Article 121-30 (Tax Special Treatment for Exchange of Stocks, etc. Between Companies)

If a controlling shareholder, shareholder, or their special-related persons (hereinafter referred to as "controlling shareholders, etc." in this Article) of a domestic corporation (hereinafter referred to as "company subject to exchange" in this Article) transfer all of their shares or equity interests (hereinafter referred to as "shares, etc." in this Article) in accordance with a business reorganization plan prescribed by Presidential Decree (hereinafter referred to as "business reorganization plan" in this Article) by December 31, 2026, and acquire shares, etc. of another domestic corporation that is not a special-related person prescribed by Presidential Decree of the company subject to exchange (hereinafter referred to as "acquiring company" in this Article) in proportion to their ownership in any of the following ways, they may defer taxation on the capital gains arising from the transfer of shares, etc. (including capital gains incurred by the acquiring company and its controlling shareholders, etc.) until the disposal (including inheritance and donation) of the acquired shares, etc., as prescribed by Presidential Decree. 1. A method of acquiring shares, etc. that the acquiring company already holds or newly issues. 2. A method of acquiring all of the shares, etc. held by the controlling shareholders, etc. of the acquiring company [limited to cases where the company subject to exchange and the acquiring company belong to different business groups (meaning a business group as defined in Article 2, Item 11 of the 「Act on Monopoly Regulation and Fair Trade」. This is the same in this Article hereinafter)].

If the shareholders, etc. of the company subject to exchange who transferred their shares, etc. under Article 1, Item 2 fall under any of the following subparagraphs, the resident shall pay the unpaid tax amount within 2 months from the end of the half-year in which the reason occurred, and the domestic corporation shall include in gross income the amount deducted as expense in calculating the income amount for the business year in which the reason occurred. In this case, the interest equivalent amount calculated as prescribed by Presidential Decree shall be added and paid as capital gains tax or corporate tax, and the said tax amount shall be deemed as the tax amount to be paid according to Article 111 of the 「Income Tax Act」 or Article 64 of the 「Corporate Tax Act」. 1. If a corporation conducting the same business as the company subject to exchange belongs to the same business group as the company subject to exchange within 5 years from the end of the business year in which the shares, etc. were transferred. 2. If the controlling shareholders, etc. reacquire shares, etc. of the company subject to exchange within 5 years from the end of the business year in which the shares, etc. were transferred. 3. If the approval of the business reorganization plan is canceled for reasons prescribed by Presidential Decree.

A domestic corporation implementing a business reorganization plan shall submit the details of the business reorganization plan and its implementation performance to the head of the tax office having jurisdiction over its tax office annually as prescribed by Presidential Decree.