YOON&YANG

CS Wind Corporation had benefited for 5 years of corporate tax exemption by relocating the headquarters outside of the Seoul metropolitan area. However, the Korean tax authority imposed corporate tax from a part of the exempted portion with the basis that the income generated from a new type of business after the relocation was not subject to the corporate tax exemption.

 
Yoon & Yang represented CS Wind Corporation in tax appeal where the client seeks to invalidate the additional corporate tax imposed by the tax authority. During the tax appeal, Yoon & Yang argued that from the perspective of the legal principles, the income generated from a new type of business could not be rejected for the corporate tax exemption. Yoon & Yang also proved that considering the client’s overall business structure and factual background, the relevant income concerned should not be deemed as the income generated from a new type of business.
 
The Tax Tribunal accepted Yoon & Yang’s argument and as a result, invalidated the corporate tax previously imposed by the tax authority that amounted to KRW 19.5 billion (approximately USD 16.4 million), which had helped the client to retain the economic ties to stably manage its business operation.
 
This case is meaningful, which clarified that the principle of strict interpretation shall not be applied to a taxpayer unfavorably when interpreting the tax law. In addition, the case provided a clear standard for the application of the tax benefit including the tax exemption under the tax regulation, which significantly removed the taxpayer’s uncertainty.