseeable relevance of incoming requests.

Status determined

In the process of being addressed

Actions required

In its next self-assessment in 2028, Korea should –

• Provide internal guidelines on establishing foreseeable relevance of incoming requests.

Recommendation (C.5, practice)

Korea is recommended to continue to ensure that it provides status updates in all cases where it takes over 90 days to provide a response.

Underlying factor

Korea did not provide any status updates in the first year of the review period. Korea introduced updates to its computer system which increased the number of status updates being provided in the last year of the review period to 65%.

Summary of actions reported

Korea provides status updates in all cases where it takes over 90 days to provide a response.

Conclusion

Korea has made progress to address the recommendation. Although Korea reported that status updates are provided in all cases, the statistics provided show that status updates were only provided in 26 out of 34 cases (76%) for which they should have been provided; thus, there is room for improvement. Korea should report further progress in the next self-assessment.

Status determined

In the process of being addressed

Actions required

In its next self-assessment in 2028, Korea should –

• Provide updated timeliness statistics, including on status updates