Tech Giant Slapped By Korea's Tax Agency

The National Tax Service (NTS) has imposed a US$ 275.74 million fine on Oracle Korea for alleged tax evasion involving tax haven during the period of seven years. The NTS concluded the judgement after conducting a tax audit of the company for four months from July 2014.

Software License Fees Booked in Ireland

Before 2008, Oracle Korea transferred most of gains it earned in South Korea to the headquarters in the U.S. in the name of software license fees. As of 2008, Oracle Korea started sending the fees to Oracle's unit in Ireland, using similar tax scheme as Google and Apple.  In this way, the company saved US$275.74 million of taxes since 2008.

An official from the tax authority said, “We cannot confirm whether to conduct a tax audit of individual company. It is true that many countries, mainly advanced countries, are tightening regulations on tax avoidance by multinational companies and we are also thoroughly monitoring taxes paid by global companies.”

An official from Oracle Korea said, “It is not a tax evasion. There is an ambiguity of the interpretation of tax laws so we will verify it through the lawsuit.”

Number of Tax Cases Growing

Last year, Oracle Korea filed a complaint against tax agency's earlier decision regarding agency's claim of unspecified amount in taxes. As the tribunal rejected Oracle Korea's complaint in November, the company filed a suit with the Seoul Administrative Court February this year. A lawyer specializing in taxation from a large law firm said, “The number of foreign companies’ income transfer and tax dodging cases caught by the NTS is growing in recent years.”

Sources: Business Korea, Korea Joongang Daily, Korea IT Times

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