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Editorial

Press releases and law firm thought leadership

This page is dedicated to keeping readers informed of the latest news and thought leadership articles from law firms across the globe.

If your firm wishes to publish press releases or articles, please contact Shehab Khurshid on +44 (0) 207 396 5689 or shehab.khurshid@legalease.co.uk

 

New Proposed Tax Law Amendments Provide Clarification on the Taxation of Foreign Funds

November 2018 - Tax & Private Client. Legal Developments by Lee & Ko .

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On July 30, 2018, the Korean Ministry of Economy and Finance (“MOEF”) announced the proposed tax law changes/amendments for 2019 and beyond (“Proposals”). The Proposals are expected to be reviewed and finalized by the Korean National Assembly in December 2018.

Some key Proposals that should be of great interest to private equity funds and other investors relate to the Korean taxation of a foreign collective investment vehicle, referred to as an Overseas Investment Vehicle (“OIV”) in the Korean tax law. An OIV is broadly defined as an overseas vehicle that raises funds through an investment offering, manages investment assets, derives value from the acquisition and disposition of such assets, and distributes such derived value to its investors. Consequently, partnerships, limited liability companies and other types of collective investment vehicles (e.g., trusts) would likely be included in the definition of OIV.

The key provisions of the Proposals in relation to an OIV that will impact tax planning for foreign funds are summarized below.

[Legal Update] Proposed Amendment to Reduce Capital Gains Exemptions...

August 2017 - Tax & Private Client. Legal Developments by Bae, Kim & Lee LLC.

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The Ministry of Strategy and Finance announced its proposed tax law amendments for 2018 on August 2, 2017. This tax alert highlights the proposed change to the capital gains exemption currently available to foreign investors engaged in on-the-market transactions.

[SOUTH KOREA] Korean Supreme Court Issues Several Rulings on Whether a Foreign Company Doing ...

May 2017 - Tax & Private Client. Legal Developments by Kim & Chang .

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Korean Supreme Court Issues Several Rulings on Whether a Foreign Company Doing Business in Korea May Be Found to Have a Permanent Establishment 

In 2016, the Korean Supreme Court issued several rulings shedding light on its approach when analyzing whether a foreign company conducting business in Korea may be found to have a permanent establishment (“PE”). 

The Use of Dispatch Workers: Ironing Out Yet Another Wrinkle for its Successful Implementation

February 2017 - Tax & Private Client. Legal Developments by Lee & Ko .

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From a purely employer’s perspective, foreign companies operating in Korea are often frustrated (or at times, even amazed) at some of the protections provided to employees under the Korean employment laws. A few of the most difficult legal requirements include the strict just-cause requirement for termination, the durational limits on the use of fixed-term (contract) employees, the statutory severance obligation, and the statutory allowances for overtime, night-time, and holiday works. In light of such requirements and to minimize the burden of potential employer liabilities, many foreign companies may naturally wonder: How can we structure our workforce so that we can preserve an increased degree of flexibility when managing our personnel?

KOREA’S NEW SUPREME COURT CASE EXCLUDES MILEAGE FROM VAT TAXATION:

February 2017 - Tax & Private Client. Legal Developments by Lee & Ko .

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Used mileage points interpreted as sales allowance deductible from tax base

If a business operates a customer loyalty program together with other business, in which the amount of mileage points granted for the customers’ primary transaction is deducted from the purchase price of the customers’ secondary transaction and those customers only have to pay the remaining price, the amount deducted from the purchase price during the secondary transaction should not be additionally included as the value of supply(i.e. should not be subject to VAT) of the secondary transaction(Summary of Supreme Court 2015 du 58959, 2016. 08. 26.).

[SOUTH KOREA] (1) Hong Kong Tax Treaty, and (2) Amendment to the Korea–India Tax Treaty

February 2017 - Tax & Private Client. Legal Developments by Kim & Chang .

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Much earlier than expected, on September 12, 2016, the Korean government notified the Hong Kong government of the Korean National Assembly’s ratification of the Korea–Hong Kong Tax Treaty (“Treaty”). On September 27, 2016, the Treaty entered into force.   

