The DEMPE Concept and Its Role in Domestic Transfer Pricing Practice – Report on Korea

Korea codified the DEMPE concept in 2019, aligning its transfer pricing rules more closely with OECD standards. However, no domestic guidelines or rulings have been issued by the National Tax Service (NTS), which instead relies on the OECD Transfer Pricing Guidelines in audits and APA negotiations. The NTS emphasizes DEMPE analysis to claim that Korean entities economically own intangibles and should be allocated greater taxable income. While case law remains limited, several decisions have considered DEMPE elements. Korean courts stress a holistic assessment of DEMPE functions, contractual arrangements and value contributions to determine royalties and their appropriateness.This article is part of a special issue of the International Transfer Pricing Journal on the DEMPE concept in domestic transfer pricing practice. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Spain and the United States.