Court dismisses SC’s appeal on W44 bil. tax

The Korea Times

The Korea Times

Business

Tue, October 3, 2023 | 03:28

Companies

Court dismisses SC’s appeal on W44 bil. tax

Posted : 2010-08-26 17:00

Updated : 2010-08-26 17:00

By Kim Jae-won

An appeal by Standard Chartered NEA (SC NEA), the Northeast Asian subsidiary of the U.K-based banking giant Wednesday against the tax office of the Jongno-gu district in Seoul over corporate tax was dismissed.

SC NEA sued the Jongno tax office in 2008, asking for the return of 44 billion won it had paid in corporate tax.
“We decided to dismiss an appeal by SC NEA Limited against Jongno Tax Office over the corporate tax refund,” said Judge Kim Jin-sung of the Seoul High Court in Seocho-dong, southern Seoul.

Kim & Chang, SC NEA’s legal representative, said he had no comment at the moment.

“I cannot comment on the ruling because I don’t have the full text of the ruling statement. It will come to us in a week,” said Kim & Chang lawyer Kim Soo-hyung, who led the team of five lawyers for SC NEA. Kim served as former senior judge at the appeal court from 2004 to 2008.

“You’d do better ask the judge why he made a ruling like that,” Kim told The Korea Times over the phone.

The Korea Government Legal Service (KGLS), the government legal agency which advocated for the Jongno office, welcomed the ruling, saying it set a good precedent.

“I think the ruling can be a good warning for foreign investors, who try to evade tax through paper companies established in tax havens,” said Sohn Ho-chul, a lawyer from the KGLS.

SC NEA serves as the holding firm of Standard Chartered Korea, which has a 100 percent stake of Standard Chartered First Bank.

According to the National Tax Service (NTS), which controls the Jongno office, New Bridge Capital, the U.S. private equity firm, bought Korea First Bank, the predecessor to SC First, during the currency crisis that hit Korea in 1998. New Bridge bought Korea First Bank through a paper firm set up in a tax haven in Labuan, Malaysia.

Tax officials argued that the investors in the paper firm, named KFB New Bridge Holdings, were from eight countries that don’t have a treaty for taxation avoidance, enabling the NTS to tax their “capital gains.” Thus, the NTS claims that they are subject to taxation and SC NEA was required to pay the taxes in lieu of these stakeholders.

shosta@koreatimes.co.kr