2023년 국제조세 판례 및 심판결정례 회고

Three international tax rulings and judgments pronounced in 2023 that are considered valuable precedents are presented in this article. The first case concerns whether the carryforward deduction effect of foreign taxes paid by a taxpayer before the fiscal year 2013 can be applied to corporate local income tax under the independent tax system, which was in effect beginning from the fiscal year 2014. In cases when tax acts are amended unfavorably to taxpayers, the Supreme Court used and assessed the conditions that were applied in tax acts before amended under general transition rules to protect the taxpayer’s legitimacy. The second case involves the income classification of commissions paid by a domestic corporation to a foreign corporation that operates OTT services. The domestic corporation nonexclusively distributes such OTT subscriptions in Korea. Due to advancements in information technology, assets and intellectual property are frequently transmitted directly from foreign corporations (e.g., providers) to Korean users, which can cause continuous controversy. The third case discusses the reasonableness of using discounted cash flow methods to determine the arm’s length price of overseas unlisted shares. Given the difficulty in applying evaluation methods under Inheritance Tax and Gift Tax Act to overseas unlisted shares, discounted cash flow methods may be considered a viable approach for determining the arm’s length price of overseas unlisted shares. Thus, the reasonableness and detailed cases of using discounted cash flow methods will be discussed.