Recent tax ruling and court cases
- The tax payer who carries out real estate rental business receives input VAT refund on the output VAT paid on the construction design service received. In case the tax payer closes its business in the following taxable period, it does not have to repay any input VAT refund. ( Buga- 1269, issued in Sept.9, 2009)
- In the case a company makes a severance payment to employees who have been working for less than 1 year, the severance payment made for the defined contribution plan should be tax deductible in the taxable year when the payment is actually made. When the pension payment is received from the pension business company, the company should include the pension income in the taxable income in the year that the pension payment is received.
- When a Korean listed company merges its non-listed subsidiary with the merger ratio of 1:0 and does not issue new shares, the net operating loss (“NOL”) of the merged company cannot be transferred to the surviving company.
- In the case a tax payer did not indicate that it is filing for a zero rate VAT return, but submitted the supporting documents in relation with the zero rate VAT, the tax office will not impose a penalty. (Jaebuga-444, issued in June 26, 2009)
- Proper evaluation method to be used for the fair market value of the shares of the foreign unlisted companies owned by Korean unlisted companies.
1. Main tax issues on IFRS adoption
(1) The difference between income recognition of construction contracts in relation to IFRS and the tax laws.
(2) Main tax adjustments
2. Amendment to tax laws for FY2010
(1) Corporate Tax Law
(2) Individual Tax Law