On Thursday, May 14, 2026, the Korean National Tax Service (“NTS”) held a joint meeting with the Korea Trade-Investment Promotion Agency (“KOTRA”) and other foreign chambers of commerce[1] to present tax administrative support measures aimed at enhancing Korea’s attractiveness as an investment destination.

A key measure announced was the plan to introduce a streamlined procedural framework to facilitate the expeditious processing of advance pricing agreements (“APA fast-track”). This reflects Korea’s acceptance of the OECD’s recommendation to simplify review procedures for APA renewal applications and for low-risk or routine transactions.

Overview of APA in Korea

An advance pricing agreement (“APA”) is a procedure under which a taxpayer and the tax authority agree in advance on the transfer pricing methodology and arm’s length range applicable to cross-border related-party transactions. Korea introduced the APA regime in 1996 and concluded its first APA with the United States in May 1997. APAs are generally divided into unilateral APAs, which involve only one competent authority, and bilateral APAs, which involve the competent authorities of both jurisdictions. In practice, bilateral APAs have been more frequently utilized.

The Need for a Streamlined APA Procedure

Bilateral APAs generally take longer than unilateral APAs because they require coordination between the competent authorities of both jurisdictions. Over the past five years, the average processing period for bilateral APAs handled by the NTS, measured from commencement to conclusion, ranged from 27 to 35 months. The period perceived by taxpayers may be considerably longer because pre-filing consultations and similar processes are not included.

Meanwhile, through BEPS Action 14 on More Effective Dispute Resolution Mechanisms in 2016, the OECD commenced peer reviews of the Mutual Agreement Procedure (“MAP”), which encompasses bilateral APAs. While the OECD has continued efforts to improve dispute resolution mechanisms, including MAP and bilateral APAs, reducing processing times remains challenging due to the increasing number of APA applications and the growing complexity of cross-border transactions.

Against this background, the APA fast-track introduced at the joint meeting is intended to expedite certain APA renewal applications that are substantially similar to previously approved APAs. If implemented effectively, the fast-track is expected to significantly reduce the time required for taxpayers with prior APA approval histories to renew and obtain re-approval of their APAs.

Eligibility Requirements and Detailed Features of the APA Fast-Track

To qualify for the APA fast-track, an application must be an APA renewal application that satisfies all of the following requirements, and the regime applies to pre-filing consultation applications filed on or after May 14, 2026:

  1. The application must be filed within 6 months from the expiration date of the term covered by the previously approved APA;
  2. The transaction structure, functions, and risks must be identical to those under the existing APA, and the proportion of related-party transactions must be similar; and
  3. The arm’s length range proposed in the renewal APA must be similar to the range previously agreed upon between the tax authorities.

The taxpayer must submit pre-filing consultation materials for the APA renewal application while satisfying all of the foregoing requirements. Following a desk review of these pre-filing consultation materials, the NTS will determine whether the APA fast-track applies within 3 months. If the application is found eligible, the NTS will consult with the other jurisdiction to have the case designated as a priority case.

The designation is significant because competent authority meetings with the treaty partner jurisdiction generally take place only once or twice a year, depending on the jurisdiction, and only a limited number of cases are discussed at each session. Accordingly, if a case is determined to be fast-track-eligible and designated as a priority case, the likelihood that it will be place on the agenda for the next scheduled competent authority meeting is significantly increased.

The 3-month desk review period begins once all materials requested by the NTS, which must be included with the pre-filing consultation submission, have been submitted. In practice, taxpayers typically compile and submit such materials in the form of a single, consolidated explanatory document. As the NTS requests approximately 20 different types of materials, thorough preparation is essential to avoid delays due to incomplete submissions.

Considerations for Successful Implementation of the APA Fast-Track

The purpose of introducing the APA fast-track is not merely to reduce the taxpayers’ time and costs through shortened processing times. Rather, it is intended to enhance the efficiency of the APA regime and improve the international community’s perception of Korea’s tax administration and investment environment, thereby positioning Korea as an attractive and sustainable investment destination. Although the regime is still in its early stages and detailed operational rules have yet to be issued, the following considerations should be addressed for the successful implementation of the regime.

