Court upholds taxation of value added tax of English language institute

The Seoul Administrative Court on Monday judged as legitimate the tax authorities' imposition of value added tax (VAT) on a private language institute offering English telephone language services to students through a contract with a foreign call center.

The BCM Education Group filed a suit against a tax office in Seoul last year demanding the revocation of some 49 million won of VAT levied in 2009 on its educational service for the attendees of the institute through contracts with a Philippine call center.

The Seoul court said that any business should pay VAT when it pays for a service from foreign corporations that have no domestic offices or branches.

BCM, the plaintiff, has insisted that the educational service for students is subject to tax exemptions as provided in VAT rules.

But the court said the VAT exemption rule does not apply in this case, the as the Philippine business provided telephone English lectures to BCM under separate business contracts between the two. (Yonhap)