Recent Developments

The Korea Fair Trade Commission (KFTC) has issued the advance notice of the proposed amendment to the Notification Guidelines for Business Combinations (Notification Guidelines) for public comment from September 9, 2026 to September 30, 2026. The amendment to the Notification Guidelines has been proposed to clarify that acquihires, which are transactions becoming more common in emerging high-tech sectors (e.g., AI), may be subject to mandatory merger review and reporting obligations. Acquihires refer to transactions that utilize hiring arrangements and related agreements to transfer personnel in lieu of executing a formal business transfer agreement. Acquihire transactions have received significant attention by regulators due to large global tech companies’ execution of this transaction structure to systematically recruit key personnel while bypassing merger review. Because acquihire transactions may constitute a business transfer under the Monopoly Regulation and Fair Trade Act (MRFTA)—one of five types of regulated business combinations—the KFTC is seeking to amend the Notification Guidelines so that acquihire transactions clearly fall under the scope of a business combination subject to notification as a type of business transfer. Under the MRFTA, the transfer or lease of an entire or material part of a business is subject to merger notification if the transaction parties meet the relevant size thresholds or the transaction value exceeds a certain amount with the target entity having substantial activities in Korea. The KFTC will collect public comments during the period of the advance notice and proceed with implementation of the proposed amendment following deliberation and plenary session resolution.    

I. Key Contents of the Proposed Amendment

    A. Clarification of “business” to capture organized personnel

        The current Notification Guidelines define “business” under Article 9(1)(iv) of the MRFTA (Restriction on Business Combinations) as a bundle of property rights organized for the company’s business purpose functioning as an integrated operational unit, including sales rights, distribution systems, intellectual property rights such as patents and trademarks, and other items of economic value such as government permits and licenses. The proposed amendment to the Notification Guidelines specifies that when personnel organized into a functioning unit, combined with their technology or knowledge, perform a core business function, such personnel fall under the definition of “business.”  

    B. New standards for “material part” of business and calculating transfer price in acquihires

        The current Notification Guidelines provide that a “material part” of a business exists when (i) the part to be transferred or leased is capable of being operated as an independent business unit, or the transfer or lease causes a material decrease in the transferor’s sales, and (ii) the transfer price is at least 10% of the transferor’s total assets as of the end of the immediately preceding fiscal year, or at least KRW 10 billion.         The proposed amendment to the Notification Guidelines expands requirement (i) to include cases when the acquiring company is able to conduct the same business activities as the transferor, to now address acquihire transactions where key personnel (rather than an independently operable business unit) transfer to the acquiring company.         In addition, the proposed amendment to the Notification Guidelines revises how the transfer price is calculated for acquihires. The transfer price will now include any economic consideration (such as money or property benefits) paid to the transferor as consideration for the transaction, regardless of how it has been characterized. Examples include consideration for the release of rights relating to transferred personnel and license fees for intellectual property necessary for business activities.  

    C. New standard for “implementation” in acquihires

        The current Notification Guidelines define the implementation of a business transfer agreement as the completion of final payment. When final payment has not yet been completed, the business transfer is deemed to have been implemented upon delivery of movable assets, registration of real property, or registration of trademarks. The proposed amendment to the Notification Guidelines provides that the cessation of the transferor’s business in the context of an acquihire will also constitute implementation of the business transfer.  

II. Implications of Proposed Amendment

    In light of the proposed amendment to the Notification Guidelines, companies planning to transfer employees through an acquihire transaction should carefully assess whether the transaction may now trigger a merger notification obligation and factor any resulting notification requirement and review timeline into the transaction schedule.     The KFTC has also stated that the proposed amendment to the Notification Guidelines was developed through the exchange of information with foreign competition authorities, including the EU, Germany and the United Kingdom, and expects further international cooperation and response to new types of business combinations by large global tech companies. Given this exchange, companies planning acquihires should take into account potential coordination between the KFTC and multiple competition authorities during the merger review process. If you have any questions or require legal assistance on the matters addressed in this newsletter, please contact Lee & Ko's Antitrust & Competition Practice Group. Authors and relevant professionals : - Hwan JEONG Partner ( hwan.jeong@leeko.com ) - Jeong-Ho SUN Partner ( jeongho.sun@leeko.com ) - Min-Ho LEE Partner ( minho.lee@leeko.com ) - Suruyn KIM Partner ( suruyn.kim@leeko.com ) - Jungwon KWON Partner ( jungwon.kwon@leeko.com ) - Jeong Yoon CHOI Partner ( jeongyoon.choi@leeko.com ) - In Seon LEE Partner ( inseon.lee@leeko.com ) - Frank S. SHYN Senior Foreign Attorney ( frank.shyn@leeko.com )  

On September 3, 2026, the Ministry of Employment and Labor (MOEL) issued new guidelines elaborating the scope of "labor disputes" under the Trade Union and Labor Relations Adjustment Act (TULRAA), entitled the "Guidelines on the Scope of Labor Disputes, Including Company Performance-Based Bonuses" (New Guidelines). For context, the latest amendments to the TULRAA—also known as the Yellow Envelope Act—significantly expanded the scope of permissible "labor disputes" by including disagreements concerning the "determination of working conditions" (e.g., wages, working hours, welfare, termination and employee status) as well as "managerial decisions that affect working conditions." Since the Yellow Envelope Act took effect on March 10, 2026, labor unions have increasingly sought to bargain over matters that are traditionally viewed as falling within the realm of management-level decision-making – e.g., bonuses tied to a certain percentage of operating profit or strategic investment decisions made by management. As these topics have garnered more public attention in recent months, there has been considerable confusion about the meaning and scope of "managerial decisions" over which employers must engage in collective bargaining under the amended TULRAA. The New Guidelines—built upon the general interpretive framework set out in its earlier guidelines issued in February 2026—represent the MOEL’s latest attempt to provide more concrete standards for interpreting and applying the amended TULRAA in the context of collective bargaining, labor-dispute mediation, industrial action, and unfair labor practice proceedings. Below, we address key aspects of the New Guidelines and their practical implications for employers.    

1. Whether Profit-Based Bonuses Fall Within the Scope of Permissible "Labor Disputes"

    Profit-based bonuses can take various forms depending on how their eligibility, calculation, amount, and timing are structured. Such wide variance has created uncertainty as to whether—and under what circumstances—such bonuses would fall within the scope of permissible "labor disputes" requiring employers to engage in collective bargaining.     The New Guidelines clarified that:     ■ Bonuses directly linked to a fixed percentage of company profits—such as revenue, operating profit, or net income—generally fall outside the scope of "labor disputes." MOEL reasoned that requiring employers to bargain over such demands could result in a fundamental restriction against a company’s managerial freedom to conduct its business or interfere with the rights and interest of third parties, including shareholders.     ■ In contrast, MOEL reiterated that concerning employees’ wages, benefits, bonuses tied to individual performance (or fixed bonuses) or other terms and conditions of employment do fall within the scope of "labor disputes" and therefore require employers to engage in collective bargaining.  

