South Korea's Supreme Court orders tax authorities to return 11.3 billion won in corporate tax to Samsung

South Korean court officials said on Sunday that the South Korean Supreme Court has ordered the tax department to refund 11.3 billion won (about 59.325 million won) in the former patent transaction between Samsung Electronics Co. and US software giant Microsoft Corp. RMB) improper corporate tax.

It is reported that Samsung Electronics signed an agreement with Microsoft on the use of patents in July 2011, and from 2012 to 2015, while paying the patent royalties, it withheld from the tax department in the form of withholding according to the "Korea-US Tax Agreement". A corporate tax equivalent to a maximum of 15% of the royalties is paid.

In compliance with South Korea's tax rules and the treaty between Seoul and Washington, Samsung paid the South Korean tax authority 15% of the annual patent fee on behalf of Microsoft as a corporate tax. This fee is paid out of royalties due to Microsoft.

In the process of investigating the corporate tax in 2016, the tax department believed that Samsung Electronics deliberately reduced part of the patent fee in 2013. That is to say, after offsetting the 69 billion won received from Microsoft in the patent fee, Samsung Electronics only pays the corporate tax on the remaining part. Therefore, in 2017, the tax department paid 11.3 billion won of corporate tax to Samsung Electronics.

Samsung later disputed the levy, arguing that domestic withholding taxes should not be levied on the use of Microsoft's unregistered patents in South Korea.

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