법인세법상 내국법인 인정요건인 “실질적 관리장소” 판단기준 ‐ OECD 모델조약 제4조 제3항 주석서의 합리적 활용 ‐

To qualify as a domestic corporation under the Corporate Tax Act, one of therequisites is satisfying the standard of the “place of effective management” (hereinafterthe “Standard”) which is the notion adopted from the OECD Model Tax Convention. Such Standard has been introduced to deal with tax avoidance by corporations andthe adoption thereof reflects such legislative intent. The Standard determines whethera corporation should be deemed a “domestic corporation” by collectively contemplatingthe factual and surrounding circumstances that whether such circumstances confirmthat the “management and decision making of material issues of the corporation arewithin the borders of Korea.” Such Standard is identical to that of OECD ModelTax Convention (hereinafter the “Convention”) which was introduced to resolve theissues arising out of dual residency of a corporation. Furthermore, the guidelinesprovided in the Commentary of the Convention (hereinafter the “Guidelines”) havebeen recently utilized in the lower courts of Korea in determining whether a corporationis a domestic corporation. Therefore, it is reasonable to suggest that such Guidelinescan be a useful and reliable source of reference to develop the specifics and detailsof the Standard under the Corporate Tax Act. Provided, however, that the Guidelines were created for the purpose of resolvingthe issues related to dual residency of corporations under the treaty and thus thatthere are some aspects incompatible to determining whether a corporation is a domesticcorporation under the Corporate Tax Act. Thus, in order to develop the appropriate and concrete Standard, it is necessary to selectively incorporate the Guidelines intothe Standard considering the abovementioned legislative intent and objective, and thefunction thereof. Considering the abovementioned, the following may be suggested as factors indetermining whether a corporation satisfies the Standard and may be deemed as adomestic corporation:(1) Where the meetings of its board of directors or equivalent body are usuallyheld;(2) Where the chief executive officer and other senior executives usually carry ontheir activities;(3) Where the senior day-to-day management of the person is carried on;(4) Where its accounting records are kept;(5) Whether the corporation paid the corporation tax to the state where thecorporation is founded or the main office is located; and(6) Other reasons to suspect the tax avoidance. In addition to the abovementioned factors, the following should also be taken intoaccount:(1) The underlying notion of the Standard under the Corporate Tax Act is distinctivefrom that of the Convention that the Standard does not weigh the domesticfactors against the international factors. (2) The risk of double taxation would not be necessarily considered because theStandard bears the broader meaning of the “place of effective management” underthe Corporate Tax Act than the Convention. (3) When a corporation is not subject to taxation in any other country and itsclear intent of tax avoidance is provable, the Standard can be applied to suchcorporation without strict constraints as the burden of protecting taxpayer’sforeseeability would be lessened.