[South Korea] Korea’s Strategy and Finance Ministry Proposes Tax Law Changes for 2017

October 2016 - Tax & Private Client. Legal Developments by Kim & Chang .

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On July 28, 2016, the Ministry of Strategy and Finance (“MOSF”) announced the proposed tax law amendments for 2017. MOSF has submitted the draft tax law amendment to the National Assembly.

Korea strengthens taxation on multi-national enterprises in 2017

September 2016 - Tax & Private Client. Legal Developments by Lee & Ko .

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On July 28, 2016, the Ministry of Strategy and Finance (“MOSF”) announced the annual proposal to amend the tax law for 2017 (the “Proposal”). The Proposal was submitted to the National Assembly on 2 September 2016.

[South Korea] 2016 Proposed Tax Law Amendments

August 2016 - Tax & Private Client. Legal Developments by Bae, Kim & Lee LLC.

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On July 28, 2016, the Ministry of Strategy and Finance announced its proposed tax law amendments for 2016. According to the proposal, the revisions are aimed at increasing the engines for growth and promoting fairness in taxation in accordance with the mid- to long-term tax policy initiatives of the government. The proposed amendments are expected to come into effect on January 1, 2017 pending approval by the National Assembly.

Provided below is a highlight of some key proposed amendments.

Court Regards Tax Avoidance Purpose as a Primary Consideration in Determining Beneficial Ownership

August 2016 - Tax & Private Client. Legal Developments by Bae, Kim & Lee LLC.

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The Seoul Administrative Court recently ruled that a Hungary-based subsidiary ("HungarianCo") - set up in 2010 by a Dutch Motion Picture Licensing Entity ("Dutchco") to hold exclusive rights in distributing motion pictures produced by the group company in Korea, Japan, Israel and Hungary - was not the beneficial owner of royalty payments made by a Korean entertainment and motion pictures distributor ("KoreaCo") for rights to distribute motion pictures in the Korean market. Although HungarianCo had substantive physical presence in Hungary, the court held that based on an overall consideration of the purpose for setting up the entity in a certain jurisdiction, the nature of the activities performed by the employees, scope of transactions undertaken and actual flow of payments, DutchCo was the beneficial owner to the royalty payments and applied the royalty withholding tax rate of 15% pursuant to the Korea-Dutch tax treaty.

[South Korea] Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and ...

July 2016 - Tax & Private Client. Legal Developments by Kim & Chang .

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[Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and Those Companies Subject to the Comprehensive Report on International Transactions]

Under the amendments to Article 11 of the International Tax Coordination Law (“ITCL”) and Article 21-2 of the Presidential Decree of the ITCL, taxpayers are required to submit an Individual Company Report, and a Comprehensive Report on International Transactions (“Comprehensive Report”) if their annual sales amount exceeds KRW 100 billion (approx. USD 83 million) and annual cross-border intercompany transactions exceeds KRW 50 billion (approx. USD 42 billion).

Court Holds Royalties for Foreign-Registered Patents are Not Subject to Withholding Tax in Korea

June 2016 - Tax & Private Client. Legal Developments by Lee & Ko .

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Court adhered to the existing position on the determination of royalty payment

In May 2016, a Korean taxpayer won its victory over the Korean tax authority when the Seoul High Court overruled the tax authority’s assessment against the taxpayer in connection with its royalty payments made with respect to non-Korean registered patents. The tax authority challenged against the Supreme Court’s well-established position on the determination of source with respect to royalty payments and the tax payer, represented by Lee& Ko, successfully persuaded the Seoul High Court to adhere to the Supreme Court’s existing position.

[South Korea] Update on the Korea-Hong Kong Tax Treaty

March 2016 - Tax & Private Client. Legal Developments by Kim & Chang .

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The Korea-Hong Tax Treaty (“Hong Kong Treaty”) has not yet been ratified.¹ As a result, the Hong Kong treaty did not enter into force in 2015. Consequently, its provisions will not have effect in 2016.

