EDUCATION TAX

1. Taxpayer

2. Non-taxable Income

3. Tax Base and Tax Rate

4. Return and Payment

5. Determination and Collection

6. Penalty

7. Non-inclusion of the Education Tax in Losses or Necessary Expenses

1. Taxpayer

a.  Persons engaged in banking and insurance businesses in Korea

b.  Taxpayers of special excise tax pursuant to the Special Excise Tax Law

(excluding those who pay special excise tax on LPG, petroleum, diesel oil, and

LNG)

c.  Taxpayers of transportation tax pursuant to the Transportation Tax Law

d.  Taxpayers of the liquor tax excluding Spirits, Takju,and"Yakju"

2. Non-taxable Income

Concerning the banking and insurance businesses, profits from property placed in trust

for public welfare shall not be liable to education tax

3. Tax Base and Tax Rate

Taxpayer

Tax Base

Rate

Banking and insurance

Gross Receipts

0.50%

business

Taxpayer of Special

Special excise tax amount

30% (15% in the case of

Excise Tax

payable pursuant to the

kerosene, heavy oil

Special excise tax law

butane or LPG)

Taxpayer of

Transportation tax amount

15%

transportation tax

payable pursuant to the

Transportation tax law

Taxpayer of

Liquor tax amount

10% (30% when liquor

liquor tax

payable pursuant to the

tax ratge is over 70%)

Liquor tax law

* The tax rates illustrated above can be adjusted within 30% of each rate for the purpose

of supplying resources to the education investment fund.

(1) regarding banking and insurance businesses, the share of gross receipts from

transactions with the Bank of Korea of the Education Tax shall not exceed the net income

amount;

(2) gross receipts consist of the following amounts received within Korea:

(a) interests;

(b) dividends;

(c)commissions;

(d) guarantee money;

(e) profits from the transfer of securities;

(f) insurance premiums;

(g) profits from foreign exchange transactions;

(h) rent;

(i) profits from the transfer of fixed assets;

(j) other operating or non-operating revenue.

4. Return and Payment

a. With regard to the taxpayers described in 1a

Taxpayers shall file education tax returns at the pertinent district tax office within

the due date.

Taxation Period

Due Date

1st period

1/1 ~ 3/31

May 31

2nd period

4/1 ~ 6/30

August 31

3rd period

7/1 ~ 9/30

November 30

4th period

10/1 ~ 12/31

February 28 of the next year

b. With regard to the taxpayers described in 1b, 1c and 1d

When taxpayers declare and pay an amount of special excise tax, transportation

tax, or liquor tax, they shall also declare and pay education tax thereon.

5. Determination and Collection

a. With regard to 4a

(1)   The government will correct the tax base and the tax amount if there are any

omissions or errors in the return field.

(2)    When education tax is not paid or partially paid, the government shall collect the

unpaid tax immediately

b. With regard to 4b

Education tax on the special excise tax amount, transportation tax amount, or the

liquor tax amount is assessed and collected according to the Special Excise or

Transportation Tax Law or the Liquor Tax Law.

6. Penalty

When education tax is not paid or partially paid, a penalty shall be levied at the amount

equivalent to 10 percent of the tax unpaid.

7. Non-inclusion of the Education Tax in Losses or Necessary Expenses

The education tax assessed on the tax amount not included in losses or necessary

expenses according to the provisions of the Income Tax Law or Corporation Tax Law is

not included in losses or necessary expenses in the calculation of the income amount

for the purpose of income tax or corporation tax.