Article 104-33 (Special Provisions for Recognition as Expenses of Loans, etc. Paid to Overseas Construction Subsidiaries)

Where a domestic corporation, which is an overseas construction business operator as defined in Article 2(5) of the 「Overseas Construction Promotion Act」 (hereinafter referred to as "overseas construction business operator"), has calculated provision for bad debts for a claim against an overseas construction subsidiary as prescribed by Presidential Decree (hereinafter referred to as "overseas construction subsidiary"), which meets all of the following requirements (hereinafter referred to as "loans, etc."), such provision for bad debts may be recognized as an expense within the limit of the amount calculated under paragraph

, after subtracting the book value of the net assets of the overseas construction subsidiary (meaning the book value of net assets excluding borrowed money, etc.; if it is less than zero, it shall be zero). ③ When calculating the limit for recognizing provision for bad debts as an expense under paragraph ②, the provision recognition rate for the business year that includes January 1, 2024, shall be 10/100, and the provision recognition rate for subsequent business years shall be the rate obtained by adding 10/100 to the provision recognition rate of the preceding business year, up to a maximum of 100/100.

, shall be deemed an expense when calculating the income amount for the business year: <Newly added by March 14, 2025> 1. The loans converted into equity, etc. meet the requirements of Article 1(1) and (2). 2. More than 5 years have passed since the loans converted into equity, etc. paid before December 31, 2022, were converted into equity. 3. The overseas construction subsidiary has continuously been in a capital impairment status for the 10 years preceding the end of the business year in which the domestic corporation, which is an overseas construction business operator, recognized the amount equivalent to the difference from conversion into equity as an expense. ⑤ The limit for recognizing the amount equivalent to the difference from conversion into equity as an expense shall be the amount obtained by multiplying the amount equivalent to the difference from conversion into equity, after subtracting the book value of the net assets of the overseas construction subsidiary as of the end of the business year (if less than zero, it shall be zero; hereinafter the same applies in this Article), by 10/100. In this case, the period during which the amount equivalent to the difference from conversion into equity can be recognized as an expense shall be limited to the business year in which such amount is first recognized as an expense and the following 9 business years.

Where a domestic corporation has recognized the amount equivalent to the difference from conversion into equity as an expense under paragraph ④, and falls under any of the following, the amount calculated according to Presidential Decree shall be recognized as income for the business year in which such cause occurs: <Newly added by March 14, 2025> 1. Where the book value of the net assets of the overseas construction subsidiary as of the end of each business year commencing after the business year in which the amount equivalent to the difference from conversion into equity was first recognized as an expense under paragraph ④ exceeds the book value of the net assets of the overseas construction subsidiary as of the end of the business year to which the date of conversion into equity belongs. 2. Where the domestic corporation disposes of the shares, etc. acquired through conversion into equity (including cases where the overseas construction subsidiary is liquidated).