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One of the most difficult issues for multinational companies in international trade is how to adjust the TP of national taxes and tariffs.
The Korea National Tax Service wants to raise the amount of income by lowering the import price of goods, and on the contrary, the Korea Customs Service wants to raise the customs value by raising the import price. This is because both government agencies must collect more taxes.
Even if tariffs are not imposed due to the signing of the FTA, VAT is taxed based on import prices, so the import price evaluation issue is still a headache for taxpayers.
The Korean government revised the Law for the Coordination of International Tax Affairs on December 22, 2020. According the revised rule, multinational taxpayers can ask the determination of the import price through consultation between the head of the National Tax Service and the head of the Korea Customs Service by filing the unilateral APA with the National Tax Service. Therefore, many foreign companies in Korea will be able to use the system in the future.
In order for taxpayers for present a solution that can be satisfied at the same time by both the National Tax Service and the Korea Customs Service, it is absolutely necessary to obtain the help of competent experts who can accurately understand both the national tax TP and the tariff TP. This is because the competent expert can persuade the head of the National Tax Service and the head of the Korea Customs Service to agree on the transfer price issue of national taxes and tariffs.
Foreign companies that are concerned about such problems can receive the accumulated KNOW-HOWs from BEPS International (BEPS division of Law Firm Yang Jae) to solve problems.
Dr. Han, Sung-Soo
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