국제거래에 대한 원천징수세제의 개선방안

The withholding tax system requires the payor to withhold a certain amount of tax from income payable to the payee, and pay the tax withheld to the tax authority having jurisdiction over the payor. In other words, tax authorities delegate their withholding authority to payors (i.e., ordinary taxpayers) for administrative convenience. In cross-border transactions, this not only enables an early exercise of taxing rights over income recipients and their income, but also secures the taxing rights of the source country. While the withholding tax system is frequently used to assess and collect tax due to its administrative convenience, it has certain operational limits. First of all, the system relies on withholding agents to duly perform their withholding obligations, which imposes a burden on the withholding agents as the agents are required to identify the tax profile of the income recipients and income classification under the tax laws. However, unlike the tax authorities which have authority to request necessary information from income recipients, withholding agents may find it difficult to comply with such obligation. In particular, with the increase in the number of multi-tier offshore fund transactions and hybrid transactions, the burden on withholding agents to identify the income recipients and income classification in these transactions has increased. If a withholding agent fails to withhold the correct amount of tax by mistake or due to an administrative error, it would be unjust to require the agent to pay the shortfall amount of tax which may be significant. On the other hand, if a withholding agent takes a conservative approach and withholds the maximum amount of tax, this would greatly undermine the predictability and legal stability of cross-border transactions and interfere with capital and income flows. It is necessary to take this opportunity to identify the inherent flaws in the withholding tax system and find ways to improve the system. First of all, we need to clearly define terms that have controversial meanings in relation to the withholding obligation in offshore fund transactions and hybrid transactions, to set up a clear guideline. Furthermore, we should consider specifying the scope of information which could be collected by transaction partners, and provide withholding agents a right to request information for the purposes of fulfilling their withholding obligations. Also, it is necessary to lessen the responsibilities and alleviate the burden of proof of withholding agents who perform their withholding obligations in good faith. Alleviating withholding agents’ burden will help secure the predictability and legal stability of cross-border transactions, enhance the reliability of the tax administration of our country, and ultimately further the national interests.