2. Meaning of "Managerial Decisions Affecting Working Conditions"

    MOEL’s earlier guidelines issued in February 2026 took the position that a "managerial decision" may become subject to a labor dispute where it results in "substantive and specific changes" to working conditions. Conversely, where the managerial decision’s potential impact on working conditions remains merely abstract or speculative at the time of the decision, the managerial decision would fall outside the scope of permissible "labor disputes".     The New Guidelines clarified that:     ■ As a general rule, a managerial decision, in and of itself, does not constitute a mandatory subject of collective bargaining. Thus, at a stage where a "managerial decision" is under review or merely announced, the mere possibility that the "managerial decision" may ultimately affect employees’ working conditions is insufficient to trigger an obligation to engage in collective bargaining.     ■ However, the "managerial decision" may become a mandatory subject of collective bargaining if it moves into the implementation stage and detailed plans (e.g., workforce arrangements) are formulated so that changes to employees’ working conditions can be objectively anticipated. The New Guidelines further illustrate how this framework is intended to operate in practice through examples such as corporate investments (e.g., plant establishment or relocation to abroad), business acquisitions or sales, or the introduction of new technologies like AI.  

3. MOEL’s Enforcement Approach

    The New Guidelines also explain how MOEL intends to approach cases where a labor union nevertheless seeks to bargain over a managerial decision itself or demands that a fixed percentage of company profits be allocated as bonuses:     ■ Mediation through LRC. At the mediation stage, the Labor Relations Commission (LRC) will encourage the union to modify its bargaining demands and present a reasonable alternative. If the union declines to do so, the LRC may issue administrative guidance (i.e. declining the union’s filing) on the basis that the relevant demand does not fall within the scope of permissible "labor disputes" under Article 2(5) of the TULRAA.     ■ Industrial Action Over Out-of-Scope Matters. Where a union engages in industrial action primarily to pursue matters that fall outside the scope of permissible "labor disputes," the legitimacy of such industrial action will be assessed in accordance with the standards established by Supreme Court precedent. In other words, industrial action may be found unlawful.     ■ Unfair Labor Practice Implications. An employer’s refusal to bargain over matters falling outside the scope of permissible "labor disputes" would not constitute an unfair labor practice, given that managerial decisions themselves (or demands for profit-based bonuses) do not trigger an obligation to engage in collective bargaining.  

4. Implications

    The New Guidelines provide meaningful clarification by confirming that profit-based bonus demands and managerial decisions with only an abstract or speculative impact on working conditions generally fall outside the scope of permissible "labor disputes".     That said, the New Guidelines are unlikely to eliminate uncertainty altogether for the following reasons:     ■ First, the exclusion for profit-based bonuses appears to focus on bonuses directly linked to certain profit metrics (e.g., revenue, operating profit or net income), potentially leaving room for unions to formulate bonus demands using other metrics.     ■ Second, because profit-based bonuses have not been categorically excluded and bargaining over this matter is not prohibited, unions may continue to pursue such demands alongside other matters that fall within the scope of permissible "labor disputes."     ■ Third, the legal basis for certain aspects of the New Guidelines may itself be subject to challenge, particularly as to whether MOEL has gone beyond the scope of authority delegated to it under the TULRAA. If these uncertainties persist, they may also lend further momentum to legislative proposals to amend the Korean Commercial Code to require shareholder approval for the payment of company performance bonuses that an employer is not contractually obligated to provide. Lee & Ko’s Labor and Employment Practice Group has been closely monitoring recent developments surrounding the amended TULRAA (i.e., Yellow Envelope Act) and continues to engage with clients through newsletters and seminars addressing key issues arising under the Yellow Envelope Act. On September 10, 2026, Lee & Ko will host a seminar on the Serious Accidents Punishment Act and the Yellow Envelope Act, where we will provide a more detailed explanation of the New Guidelines and discuss practical response strategies for corporate clients. Lee & Ko remains committed to providing clients with timely guidance and legal support as they navigate the amended TULRAA. If you need assistance with the New Guidelines or related labor-management issues, please do not hesitate to contact Lee & Ko. Author Chang Soo JIN Partner, Hyunseok SONG Partner, Young Jin KIM Partner, JungwooLEE Partner, William KIM Senior Foreign Attorney, Shawn HAN Senior Foreign Attorney

On August 3, 2026, the Ministry of Economy and Finance announced the 2026 Proposed Tax Law Amendments (the Proposals). The Proposals encompass a broad range of measures including, inter alia, revision of the domestic treasury shares taxation rules, introduction of new tax credits for domestic production of strategically important products, adoption of preferential tax incentives to promote regional R&D and investment activities, revision to the preferential flat tax regime for foreign expats, a reduction in the threshold tax rate for the Korean controlled foreign company (CFC) rule to align with Pillar Two global minimum tax rules (GloBE Rules), and the introduction of the Side-by-Side Package agreed by the OECD/G20 Inclusive Framework (the Side-by-Side Package). The following is a brief summary of some of the Proposals that may affect multinational companies doing business in Korea, as well as domestic companies. * The Proposals remain subject to legislative approval, and certain provisions may be amended or withdrawn during the legislative process. Accordingly, the discussion below describes the key changes that would take effect to the extent that the relevant provisions of the Proposals are enacted substantially in their current form. For ease of reference, the discussion below may use terms such as “will” when describing the proposed changes; such usage should not be understood to indicate that the relevant changes are necessarily expected to be enacted or take effect.    

1. Reduction of the Threshold for Deemed Dividends of Controlled Foreign Companies (Article 27 of the International Tax Coordination Law)

    The effective tax rate (ETR) test under the Korean CFC regime to determine deemed dividends of a CFC in a low tax jurisdiction will be reduced from 17.5% to 15%.     Under the current regime, a Korean shareholder may be subject to deemed dividend taxation with respect to a CFC if certain requirements are met, including, among other things, the ETR test, which currently requires the CFC’s ETR in that jurisdiction to be 17.5% or lower. This reduction also aligns with the 15% global minimum tax rate under the GloBE Rules. If enacted, this Proposal would apply to fiscal years beginning on or after January 1, 2027.     [ Practical Implications ]     The lowering of the ETR threshold to trigger deemed dividend under the CFC rules should widen the range of retention and distribution strategies available for Korean multinational companies with foreign subsidiaries. However, as the ETR is based on the actual tax burden (as defined) in that jurisdiction in a given year, groups should reassess the ETRs of relevant foreign subsidiaries annually to determine whether the CFC rules would apply.  

