By Kim Rahn
The Supreme Court has ruled that a dual resident of Korea and Saudi Arabia should pay income taxes here on his salary paid to him by his company in Saudi Arabia.
The taxation should be decided based on which country, Korea or Saudi Arabia, he stays in longer; where his main assets are; and where he spends most of his income, according to the top court.
The court upheld lower court rulings Friday that it was appropriate for a local tax office in Seoul to impose income taxes on the man, surnamed Kang, who runs a construction company in the Middle Eastern country.
“In Korea, Kang has a stronger personal network and financial interests than he does in Saudi Arabia. He is a resident of Korea and thus is subject to paying taxes here according to the Income Tax Law,” the court said.
Kang established the company in Saudi Arabia in 2003. He registered as a Korean resident abroad with the Korean embassy in Saudi Arabia, while he kept a residence in southern Seoul.
In 2012, the Seoul tax office levied taxes worth 2.3 billion won ($2 million) on his income between 2007 and 2010, saying he failed to report income worth 6.3 billion won during that period.
He then filed the suit, saying Saudi Arabia was where he had a personal network and financial interests, so it was improper to regard him as a resident of Korea and impose taxes on him on that basis.
But a district and a high court ruled against him saying the taxation was due. “Kang stayed in Korea for 188 days a year on average between 2007 and 2010. Kang and his wife’s main assets are in Korea. His company’s major clients are other Korean companies’ local units in Saudi Arabia, and major contracts with them were signed in Korea. Considering these factors, he has a stronger personal network and stronger financial interests in Korea than in Saudi Arabia,” the courts said.