[South Korea] Changes to the Presidential Decrees of Tax Laws for 2015

July 2015 - Tax & Private Client. Legal Developments by Kim & Chang .

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The Government amended the Presidential Decrees of various tax laws on February 3, 2015. Included below are some highlights:

[South Korea] Proposed Tax Law Changes for 2015

June 2015 - Tax & Private Client. Legal Developments by Kim & Chang .

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On August 6, 2013, the Ministry of Strategy and Finance announced proposed tax law amendments for 2015, most of which would take effect on January 1, 2015 if enacted into law. The main items as currently proposed are summarized below but are subject to change during the National Assembly’s legislative review later this year.

Tax treaty rates to apply to offshore investors only upon application including disclosure of benefi

Tax treaty rates to apply to offshore investors only upon application including disclosure of beneficial owners
 
New rules requiring prior information, subject to some exceptions, apply from July 1, 2012.
 
Under amendments to the Corporate Income Tax Act (CITA) promulgated on December 31, 2011, in order to have favorable tax treaty withholding rates applied to payment of Korean-source income (including dividends, interest and royalties) from July 1, 2012, the offshore beneficial owner of the income must first submit an application for such treatment to the tax withholding obligor (normally the income-paying Korean counterparty). In the case of an "offshore investment vehicle" or offshore fund serving as conduit for the income to beneficial owners,1 the fund must submit an application by its beneficial owners, together with an offshore investment vehicle report. Thus, the income-paying entity in Korea will have to obtain, up front, details of the beneficial owners-information that till now was sought, if at all, only by tax examiners after the fact.

As an exception, the application filing requirement will not apply to income from investment in overseas depository receipts of Korean issuers. As discussed below, other important exceptions have been proposed as part of the implementing regulations, but are yet to be decided.

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1 An “offshore investment vehicle” is defined simply as an entity, set up overseas, that manages funds for investors and engages in investment by acquiring, disposing of and otherwise managing investment targets and distributing the proceeds to investors.

2013 Proposed Tax Amendments

August 2012 - Tax & Private Client. Legal Developments by Yulchon.

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On August 8, 2012 and August 9, 2012, the Korean Ministry of Strategy and Finance has announced the government’s proposed tax law amendments (“Proposal”) for 2013. Set forth below is an overview of the major items of the Proposal that may affect foreign-invested companies or foreign corporations conducting business in Korea. Please note that this is not an exhaustive list of the Proposal that may affect your organization.

South Korea: Ministry of Strategy and Finance's Efforts to Strengthen International...

June 2012 - Tax & Private Client. Legal Developments by Kim & Chang .

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Cooperation for Tax Information Exchange

The Ministry of Strategy and Finance (the "MOSF") announced through its official press release dated March 12, 2012 its plan to strengthen the international cooperation for the exchange of tax information with other countries.  

New Procedure Rolled Out For Claiming Reduced Withholding Tax under Treaties

March 2012 - Tax & Private Client. Legal Developments by Yulchon.

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After an extensive and tumultuous deliberation process, the Korean Ministry has recently rolled out a long-anticipated procedure for claiming a reduced rate of withholding under double taxation treaties.

A parent company which indirectly acquired controlling shares in a Korean company through...

March 2012 - Tax & Private Client. Legal Developments by Yulchon.

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subsidiaries held to be liable for the deemed acquisition tax - the en banc decision of the Supreme Court

It has been a popular structure among foreign investors to indirectly acquire Korean real estate businesses through several subsidiaries in order to avoid the deemed acquisition tax (a local tax) which would apply to the acquisition of controlling shares in a company holding certain assets (e.g., real properties) subject to the acquisition tax. 

Tax Treaty benefits denied based on the substance over form principle

March 2012 - Tax & Private Client. Legal Developments by Yulchon.

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 - the Supreme Court decision on Lone Star Fund cases

Foreign investors have frequently used intermediate holding companies located in the third countries when acquiring Korean companies. Such holding companies are generally located in jurisdictions where favorable tax treaties are available.  