2. Enhanced Oversight of Foreign Trusts – Expanded Whistleblower Rewards and Increased Penalties for Reporting Violations (Article 84-2 of the National Tax Basic Law and Article 65-4 of the Presidential Decree thereto; Article 91 of the International Tax Coordination Law)

    Oversight of foreign trusts will be strengthened by expanding whistleblower rewards and increasing penalties for reporting violations under the International Tax Coordination Law.     Currently, such rewards are available only for material information leading to the detection of violations of overseas financial account reporting obligations. The Proposals would expand the program to include material information leading to the detection of violations of the obligation to submit foreign trust statements.     The reward structure would also be revised. Under the Proposals, the current 5% tier for fines exceeding KRW 500 million would be eliminated, with the 10% rate applying to the entire portion exceeding KRW 200 million, thereby increasing rewards for large-scale violations.     The maximum administrative fine for failure to submit, or for falsely submitting, a foreign trust statement or related supplementary information will increase from KRW 100 million to KRW 1 billion. The existing calculation method, generally up to 10% of the unreported or under-reported foreign trust assets, would remain unchanged. To prevent duplicative penalties, any trust assets already subject to a fine for failure to report overseas financial accounts would be excluded from the foreign trust statement fine. These changes would apply to submissions made on or after January 1, 2027.     [ Practical Implications ]     The tenfold increase in the maximum fine, together with expanded whistleblower rewards, would significantly increase compliance risks relating to foreign trusts. Individuals holding or administering foreign trusts should therefore review their reporting obligations and ensure that trust structures and asset valuations are properly documented.  

3. Clarification of the Scope of Administrative Fines for Failure to Comply with International Transaction Reporting Obligations (Article 87 of the International Tax Coordination Law; Article 144 of the Presidential Decree thereto)

    The scope of administrative fines for failure to comply with international transaction reporting obligations will be clarified. Under the current regime, an administrative fine is imposed where documentation is not submitted by the applicable deadline or where false documentation is submitted; the Proposals would extend the scope to include the submission of documentation containing material omissions or errors.     [ Practical Implications ]     Currently, taxpayers may have some room to avoid administrative fines where the required documentation is submitted by the applicable deadline, even if its contents are deficient in certain respects. Under the Proposals, however, the submission of documentation containing material omissions or errors will be expressly subject to administrative fines. Accordingly, when preparing and submitting international transaction documentation, including the Statement of International Transactions, Master File, Local File, Country-by-Country Reporting (CbCR), and GloBE Information Return, taxpayers should establish procedures and controls to verify the accuracy and completeness of the information reported, rather than treating on-time submission as sufficient in itself.  

4. Deemed Dividend Taxation on the Acquisition of Treasury Shares (Article 17 of the Individual Income Tax Law, among others; Article 16 of the Corporate Income Tax Law and the Presidential Decrees thereto)

    Under current Korean tax law, gains realized by a shareholder from a share buyback or redemption by the company may be treated as either deemed dividend income or capital gains, depending on the purpose of the buyback. Generally, the amount exceeding the shareholder’s tax basis is treated as deemed dividend income if the company intended to cancel such shares immediately, but as capital gains if the company intended to continue to hold such shares as treasury shares.     However, in light of recent amendments to the Korean Commercial Law, which now generally treat all acquisition of a company’s own shares from shareholders as a capital transaction and require the repurchased shares to be canceled (rather than held as treasury shares), the Proposals would revise the tax treatment of share buybacks. To align the tax treatment with the amended Korean Commercial Law, the Proposals would provide that any amount exceeding the shareholder’s tax basis is per se treated as deemed dividend income, regardless of the purpose of the share buyback.     The Proposal would apply to share buybacks for which the purchase price is paid on or after January 1, 2027.     [ Practical Implications ]     Under the current rules, the tax treatment of a share buyback as a deemed dividend or capital gains depends on the purpose for which the treasury shares are acquired. This historically resulted in disputes over the income characterization of the acquisition. Under the Proposals, however, a share buyback would give rise to deemed dividend treatment at the shareholder level regardless of the purpose of the acquisition. Accordingly, domestic companies considering share buybacks and their shareholders should take into account that deemed dividend treatment would apply to share buybacks for which the purchase price is paid on or after January 1, 2027, irrespective of the intent of repurchase/redemption.  

5. Reform of the Income Tax Incentives for Foreign Employees – Increase in the Flat Tax Rate for Foreign Employees and Tightening of the Eligibility Requirements for Foreign Engineers (Article 18 of the Special Tax Treatment Coordination Law, among others; Article 16 of the Presidential Decree thereto, among others)

    Under the Proposals, income tax incentives for foreign employees will be reformed. First, the flat tax rate under the Special Tax Treatment Coordination Law available to foreign employees for earned income will be increased from the current 19%1 to 21%2, while the sunset date will be extended from December 31, 2026, to December 31, 2029. If enacted, this Proposal will apply to income arising on or after January 1, 2027.     In addition, the educational requirement for the foreign engineer income tax reduction, which provides a 50% reduction of Individual Income Tax for ten years, will be tightened from “a bachelor’s degree or higher in the natural sciences, engineering, or medicine” to “a doctoral degree.” The sunset date for the reduction will also be extended from December 31, 2026, to December 31, 2029. If enacted, this Proposal will apply to employment contracts entered into on or after April 1, 2027.     The scope of qualifying research institutions at which foreign engineers may be employed will also be narrowed. Universities, government-funded research institutes, and the Agency for Defense Development, among others, will continue to qualify. However, a corporate research institute or dedicated R&D department established within a company will qualify only if the company: (i) claims the research and human resources development expense tax credit for national strategic technology or new growth and original technology; (ii) holds national strategic technology under the National Strategic Technology Fostering Law; (iii) holds strategic technology under the National Advanced Strategic Industry Law; or (iv) holds national core technology under the Industrial Technology Protection Law. If enacted, this Proposal will apply to employment contracts entered into on or after April 1, 2027.     [ Practical Implications ]     The higher flat tax rate would apply from January 1, 2027, and would also apply to foreign employees under existing employment contracts. By contrast, the tightened eligibility requirements for foreign engineer income tax reduction and the narrowed scope of qualifying research institutions will apply only to employment contracts entered into on or after April 1, 2027, and therefore will not apply retroactively to existing contracts. Accordingly, companies that may not satisfy the new requirements may wish to enter into employment contracts by March 31, 2027, so that the existing eligibility requirements, including the bachelor’s degree requirement, continue to apply.     Companies should also review whether their research institutions satisfy the new requirements when assessing the availability of the tax incentives for planned foreign engineer hires.  

6. Implementation of the Side-by-Side Package – Introduction of the Side-by-Side, UPE, Substance-Based and Simplified ETR Safe Harbours (Article 80 of the International Tax Coordination Law; Articles 138, 138-3 and 138-4 of the Presidential Decree thereto, among others)

    The Proposals would incorporate key elements of the OECD/G20 Inclusive Framework’s Side-by-Side Package into Korea’s GloBE rules. The principal changes include the introduction of the following four safe harbours:       The Proposals would also make the following related amendments:     ■ Transitional UTPR Safe Harbour: The end date would be extended from December 30, 2026, to January 3, 2027, to accommodate MNE Groups using 52-week or 53-week fiscal years.     ■ Foreign Tax Credit for QDMTT: QDMTT paid in a foreign jurisdiction would be included among foreign taxes potentially eligible for the Korean foreign tax credit, subject to applicable requirements and limitations.     [ Practical Implications ]     MNE Groups with Korean operations should assess whether the new safe harbours may reduce their Pillar Two tax or compliance burden, particularly in light of their UPE jurisdiction and existing tax incentives. Groups should also consider the potential availability of Korean foreign tax credits for QDMTT paid overseas.  

