Seoul partially wins tax suit against Lone Star

SEOUL, May 27 (Yonhap) -- A South Korean appeals court partially ruled in favor of Seoul tax authorities Wednesday in a tax refund suit against U.S.-based buyout fund Lone Star Funds over the purchase of a local skyscraper.

The Seoul High Court, partially upholding an earlier lower court decision, said there is a legal basis for the Yeoksam Tax Office to levy nearly 60 billion won (US$ 58 million) in corporate tax on the fund.

In 2001, Lone Star purchased and sold the commercial high-rise in Seoul's posh Gangnam area, gaining nearly 245 billion won in profits.

Local tax authorities withheld 50 percent of the sale proceeds and levied 100 billion won in transfer income tax, against which Lone Star filed a suit. The Supreme Court, upholding two previous courts' decisions, ruled in 2012 that the tax agency's levying of the 100 billion transfer income tax is against local tax law and ordered the refund.

Challenging the ruling, the tax authorities then levied nearly 100 billion in corporate tax, which again prompted Lone Star to file a lawsuit to cancel the tax.

Lone Star claimed that it should be exempted from paying the tax because it was based in Belgium, with which South Korea has a double-taxation avoidance deal.

khj@yna.co.kr
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