Tax Tribunal Ruling: Transfer Pricing Adjustments Do Not Affect Customs Valuations

January 2012 - Tax & Private Client. Legal Developments by Yulchon.

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The Tax Tribunal of Korea recently ruled that the customs value of imported products is not affected by a price decrease due to transfer pricing adjustments (Josim 2011 Kwan 0119, October 28, 2011).

LAUNCHING OF NTS FORENSIC & ANTI TAX-EVASION CENTER

June 2011 - Tax & Private Client. Legal Developments by Kim & Chang .

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The National Tax Service (the "NTS") announced through its official press release dated February 8, 2011 the recent launch of a Forensic and Anti Tax-Evasion Center ("FAC") within the NTS and plans for other FACs to be established within the various regional tax offices across Korea.

Introduction of the Reporting System for Foreign Financial Accounts [2]

March 2011 - Tax & Private Client. Legal Developments by Yulchon.

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In our newsletter dated December 20, 2010, we reported on the introduction of the reporting system for foreign financial accounts. The amendment to the Enforcement Decree of the Law for Coordination of International Tax Affairs, which took effect on December 31, 2010, sets forth the detailed rules for the foreign financial account report (“FFAR”) requirement. To address numerous inquiries we have recently received from our clients regarding this new requirement, we have summarized the key points of the reporting system as set forth below.

UPDATE ON THE TAX LAW CHANGES

February 2011 - Tax & Private Client. Legal Developments by Kim & Chang .

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The bills for tax laws as proposed by the Ministry of Strategy and Finance ("MOSF") last August have been reviewed and ratified by the Strategy and Finance Committee of the National Assembly ("NA") on December 7, 2010. After subsequent ratifications by the Legislation & Judiciary Committee and a plenary session of the NA, the bills became effective as of January 1, 2011. Summarized below are the key amendments in the final bills that were not included in the original MOSF proposals last August.

TAX LAW CHANGES FOR YEAR 2011

February 2011 - Tax & Private Client. Legal Developments by Kim & Chang .

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On December 27 and December 30, 2010, amendments to tax laws and related presidential decrees have been promulgated, most of which took effect as of January 1, 2011 (with the exception of those provisions for which different effective dates are specified). It is also expected that there will be further amendments to presidential decrees unrelated to the above amendments to tax laws sometime around February or March 2011. Among the amendments for this year, we provide you below with some of the major items that may affect your business or may be of interest to you.

2011 Tax Law Amendments

January 2011 - Tax & Private Client. Legal Developments by Yulchon.

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On December 8, 2010, the National Assembly approved the tax reform proposals for 2011 submitted by the Ministry of Strategy and Finance (“MOSF”) with some revisions. Most of the changes took effect on January 1, 2011 unless specified otherwise. We have summarized some of the major items in the passed bill affecting foreign investors below.

2010 TAX LAW CHANGES PROPOSED BY THE MINISTRY OF STRATEGY AND FINANCE

December 2010 - Tax & Private Client. Legal Developments by Kim & Chang .

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On August 23, 2010, the Ministry of Strategy and Finance ("MOSF") announced a series of proposals for revisions to the tax laws before the end of 2010. The proposals include revisions to tax laws aimed at mitigating potential tax burdens arising from the adoption of the International Financial Reporting Standards ("K-IFRS") by listed companies or financial institutions starting from next year.

Korea and U.S. Agree on Joint Tax Audits

December 2010 - Tax & Private Client. Legal Developments by Yulchon.

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The Korean tax authority, National Tax Service ("NTS"), announced on September 8, 2010 that it has signed an agreement with the U.S. Internal Revenue Service ("IRS") to join forces to crack down on offshore tax evasion and illegal wealth transfers abroad.

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Dinner with GC -
Korea 2018

  • China and Hong Kong GC Powerlist

    In May, The Legal 500 and GC Magazine added another country to the list of destinations for their exclusive Dinner with GC series, as South Korea’s elite in-house counsel came together at Mugunghwa in Seoul, for a closed-door discussion on the realities of the role.

    Dinner with GC - Korea 2018