7. Other Proposals Relevant to Foreign Investors and Non-Residents

    Other proposals relevant to foreign investors and non-residents include the following:     ■ Expansion of Foreign Investor Omnibus Accounts: ETFs and ETNs (excluding leveraged and inverse products) will be added to the financial products tradable through foreign investor omnibus accounts. The specific eligible products will be prescribed by Presidential Decree. The Proposal will apply to payments made on or after January 1, 2027.     ■ Acquisition Cost upon Re-Entry after Exit Tax: Where a former Korean tax resident who paid exit tax upon emigration re-enters Korea more than 5 years after departure and subsequently disposes of the relevant shares, the deemed disposal value applied for exit tax purposes will generally be treated as the cost basis of the shares. Certain exceptions will apply, including where the exit tax was refunded or the share value at re-entry is lower than at departure. The Proposal will apply to persons re-entering Korea on or after January 1, 2027.     ■ VAT Reverse Charge for Services Supplied by Foreign Companies: Where a foreign company has a Permanent Establishment (PE) that issues a tax invoice for a service, the service will be deemed connected with that PE. The reverse charge will therefore not apply, and the PE will be responsible for reporting and paying VAT.     ■ Deadline for Non-Resident Housing Tax Reduction: The existing tax reduction for qualifying non-residents who acquired housing between March 16, 2009, and February 11, 2010, will be limited to transfers made on or before December 31, 2028.  

8. Other Proposals Relating to Investment and R&D Tax Incentives

    The Proposals introduce a new domestic production tax credit and make several other changes to investment and R&D tax incentives:     ■ Domestic Production Tax Credit: A new tax credit will be available to Korean residents and domestic companies that directly produce and sell qualifying items in Korea. Eligible items will be selected from 6 categories: solar power, wind power, secondary batteries, semiconductors, key materials, and AI robot components, with specific items to be prescribed by Presidential Decree. To qualify, core production processes must be performed in Korea, prescribed domestic expenditure requirements must be met, and the relevant assets generally must not have benefited from the integrated investment tax credit. The credit will apply to production and sales in tax years beginning on or after January 1, 2027, and will be available through December 31, 2036.     ■ Regional Preferences for R&D and Investment Tax Credits: The R&D tax credit and integrated investment tax credit will be increased based on the location of the relevant R&D activity or investment. The applicable base credit rate will be multiplied by a regional preference coefficient ranging from 1.0 to 1.5, with higher coefficients generally applying outside the Seoul metropolitan area and in preferred areas. Separate accounting by place of business will be required. The Proposal will apply to R&D expenses incurred and investments made on or after January 1, 2027.     ■ Eco-Friendly Company Vehicles: The annual depreciation and disposal-loss deduction limit for electric and hydrogen company vehicles will increase from KRW 8 million to KRW 10 million per vehicle, while the limit for other vehicles will decrease to KRW 7 million. The Proposal will apply to vehicles newly acquired or leased on or after January 1, 2027.     ■ Expansion of National Strategic Technology: The existing “hydrogen” category of national strategic technology will be expanded into a broader “next-generation energy” category, with qualifying technologies to be prescribed by Presidential Decree. The Proposal will apply to R&D expenses incurred and investments made on or after January 1, 2027.     ■ Technology-Specific Sunset Dates: Instead of a single sunset date per technology group, sunset dates will be determined individually by reference to each technology's or facility's designation year.     [ Practical Implications ]     Companies planning significant investments should consider these new domestic production credit and regional preference when determining the structure and location of future investments. Companies should also review the revised vehicle deduction limits and technology-specific sunset dates in assessing the availability and timing of relevant tax incentives. The Lee & Ko Tax Group has extensive experience and expertise in both domestic and international tax matters. If you require assistance with any tax matters, including the issues discussed in this newsletter, please feel free to contact the Lee & Ko Tax Group at any time. [ See footnotes below ] 1. 20.9% including local income surtax. 2. 23.1% including local income surtax. Author Sang Hoon KIM Partner, Tom KWON Senior Foreign Attorney, Jung Ho RYU Partner, Steve Minhoo KIM Senior Foreign Attorney, Philje CHO Partner, Ross HARMAN Senior Foreign Attorney, Yeonhyung KIM Associate, Hae Min CHU Associate, Kyu Bin (K) KANG Foreign Attorney  

