“No Need to Pay 154 Billion Won in Corporate Taxes”: Google Korea Wins Final Ruling

[Financial News] Google Korea has won a final ruling in its lawsuit against the tax authorities, seeking to overturn the assessment of around 154 billion won in corporate taxes.
Legal sources said on the 12th that the Supreme Court’s Second Division, with Justice Oh Kyung-mi presiding, on the 8th upheld a lower court ruling in favor of Google Korea in its lawsuit against the head of the Yeoksam Tax Office seeking to overturn the collection of corporate taxes and other levies. The court dismissed the appeal without further review.
Dismissal without further review is a procedure under which, in appeals to the Supreme Court in civil, administrative and family cases—excluding criminal cases—the court dismisses an appeal without examining the merits if the lower court ruling contains no legally specified grounds for appeal, such as an error in the interpretation of the law.
The tax authorities took issue with Google Korea transferring some of the income it earned from domestic advertising sales and other business to Google Asia Pacific. Incorporated in Singapore, Google Asia Pacific serves as the headquarters for the Asia-Pacific region.
The tax authorities determined that the income constituted royalty income taxable in Korea and, in 2020, issued an order for the collection of around 154 billion won in corporate and local income taxes from Google Korea.
Google Korea countered that the income was business income belonging to Google Asia Pacific and therefore was not taxable in Korea, and filed an administrative lawsuit.
The court of first instance ruled in Google Korea’s favor, finding it difficult to regard the payments as consideration for information relating to knowledge and experience, or for know-how.
The appellate court upheld the same conclusion. However, it dismissed Google Korea’s claim against the Gangnam District Office seeking to overturn the local tax collection order. It found that, because local taxes are linked to corporate taxes, there was no need for a separate lawsuit to overturn the local tax order after the corporate tax assessment had been canceled.
The Yeoksam Tax Office challenged the ruling, but the Supreme Court dismissed the appeal without further review, making Google Korea’s victory final.   


[email protected] Kim Dong-gyu Reporter