International taxation: entering a new era of transformation

Korea’s international tax system may have a shorter history than other areas of taxation, but it has evolved at remarkable speed. Since the late 1990s, marked by the introduction of the Act on International Tax Adjustment, Korea has worked steadily to build a framework that aligns with global standards. Alongside these developments, the capabilities of Korean taxpayers to deal with international tax rules have grown significantly as well.

Today, competition among countries to secure taxing rights is fiercer than ever, and multinational enterprises are constantly seeking ways to improve their global effective tax rates. The result is a landscape that often feels like a “silent battleground.” In this environment, both governments and companies are racing to build new strategic tools, and stronger defenses to keep pace.

A major focus of recent changes has been the increased sophistication of transfer pricing rules. Following the adoption of the BEPS Project in 2016, Korea implemented the now-familiar three-tier documentation system: the Master File, Local File, and CbCR. This framework has strengthened the country’s ability to prevent base erosion, supported by strong enforcement measures such as significant administrative charges for failing to submit required documentation.

The transformation doesn’t stop there. Global discussions around Pillar 1 (Digital Tax) and Pillar 2 (Global Minimum Tax, or GloBE) are reshaping the very foundation of international taxation. While these initiatives are often viewed as reactions to multinational tax avoidance, they also reflect a broader realization: traditional international tax rules simply weren’t built for today’s digital-driven world. Old-school examples—like the classic “painter” used to explain permanent establishment—no longer match the realities of AI, digital platforms, and borderless business models.

All of these points point to one thing: we are entering a new era of challenge and adaptation. The Korean government will continue refining its international tax rules to stay aligned with global standards, and Korean companies operating globally will need to stay agile—strengthening their ability to respond quickly to regulatory shifts while strategically managing their global effective tax rates.

And one message stands out above all:
International tax is no longer a niche field reserved for a handful of specialists.
In the years ahead, success for both companies and tax authorities will depend on how quickly and smartly they navigate this fast-changing global landscape.