韓国の審査猶予及び優先審査制度の最近の変化 2026年には、韓国の特許審査実務において、審査猶予の変更・取下げに適用されていた2ヶ月の期限が廃止され、フィジカル人工知能及び合成生物学等の先端技術分野の優先審査対象が拡大された。また、優先審査事件の後続処理期間も短縮された。以下では、このような変化の主な内容と海外出願人の観点から見た実務上の留意事項をまとめる。 1. 審査猶予の変更・取下げ期限制限の廃止     韓国の審査猶予制度は、出願審査請求日から9ヶ月以内に猶予希望時期を指定して申請することにより、審査請求日より24ヶ月が経過した後から出願日より最長5年の範囲内で審査開始の時期を定めることができる制度である。     従来は、審査猶予の希望時期を変更するか、または審査猶予申請を取り下げるためには、審査猶予の申請日から2ヶ月以内に取下書または補正書を提出しなければならなかった。そのため、審査猶予の申請後に市場状況や製品発売の日程が変更されたとしても、出願人が審査時期を調整することが困難であるという実務上の制約があった。     改正された「特許法施行規則」第40条の3第2項及び「実用新案法施行規則」第10条の3第2項は、上記2ヶ月という期限を削除した(2026年5月14日施行)。これにより、審査官が審査に着手するまでは、従来の2ヶ月の制限なく、猶予希望時期を早めたり遅らせたりすることができ、審査猶予の申請自体を取り下げることもできる。     今般の改正により、企業及び出願人は、資金調達、研究開発(R&D)の進行速度、製品の発売日程及び市場競争状況等、事業戦略の変化に合わせて、特許審査及び権利化の時期をより柔軟に管理することができるようになった。 2.先端技術優先審査の拡大及び処理期間の短縮     ■ フィジカル人工知能・バイオ分野の優先審査の拡大         現在、先端技術優先審査は、半導体、ディスプレイ、二次電池、バイオ、先端ロボット及び人工知能(AI)の6つの分野を対象として運営されている。 2025年にバイオ、人工知能(AI)及び先端ロボット分野が先端技術優先審査の対象として追加されたのに引き続き、2026年には、人工知能分野における適用範囲が従来の人工知能ニューラルネットワーク関連技術からフィジカル人工知能まで拡大され、バイオ分野では合成生物学等を含むように対象範囲が再整備された。関連対象と適用期間は、2026年1月30日付のバイオ(生命工学)及び人工知能優先審査対象指定公告により変更・延長された。     ■ 最初の審査及び後続審査の処理期間の短縮         韓国の知的財産処が公開した2025年の実績によれば、最初の審査結果までの平均待機期間は一般審査が14.7ヶ月、優先審査が2.1ヶ月であった。韓国の知的財産処は、2026年内に全体の平均審査待機期間を14ヶ月に短縮する計画であり、特に、優先審査事件では、出願人が意見書・補正書等の中間書類を提出した後の審査官の内部処理期限を4ヶ月から2ヶ月に短縮することで、審査終結までの期間も短縮する方針である。     ■ 海外出願人の留意事項         先端技術優先審査は、当該技術分野に属するとの主張のみで利用できる制度ではなく、①指定公告で定められた特許分類(CPC)が当該出願の主分類として付与されていること、②韓国国内において関連製品を生産し、または生産準備している等の一定の要件を満たしていることが必要である。したがって、海外出願人は、個別出願について先端技術優先審査の適用要件を満たしているかを確認し、これを満たさない場合には、特許審査ハイウェイ(PPH)制度等の他の優先審査制度の活用可能性を検討する必要がある。 3. 審査猶予と優先審査の戦略的連携     2026年の審査猶予制度の改正と先端技術優先審査の拡大及び後続処理期間の短縮を共に活用すると、出願人は、事業の段階に応じて特許審査の速度と権利化の時期をより弾力的に管理することができる。     商用化に長期間を要する技術の場合、初期段階では審査猶予を申請して技術開発及び市場動向を観察しながら請求の範囲の戦略を検討することができる。その後、投資の誘致、製品発売、技術移転または海外進出等の迅速な権利確保が必要となる事業上のイベントが生じた場合には、審査官が審査に着手する前に審査猶予を取り下げ、当該出願が優先審査の要件を満たす場合、優先審査を別途申請する戦略を考慮することができる。     これにより、企業は、初期段階において審査対応費用の発生時期を調整する一方、事業上必要な時期においては、最初の審査結果と出願人の対応後における後続審査の結果を早期に確保することができる。ただし、優先審査は審査手続きを前倒しする制度に過ぎず、特許査定または特許登録を保証するものではないという点に留意する必要がある。 Author チェ・ヒョンウォン, キム・サンヒョン 2026年改正の商標審査実務：より迅速かつ公正になった商標審査制度 韓国知的財産処は、商標審査の迅速性と公正性を高めるために、関連規定と審査実務を順次改正・施行している。 主な改正事項は、①拒絶案件における審査保留の解消時期の明確化、②拒絶査定予告通知手続きの簡素化、③取消差戻し事件における審査官の変更、④商品分類及び類似商品の審査基準の整備であり、改正事項の詳細は、以下のとおりである。 1. 先願による拒絶案件における審査保留解消時期の明確化     現行の商標審査の実務上、出願商標と同一または類似する先願商標が存在する場合には、先願商標の処理結果が確定するまで後願商標の審査が保留されることがある。しかし、従来は、審査保留の事由が解消される時期が明確ではなかったため、後願商標の審査が長期間遅延することがあった。     2026年7月1日より施行された改正「商標審査事務取扱規程」等によれば、先願商標の関連指定商品に対する拒絶査定が確定し、後願商標の指定商品と同一・類似でなくなった場合には、その拒絶査定確定日に審査保留の事由が解消されたものと判断される。     これにより、先願商標により保留されていた後願商標の審査がより迅速に再開されるものと予想される。 2. 拒絶査定予告通知手続きの簡素化     従来は、商品類の区分や指定商品の記載等に関する商標法第38条第1項に基づく拒絶理由が通知された後、出願人が意見書や補正書を提出しなかった場合でも、拒絶査定に先立ち、改めて拒絶査定予告通知書が送付されていた。     2026年7月1日からは、出願人が最初の拒絶理由通知に対して何ら対応をしなかった場合、改めて同一事項を案内する拒絶査定予告通知手続きが省略される。     したがって、出願人が最初の拒絶理由通知に対応しないと、追加の通知を受けることなく拒絶査定が下される可能性があるため、追加の通知を前提に対応を先送りすることなく、最初の拒絶理由通知の段階において必要な意見書または補正書を適時に提出しなければならない。 3. 取消差戻し事件は新たな審査官が担当     特許審判院が商標登録の拒絶査定を取り消し、事件を知的財産処に差し戻した場合、従来は、当該拒絶査定に関与した審査官が再度出願を審査することができた。     2026年7月1日から施行された改正規定では、原決定に関与した者を後続手続きから排除する、いわゆる「前審関与制限」の趣旨を審査段階にも反映した。これにより、従来の拒絶査定に関与した審査官は、取消差戻し後の再審査から除外され、新たな審査官が当該事件を担当することになる。     今般の改正により、取消差戻し事件に対する審査の客観性と手続的公正性が一層強化されることが期待される。 4. 商品分類及び類似商品の審査基準の整備     2026年1月より、実際の取引実情を反映し、人用医薬品と動物用医薬品、人用医療機器と動物用医療機器との間の類否に関する判断基準が見直された。     また、2026年1月1日より改正されたニース国際商品分類が施行されている。主な変更事例としては、眼鏡・レンズ・サングラスの分類が第9類から第10類に変更された点と、精油のうち製造用精油が第1類、食品用エッセンスが第30類に分類される点等が挙げられる。     そのため、商品分類が変更された分野では、実際の事業内容と今後の使用計画を考慮し、適切な商品類と指定商品を選定しなければならない。 5. 実務上の留意点     今般の改正は、不要な手続きと審査の遅延を削減すると共に、取消差戻し事件における審査の公正性を強化する方向に行われた。     特に、最初の拒絶理由通知に対応しない場合には、追加の予告通知を受けることなく拒絶査定が下される可能性があるため、出願人は、意見書及び補正書の提出期限をこれまで以上に徹底して管理しなければならない。また、出願に先立ち、改正された商品分類と類似商品の審査基準を確認し、指定商品の漏れや誤分類を防止することが重要である Author イ・ミジョン 海外からもオンラインで参加可能な韓国特許審判院の口述審理     韓国特許審判院(IPTAB)は、2026年7月から韓国政府の「オンナラ個人用コンピュータ(PC)映像会議システム」を活用し、インターネット映像口述審理を本格的に実施する。     特許審判の当事者及び代理人は、特許審判院(大田)や知的財産処ソウル事務所に直接出席することなく、事務所や自宅等の希望する場所からインターネットを介して口述審理に参加することができるようになった。特に、海外に居住する当事者も、韓国を訪問することなく口述審理に出席して意見を陳述することができるという点から、海外顧客の審判手続きへの参加が大幅に拡大するものと期待される。     従前は、口述審理に出席するためには、大田に位置する特許審判院に直接出席するか、知的財産処ソウル事務所にて大田とソウルを結ぶ遠隔映像審理に参加しなければならなかった。     今回導入されるインターネット映像口述審理は、特許審判院またはソウル事務所を訪問する必要がなく、当事者がどこからでもインターネットによる映像会議システムに接続して参加することができる。韓国政府が運営する「オンナラ個人用コンピュータ(PC)映像会議システム」のホームページ1)に参加者名と特許審判院から共有された接続コードを入力するだけで、多数が同時に映像会議システムに接続できるだけでなく、代理人は審判院に直接口述審理に参加し、顧客は海外または国内から映像口述審理に参加するというハイブリッド方式も可能である。これにより、海外顧客は、海外からの移動時間や出張費用を削減しながら、審判手続きに効率的に参加することができる。     したがって、インターネット映像口述審理は、韓国の代理人と海外当事者が場所の制約なく口述審理に共に参加し、審判部に対して当事者の意見を直接説明することができるため、海外顧客に広く活用されるものと期待される。 1) オンナラPC映像会議 (https://vc.on-nara.go.kr:8089/guest/) Author クァク・ジュンヨン , パク・ジェヨン 細胞・遺伝子治療薬の「臨床的有意性」の判断基準に関する最近の裁判例     最近、ソウル行政法院が幹細胞治療薬の品目許可申請に対する返戻処分を取り消し、先端バイオ医薬品の安全性・有効性審査の中核的な基準である「臨床的有意性」の意義と判断基準を明確に提示する判決(2025グハプ55403；2026年7月9日宣告)を下した。     Lee&Ko法律事務所が代理した株式会社RNL再生医学研究所(以下、「原告」)は、重度の変形性膝関節症を適応症とする自家脂肪由来間葉系幹細胞治療薬「ジョイントステム」(「先端再生バイオ法」上の細胞治療薬)に関して、2回にわたり品目許可を申請したが、食品医薬品安全処は、「第3相臨床試験の結果、統計的有意性は認められるものの、既に市販されている関節炎治療薬と比較して治療効果の優越性が認められない」とする中央薬事審議委員会の審議結果に基づき、「臨床的有意性を認める資料が不足している」との理由で返戻処分を行った。     これに関連して、韓国の食品医薬品安全処の告示である「先端バイオ医薬品の品目許可・審査規定」第19条第4号は、先端バイオ医薬品の安全性・有効性審査のうち、臨床試験資料の審査基準に関して、以下のとおり規定している。   

