Usually, copyright royalties occur the most in the first year when the song is released. Then, the total amount of copyright royalties gradually decreases over the first and second year. After that, it tends to stabilize.

When you own the copyright of a certain song, a profit will occur when you receive a monthly settlement (copyright royalty) and when you sell the copyright at a price higher than the amount you have used to purchase it, both of which shall be classified as ‘Other Income.’

In the case of ‘Other Income,’ you can select ‘separate taxation’ to conclude your tax obligation if the income per case is less than 50,000 KRW and your annual other income (total) is less than 3,000,000 KRW.

However, if your annual other income (total) exceeds 3,000,000 KRW, you must add the ‘Other Income’ to the global income tax base and report it by the end of late May every year.

When does taxation occur while using Musicow?

1. When your copyright royalty income exceeds 50,000 KRW

2. When your sales revenue exceeds 50,000 KRW

Musicow Tax Return Filing

* NO withholding tax when below 50,000 KRW/case, which is the tax threshold.

[See: INCOME TAX ACT Standards for Enforcement 84-0-1 [Sphere of Application of Other Income Tax Threshold (by case)]

* If the copyright royalty and sales revenue exceed 50,000 KRW per case, 22% of the total revenue will be withheld. Then, you must report your revenue as ‘other income’ and pay the taxes.

* The ‘other income’ of Musicow does NOT exclude necessary expenses.

** If you have the following income, you are subject to the Global Income Tax Return

1. Total amount of below 50,000 KRW/case + above 50,000 KRW/case exceeds 3,000,000 KRW/year

2. Only have cases that are below 50,000 KRW/case, and ‘other income’ exceeds 3,000,000 KRW/year

3. Only have cases that are above 50,000 KRW/case, and ‘other income’ exceeds 3,000,000 KRW/year

4. The total amount of other income (excluding necessary expenses) outside of the income from Musicow exceeds 3,000,000 KRW/year

How to file a Global Income Tax Teturn

* Period: May 1^st ~ 31^st every year

* Procedure:

1. Visit the homepage of National Tax Service (http://www.hometax.go.kr) and file it yourself

2. Visit a tax office under local jurisdiction to file a tax return

3. Contact a nearby tax accounting office for professional help