(1) Need for a Procedure to Confirm the Commencement Date of the Desk Review

Whether the APA fast-track applies is determined within 3 months following the desk review of the pre-filing consultation materials, which must include all materials requested by the NTS. In practice, it is common for additional information requests to be issued after the initial submission of pre-filing consultation materials; accordingly, the commencement of the desk review is expected to occur only upon the submission of all such supplementary materials. However, because pre-filing consultation materials are typically submitted via email and are not accompanied by an acknowledgement of receipt or a stamped receipt date, in the absence of a separate procedure, taxpayers would have to estimate the 3-month period based on the timing of their final email transmission. Therefore, it appears necessary to provide for the issuance of an official letter or acknowledgement of receipt confirming that all requested materials have been submitted and that the three-month period has commenced, in order to enhance taxpayer predictability.

(2) Need for Guidelines on Pre-filing Consultation Meetings and the Acceptance of APA Applications

Under standard practice, after a taxpayer submits pre-filing consultation materials, a pre-filing consultation meeting is held, and whether the formal APA application will be accepted is determined based on that meeting and any follow-up information submitted in response to subsequent requests. Under the APA fast-track, although fast-track eligibility is to be determined within 3 months following the desk review, there currently appear to be no guidelines regarding pre-filing consultation meetings or how the APA application process and timeline would differ from the standard APA process. Clearer operational guidelines seems required in this regard as well.

(3) Need for Specific Criteria for Determining Eligibility

To qualify for the APA fast-track, the application must demonstrate identity of transaction structure and functions/risks, as well as similarity in the proportion of related-party transactions and the arm’s length range. Without specific additional guidance on these requirements, the outcome may vary depending on the subjective judgment of the reviewing official. To ensure the effectiveness of the regime, the eligibility criteria should be made more specific and systematized.

(4) Need for Strengthened Coordination with Other Jurisdictions to Secure Priority Case Designation

Even after the NTS determines that an application is eligible for the APA fast-track, uncertainty remains because whether the case is designated as a priority case, which would be the taxpayer’s ultimate objective, depends on the outcome of consultations with the other jurisdiction. For the APA fast-track to be effective in practice, prior coordination with other major jurisdictions that have sufficient experience with APA approvals will be necessary. In particular, mutual coordination should be strengthened. For example, once fast-track eligibility is determined within 3 months following the desk review, consultations with the other jurisdiction regarding priority case designation should be initiated within a defined period thereafter. In addition, Korea should seek to reach an understanding with other major jurisdictions that priority case designation will be granted absent specific and significant disqualifying circumstances

Takeaways

The APA fast-track represents an effort both to enhance Korea’s attractiveness as an investment destination by expeditiously alleviating the burden of double taxation and to align domestic practice with OECD international standards. It is expected to substantially ease the difficulties faced by global enterprises. In particular, it is likely to provide significant benefits to companies that have repeatedly renewed APAs in connection with cross-border transactions involving counterparties in the United States, Japan, EU member states and other major trading partners of Korea. Even for companies without such a track record, the importance of successfully concluding an initial APA is expected to grow further.

That said, further improvements to the regime and coordination with other jurisdictions remain to be addressed. It remains to be seen how the APA regime, which has been operated in Korea for 30 years since its introduction in 1996, will evolve with the introduction of the APA fast-track.

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If you have any questions regarding this article, please contact below:

Sang Hoon KIM ([email protected])

Jung-hong Kim ([email protected])

Steve Minhoo KIM ([email protected])

Philje CHO ([email protected])

Byoungha LEE ([email protected])

Gijin HONG ([email protected])

Kyu Bin (K) KANG ([email protected])

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[1] This includes the American Chamber of Commerce in Korea (AMCHAM), the European Chamber of Commerce in Korea (ECCK), the Korean-German Chamber of Commerce and Industry (KGCCI), the French Korean Chamber of Commerce and Industry (FKCCI), the British Chamber of Commerce in Korea (BCCK), the Seoul Japan Club (SJC), the China Chamber of Commerce in Korea (CCCK), and the Australian Chamber of Commerce in Korea (AustCham Korea).