4.評価：提出された臨床試験成績に関する資料の検討の結果、当該適応症等について臨床的有意性が認められる場合、これを認める。治療的確証臨床試験の場合は、特別に認められる場合を除き、事前に設定された統計解析計画に従って有意性を立証しなければならない。

    判決において、ソウル行政法院は、①事前に承認された臨床試験計画に従って統計的有意性が立証された以上、臨床的有意性を認めなければならず、②薬事法上、品目許可の要件は「安全性・有効性」のみであり、既存の治療薬に対する「優越性」まで要求することは違法であると判断した。     今回の判決は、これまで審査実務において裁量的に運用されてきた「臨床的有意性」の判断に関して、第3相臨床試験において事前設定された統計解析計画に従って統計的有意性が立証されれば、原則として臨床的有意性及び安全性・有効性を認めなければならないという明確な基準を提示したという点において大きな意義がある。     特に、細胞治療薬および遺伝子治療薬等の先端バイオ医薬品分野は、既存治療薬との直接比較が困難である場合や、小規模な臨床試験により開発される場合が多く「既存治療薬に対する優越性」を要求するか否かが、品目許可における障害となってきた。今回の判決は、このような優越性の要求が薬事法上の根拠のない違法な基準であることを明確にすることにより、品目許可審査における法的予測可能性を高める契機となった。     本判決の詳細につきましては、 Lee&Ko法律事務所のヘルスケアグループのニュースレターをご参照ください。 Author ク・ジャヨン, イ・ヨンジュ  

