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Transfer Pricing | Accounting | Tax | Business Advisory

National Tax Service of Korea has addressed 430 tax dispute cases

The National Tax Service (Commissioner Kim Changki) introduced the Mutual Agreement Procedure Division (MAP division) in March 2018. The division has addressed a total of 430 cases regardingdouble taxation issues through Advance Pricing Arrangement (APA) and Mutual AgreementProcedure (MAP) with foreign tax authorities under double taxation avoidance agreements by October this year.

Under MAP scheme, two States tax authorities discuss and resolve the taxpayers double taxationburden caused by overlapping tax jurisdictions ex post facto. Since MAP divisions creation, it has resolved a total of 190 double taxation cases or an annual average of 39.3 cases by October this year, up by 94.6% from 20.2 cases in the previous five years (2013 ~ 2017). In addition, the National Tax Service (“NTS”) has run a fullfledged Advance Pricing Arrangement scheme for companies engaged in international transactions (Korean businesses operating overseas and foreign companies doing business in Korea) to do business without concerns about transfer pricing tax audit. Since 2018, thanks to the consultation in advance between tax authorities on 240 cases, companies making international transactions subject to APA have enjoyed, on average, transfer pricing tax audit suspension for six years and four months in both countries. While tax appeals in certain countries would cost a significant amount of time and effort for companies doing overseas businesses, MAP and APA are far more convenient as well as costeffective for taxpayers in responding to double taxation issues. The NTS will remain fully committed to addressing taxpayers’ concerns over double taxation by promoting MAP and APA.

For further Information see at Korean MAP & APA.

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