Answer: "Foreign Exchange Management Regulations" 》Article 12 stipulates that foreign exchange receipts and payments under the current account shall have a real and legal transaction basis. Financial institutions engaged in the business of settlement and sale of foreign exchange shall, in accordance with the provisions of the foreign exchange administration department of the State Council, conduct a reasonable review of the authenticity of transaction documents and their consistency with foreign exchange receipts and payments.
The foreign exchange administration authorities have the right to supervise and inspect the matters specified in the preceding paragraph.
Article 14 stipulates that foreign exchange expenditures under the current account shall be in accordance with the management regulations of the foreign exchange administration department of the State Council on the payment and purchase of foreign exchange, and shall be paid with valid documents and in accordance with the regulations on the payment and purchase of foreign exchange. Foreign exchange payment or foreign exchange purchase and payment from financial institutions engaged in foreign exchange settlement and sales business.
According to the above regulations, the material payment your company should pay to the Korean parent company is a current account foreign exchange expenditure. The foreign exchange expenditure should have a real and legal transaction basis, and should be paid to the Korean parent company in accordance with the regulations on foreign exchange payment and foreign exchange purchase.
Your company's use of claims against the chairman of the board to offset the debts of its Korean parent company does not comply with the provisions of the "Foreign Exchange Management Regulations".
If the payment due to the Korean parent company cannot be paid to the Korean parent company, it may be deemed as an unpayable price and treated as other business income, and corporate income tax will be calculated and paid.