On June 26, 2026, ten members of Korea’s National Assembly, led by Representative Lee Kang-il of the Democratic Party of Korea, proposed a bill that, if enacted, would establish a statutory basis for imposing a digital services tax (DST) on certain foreign corporations providing digital services to users in Korea. If enacted, the bill would amend the International Tax Coordination Law (ITCL) to require an in-scope foreign corporations to pay an amount equal to 2% of its relevant Korean digital services revenue as corporate income tax. The bill would also introduce two supporting measures: it would require certain large online platform businesses to publicly disclose detailed information regarding their foreign related-party transactions, and would recharacterize certain excessive payments to foreign related parties as non-deductible deemed dividends. This newsletter focuses principally on the digital services tax, which represents the proposal's most significant departure from Korea's existing approach. The bill is currently pending before the Finance and Economic Planning Committee of Korea’s National Assembly. As a member-sponsored bill, it remains at an early stage of the legislative process and may be substantially revised or may not ultimately be enacted. Nevertheless, in view of the current implementation of Digital Services Taxes in some European countries including France and Italy, the proposal is a notable legislative development that warrants close attention from multinational digital businesses. 1. Key Provisions of the Bill     1) A 2% corporate income tax on Korean digital services revenue         The proposed Article 34-3 of the ITCL would apply where a foreign corporation (i) conducts an online platform or other business prescribed by Presidential Decree; (ii) provides online advertising or other prescribed digital services through an information and communications network to users in Korea; and (iii) earns revenue exceeding a threshold to be prescribed by Presidential Decree. An in-scope foreign corporation would be required to pay corporate income tax equal to 2% of the relevant revenue. The calculation of the revenue, the method for calculating the tax, and the filing and payment procedures would likewise be delegated to Presidential Decree.         The proposal is therefore incomplete in several crucial respects. In particular, the bill does not yet specify: the global or Korean revenue thresholds; the full range of covered digital services; the criteria for determining whether a user is located in Korea; the sourcing rules for Korean digital services revenue; or whether any relief would be available where the same income is already subject to Korean corporate income tax.         These matters, which would largely determine the scope and practical effect of the proposed tax, are expected to be addressed through subsequent Presidential Decree should the bill proceed.     2) Enhanced disclosure obligations for large online platforms         An online platform or other prescribed business would be required to publicly disclose information regarding transactions with foreign related parties where (i) its revenue for the preceding fiscal year is at least KRW 1 trillion and (ii) the amount of its foreign related-party transactions exceeds a threshold prescribed by Presidential Decree. The required disclosures would include the identity and location of the related party, the nature and amount of the transactions, the pricing basis, the detailed scope of the services received, comparable third-party prices and the transfer pricing method applied.         Failure to disclose the relevant information, or the submission of false information, could result in an administrative fine equal to 2% of the undisclosed or falsely disclosed transaction amount. 2. Why the Proposal Is Significant     The principal significance of the bill lies not merely in its 2% rate, but in the legal form in which the tax would be introduced. The proposal would insert a specific DST provision into the ITCL and expressly require the relevant foreign corporation to pay the charge as corporate income tax. This distinguishes the bill from Korea’s previous formally introduced legislative measures concerning foreign digital businesses, which generally focused on (i) expanding the VAT regime applicable to cross-border electronic services or (ii) requiring foreign corporations to provide the Korean tax authorities with information regarding their Korean business activities and revenue. Accordingly, the bill appears to represent Korea’s first formally introduced legislative proposal to impose a revenue-based DST in the form of corporate income tax.     The corporate income tax label may have been selected to position the charge within Korea’s existing direct-tax framework. However, the statutory label would not necessarily resolve questions concerning the tax’s treatment under Korea’s tax treaties or under foreign tax credit systems. Because the charge would be calculated on gross revenue and could apply without a permanent establishment or other traditional taxable presence in Korea, questions may arise as to whether it constitutes a covered tax for treaty purposes or a creditable income tax in the foreign corporation’s residence jurisdiction. 3. Korea’s Previous Approach to Digital Economy Taxation     Lately, Korea has generally sought to protect its tax base through the application and expansion of existing tax rules rather than through a separate gross-revenue tax. In tax audits and disputes involving multinational digital businesses, recurring issues have included whether a foreign enterprise maintains a permanent establishment in Korea; whether payments characterized as service fees should instead be treated as royalties; whether a Korean entity has received arm’s-length compensation for its functions, assets and risks, including functions considered under the development, enhancement, maintenance, protection and exploitation (DEMPE) framework; and whether the legal characterization of a transaction is consistent with its economic substance. This approach has enabled the Korean tax authorities to pursue digital economy related tax cases within the existing corporate income tax, transfer pricing, royalty and permanent establishment framework, but it has required highly fact-intensive analyses and has frequently raised difficult questions under Korea’s tax treaties, mostly leading to ultimate failures at the court.     Korea’s earlier legislative initiatives concerning the digital economy did not seek to impose a direct tax on the income or revenue of foreign digital businesses. Instead, they focused primarily on establishing a domestic nexus and expanding the scope of VAT on cross-border digital services. Here are some of the examples:     ■ In September 2018, lawmakers proposed amending the Act on Promotion of Information and Communications Network Utilization and Information Protection (the Network Act) to require certain large IT companies to install servers in Korea, which would have provided a domestic basis for taxation. The proposal was subsequently withdrawn.     ■ A bill introduced in November 2018 sought to amend the VAT Act to expand the definition of taxable electronic services supplied by foreign businesses to include online advertising, cloud-computing services, and sharing-economy services, as well as certain business-to-business transactions. The substance of that proposal was incorporated into an alternative bill, and the expanded rules took effect in July 2019.     ■ Another bill introduced in November 2018, also amending the VAT Act, proposed a broader list of covered services, including remote education, electronic publications, and remote website and computer-system installation, maintenance, and management services, but lapsed at the end of the National Assembly’s term.     ■ A proposal introduced in March 2019, which would have amended the VAT Act to extend the electronic-services regime to business-to-business transactions more generally, likewise lapsed.     These initiatives expanded Korea’s ability to tax cross-border digital transactions, but they did so principally through VAT imposed on consumption. They did not establish a direct tax on the Korean-source income or revenue of foreign digital businesses.     Viewed in this historical context, the current bill represents a material escalation. It seeks to establish a direct, market-based tax calculated by reference to revenue from Korean users, without regard to the existence of a traditional physical presence in Korea and without requiring the tax authorities first to prevail in a fact-intensive transfer pricing or permanent establishment dispute. Importantly, the bill would not replace Korea’s traditional tools; an affected group could face both the 2% DST and separate transfer pricing or withholding tax adjustments relating to its Korean operations. 4. International Context     The proposal arises against the backdrop of continuing uncertainty surrounding Pillar One of the OECD/G20 Inclusive Framework. Amount A of Pillar One was designed to reallocate a portion of the profits of the world’s largest and most profitable multinational groups to market jurisdictions, while the accompanying multilateral framework contemplated the removal of existing DSTs and a commitment not to introduce new measures of a similar nature. The absence of a fully implemented multilateral solution has nevertheless led a number of jurisdictions to retain or consider unilateral digital taxes.     In the rationale accompanying the proposal, the sponsoring lawmakers point to the continuing international debate over digital taxation as a response to perceived tax avoidance by large global IT companies. They also refer to overseas precedents, including the Canadian model 1, under which a specified percentage of revenue derived from digital services, such as digital advertising, is subject to a DST. Against this backdrop, the proposal is intended to establish a tax framework suited to the digital-platform economy and provide an explicit statutory basis for Korea to impose a DST. 5. Outlook     The bill remains at a preliminary stage, and many of its critical design features have been delegated to a future Presidential Decree. Its ultimate scope and prospects for enactment therefore remain uncertain. As a member-sponsored bill, the proposal must still clear committee review in the Finance and Economic Planning Committee and the Legislation and Judiciary Committee, followed by approval at a plenary session, before it can be promulgated. Even if enacted, subordinate legislation would still be required to implement numerous details delegated to Presidential Decree. Member-sponsored tax bills of this kind are frequently revised or consolidated into a committee alternative at the subcommittee stage, or lapse at the end of the National Assembly's term. Near-term enactment therefore appears unlikely, and in view of the government’s authority in tax legislative initiative, any eventual legislation may well emerge through the government's annual tax reform process rather than this bill in its present form.     Moreover, any unilateral DST would need to be considered against the risk of potential trade retaliation from the United States. President Trump recently warned that any country imposing a DST targeting U.S. companies could face a 100% tariff on goods exported to the United States, underscoring the broader political and trade considerations that could affect the proposal’s progress. 2 Indeed, even Canada, which the sponsoring lawmakers cite as a model for the proposal, rescinded its own DST in June 2025, halting collection on the eve of its first payment deadline in order to advance broader trade negotiations with the United States.     Nevertheless, the proposal needs to be monitored. Whereas previous legislative measures primarily expanded the scope of VAT or sought additional information from foreign digital businesses, the current bill would, if enacted, establish a substantive taxing right over revenue derived from the Korean digital-services market and expressly characterize the resulting charge as corporate income tax. Multinational digital businesses should therefore view the proposal not merely as another compliance initiative, but as a potential change in the basis on which Korea asserts taxing rights over participation in its digital market. Lee & Ko’s Tax Group has extensive experience advising on tax legislation and proposed statutory amendments, as well as international tax and digital-economy taxation matters. Notably, when DSTs, diverted profits taxes, equalization levies, and similar measures were under active international discussion in 2018, Lee & Ko advised in connection with the preparation and review of draft legislation. Please feel free to contact us should you require assistance with any tax-related matter, including the issues discussed in this newsletter. [See footnotes below] 1) It is noteworthy, however, that Canada subsequently announced on June 29, 2025, that it would rescind its DST and halt the collection scheduled for June 30, 2025, in order to advance broader trade negotiations with the United States. Department of Finance Canada, Canada Rescinds Digital Services Tax to Advance Broader Trade Negotiations with the United States (June 29, 2025). 2) See Financial Times, Donald Trump Warns of 100% Tariff on Countries Implementing Digital Services Tax (June 26, 2026). President Trump stated that the threatened tariff would apply notwithstanding existing or future trade agreements

