Article 106-3 (Special Cases for Value-Added Tax on Gold Bullion)

For gold bullion imported by gold jewelers, etc., and financial institutions upon receiving a tax exemption recommendation from a person prescribed by Presidential Decree (hereinafter referred to as "tax-exempt gold bullion import recommender" in this Article), the value-added tax shall be exempted until March 31, 2014. <Amended by Act No. 13051, Dec. 27, 2010, Act No. 13649, Dec. 31, 2011, Act No. 13719, Jan. 1, 2013, Act No. 14123, Jan. 1, 2014>

A person obligated to collect value-added tax prescribed by Presidential Decree (hereinafter referred to as "value-added tax collection obligor" in this Article) shall, in cases falling under any of the following subparagraphs, collect value-added tax from a person subject to value-added tax collection prescribed by Presidential Decree (hereinafter referred to as "value-added tax collection subject" in this Article) at the time of supply prescribed by Presidential Decree, and pay it to the head of the tax office having jurisdiction over the business office, the Bank of Korea, or the postal office by the end of the month following the month in which the collection date falls, in the manner prescribed by Presidential Decree. 1. When a financial institution fails to receive repayment of gold bullion supplied through gold bullion loan contracts. 2. In the case of over-the-counter derivatives transactions of gold bullion, when a person other than gold jewelers, etc. (including financial institutions) takes physical delivery of gold bullion.

The head of a customs office shall, when a person who imported gold bullion tax-exempt under paragraph (2) for the purpose of supplying it to gold jewelers, etc., under paragraph (1) does not supply the imported gold bullion for that purpose, collect the value-added tax related to the import from the importer and issue a tax invoice. Provided, That this shall not apply in cases prescribed by Presidential Decree.

The amount collected by the head of the tax office having jurisdiction over the business office or the head of the customs office according to the following subparagraphs shall be deemed as value-added tax collected in accordance with the procedure for collecting national taxes. 1. In the case where gold bullion recommended for tax exemption by a tax-exempt gold bullion transaction recommender under paragraph (1) subparagraph 1 is supplied to a person other than the one who received the recommendation, an amount equivalent to 100분의 10 of the value-added tax on such gold bullion shall be collected as a penalty tax. 2. In cases where gold bullion is supplied under paragraph (1) subparagraph 2 and falls under any of the following items, an amount equivalent to 100분의 10 of the value-added tax on such gold bullion shall be collected as a penalty tax. a. When gold bullion wholesalers, etc., and financial institutions supply gold bullion, for which tax exemption has been recommended by a tax-exempt gold bullion transaction recommender, to a financial institution other than the one that received the recommendation. b. When a business operator supplies gold bullion to a person other than the financial institution from which the gold bullion was borrowed, upon repayment of gold bullion borrowed through a gold bullion loan contract. 3. When a value-added tax collection obligor, who is obligated to collect and pay value-added tax under paragraph (4), fails to pay the collected value-added tax from the value-added tax collection subject, an amount equivalent to 100분의 10 of the unpaid tax shall be collected in addition to the unpaid tax. 4. When a person who imported gold bullion tax-exempt under paragraph (2) for the purpose of supplying it to gold jewelers, etc., under paragraph (1) does not supply the imported gold bullion for that purpose, and the head of the customs office collects value-added tax under paragraph (6), an amount equivalent to 100분의 10 of the collected tax shall be collected in addition to the collected tax. 5. When a person obligated to faithfully perform the reporting, ledger recording, and safekeeping duties regarding the details of tax-exempt gold bullion transactions, etc., under paragraph (7) fails to do so, an amount determined in the following items shall be collected as a penalty tax. In this case, if the person falls under both item a and item b, item b shall apply. a. When ledgers under paragraph (7) have not been kept or recorded, or when the transaction amount and recommendation amount of tax-exempt gold bullion in the kept ledgers are less than the transaction amount and recommendation amount that should have been recorded, an amount equivalent to 100분의 1 (or 1,000분의 5 for tax-exempt gold bullion transaction recommenders and tax-exempt gold bullion import recommenders) of the unrecorded or deficient transaction amount and recommendation amount of tax-exempt gold bullion. b. When the details of tax-exempt gold bullion transactions and recommendation details have not been reported to the head of the tax office having jurisdiction over the business office under paragraph (7), or when the reported transaction amount and recommendation amount of tax-exempt gold bullion is less than the amount that should have been reported, an amount equivalent to 100분의 1 (or 1,000분의 5 for tax-exempt gold bullion transaction recommenders and tax-exempt gold bullion import recommenders) of the unreported or deficient transaction amount and recommendation amount of tax-exempt gold bullion.

In cases where a financial institution fails to receive repayment of gold bullion supplied through a gold bullion loan contract, and the person who fails to repay the gold bullion falls under the grounds prescribed by Presidential Decree, value-added tax shall not be collected notwithstanding paragraph (4).

When applying paragraphs (1) through (11), the methods and procedures for tax exemption of gold bullion, the issuance, 추징 (collection of previously unassessed tax), collection, reporting, and post-management of tax invoices, the amount and period of tax security for gold bullion, and the timing, procedures, and release of tax security, and other operational matters shall be prescribed by Presidential Decree.