In 2026, the Korea Fair Trade Commission (KFTC) has taken two significant steps to address the growing risk of AI-related false and exaggerated advertising. First, the KFTC amended its “Review Guidelines on Labelling and Advertising for Endorsements and Testimonials” (Review Guidelines) to capture AI-generated “virtual persons” within the existing endorsement framework so that there is clear disclosure whenever such virtual persons are used to promote a product. The amendments to the Review Guidelines took effect on June 1, 2026. Second, on June 23, 2026, the KFTC proposed amendments to its “Notice on the Operation of Substantiation of Labelling and Advertising” (Substantiation Notice) which would require businesses to substantiate advertising claims involving AI and new technology prior to publication and to produce supporting evidence on request or become subject to an order to suspend the advertisement. Following the conclusion of the public comment period on July 13, the proposed amendments to the Substantiation Notice are expected to be implemented. Together, these measures reflect the KFTC’s broader effort to combat “AI-washing” (the practice of overstating or fabricating AI involvement in products and services to influence consumer purchasing decisions) and suggest that legal risk associated with unsubstantiated or improperly disclosed AI-related advertising claims will continue to rise. The key details and implications of the Review Guidelines and Substantiation Notice are as follows: I. Review Guidelines for Endorsements and Testimonials     The key contents of the amendments to the Review Guidelines are as follows:     A. Express inclusion of “virtual persons”         The previous Review Guidelines defined the subjects of endorsements and testimonials as consumers, celebrities, experts, and organizations or institutions. The amendments add “virtual persons” created using AI or similar technology to this list. This addition now establishes a clear basis for AI-based advertising to be regulated within the existing framework.     B. Mandatory disclosure obligation for advertisements featuring virtual persons         When an AI-generated virtual person is used in an endorsement or testimonial, the advertiser is now required to disclose clearly that the person is a virtual character. The disclosure must be made in a manner that consumers can clearly and easily recognize.         ■ Text-based media (e.g., blogs, etc.): The title of the post or the beginning text of the body must include a statement such as “This post contains a virtual person generated by artificial intelligence (AI)” or “Includes virtual person.”         ■ Photo or video media: During the appearance of a virtual person, text such as “Virtual Person” must be displayed in close proximity to the virtual person.     C. Regulation of “experience-based claims” by virtual persons         The amended Review Guidelines also expressly provide that where a virtual person’s endorsement or testimonial is presented based on an actual experience, such as user review, any content that does not reflect a real experience may constitute an unlawful advertisement (if false, exaggerated, or deceptive) under the Fair Labeling and Advertising Act (FLAA).         ■ For example, a before and after testimonial featuring an AI-generated virtual consumer, with content that does not reflect reality used to exaggerate the efficacy or effects of a product, would be a representative example of unlawful advertising. II. Substantiation Notice     The labelling and advertising substantiation system under the FLAA requires businesses to bear the burden of proving factual claims made in labelling and advertising. The Substantiation Notice sets out the specific operating standards for this system, including the request, review and processing of substantiating materials.     The current Substantiation Notice has not been substantively updated since 2015 and does not expressly address claims relating to AI or other recently developed technologies, nor does it reflect the KFTC’s enforcement practices developed thereafter. Thus, the proposed amendments are intended to bring AI- and new-technology-related claims expressly within the scope of the Substantiation Notice and, in order to prevent the spread of consumer harm, allows the KFTC to issue a cease-and-desist order against an advertisement where a business fails to submit the required substantiating materials.     The key contents of the proposed amendments to the Substantiation Notice are as follows:     A. Clarification on object of request for substantiating materials         The current Substantiation Notice allows the KFTC to request substantiating materials relating to         (i) direct effects on the human body,         (ii) safety or the environment,         (iii) performance, efficacy or quality, and         (iv) other matters that materially affect consumers’ purchasing decisions or trade order.         As claims regarding AI functionality in products and services have become more common, the proposed amendments expressly clarify that advertising claims relating to AI functionality and other new technologies also fall within this scope, such as the following examples:         ■ Claims of having adopted new technology, such as describing a product as “safer through artificial intelligence (AI) technology”;         ■ Claims involving safety, environmental or new-technology-related marks or certifications; and         ■ Environmental claims relating to eco-friendliness, recyclability or reduced carbon emissions.     B. Specification of procedures for requesting and submitting substantiating materials         Under the current Substantiation Notice, substantiating materials must currently be submitted, in principle, within 15 days of the KFTC’s request, with a possible extension of up to 30 days (from the date the relevant cause ceases) where submission is impossible due to force majeure or other unavoidable causes. The proposed amendments to the Substantiation Notice set out the qualifying grounds for extension in greater detail, namely: (i) force majeure; (ii) a merger or acquisition, or the commencement of rehabilitation, bankruptcy or similar proceedings; (iii) seizure or temporary custody of the books and records or evidentiary documents of the business by an authorized agency; or (iv) a fire or other disaster causing serious disruption to the company’s operations. Also, in order to reinforce the principle that businesses should substantiate their claims before advertising, the amendments to the Substantiation Notice shorten the maximum extension period from 30 days to 15 days.         In addition, where a business continues to run an advertisement without submitting the requested substantiating materials within the applicable (including any extended) period, the proposed amendments to the Substantiation Notice would allow the KFTC to issue a cease-and-desist order against that advertisement until the proper materials are submitted.     C. Introduction of self-assessment checklist         The proposed amendments to the Substantiation Notice also introduce a checklist to help businesses assess, both before and after publishing an advertisement, whether they have complied with their substantiation obligations, including in relation to substantiation methodology, evidence-gathering and the submission of materials. III. Implications of Amendments     The amendment of the Review Guidelines and the proposed amendments to Substantiation Notice show that the KFTC is bolstering its enforcement of the FLAA. This includes the KFTC’s goal to strengthen economic sanctions for unlawful advertising. Amendments to the Enforcement Decree under the FLAA, which significantly raise administrative fines for repeat violators and reduce financial incentives for mitigating factors, took effect in July 2026.     Additionally, the KFTC established a dedicated “Labelling and Advertising Monitoring Team” on March 23, 2026. Together with amendment on the Review Guidelines and the proposed amendments to the Substantiation Notice, these measures suggest that the legal risk associated with unsubstantiated claims relating to AI, new technology or the environment will continue to rise.     With the KFTC’s increasing enforcement interest in AI-related advertising activities, companies should consider establishing proactive internal and external review processes for the creation and execution of advertising, supported by the KFTC’s new self-assessment checklist, to mitigate the associated risk.