AMCHAM presses national tax agency for quicker policy talks

BY LEE JAE-LIM, Korea JoongAng Daily - The American Chamber of Commerce in Korea (AMCHAM) on Monday demanded that Korea’s tax agency expand incentives to foreign countries and expedite talks on the advance pricing agreement (APA) system to attract more foreign investments.

The APA is an agreement between the tax authorities and multinational companies to predetermine transfer pricing policies between corporate Korean headquarters and regional branches to prevent future tax disputes.

“I believe that it is the National Tax Service’s duty to speed up the negotiation process on APA system to curb unnecessary delays or conflicts,” said the National Tax Service (NTS) Commissioner Kim Chang-ki said at an event hosted by Amcham Korea at the Grand Hyatt Seoul in central Seoul. “The agency has expanded its workforce related to the matter, but please understand that it takes time for Korea and related countries to settle on the details.”

Kim promised that “nondiscriminatory” tax measures will be applied to Korean and foreign companies, recognizing the contribution of foreign firms to record-high foreign direct investment of $32.7 billion injected into Korea last year. The U.S. took up the highest proportion with 18.7 percent.

However, the commissioner requested foreign companies’ cooperation with the agency’s tax audits, which take place on a regular basis unlike in other countries like Japan or the U.S.

“The NTS is trying to enhance communications in investigations, but domestic procedures are different compared to Japan or the U.S.,” he said. “NTS has set a timeline of two to three months to investigate tax-related matters for all companies, whereas for other national tax authorities, there is no designated time period. Korean customs have set this timeline to lessen interference or meddling in corporations, which is why our personnel may demand the needed data from foreign companies to meet our deadline. I believe that this may have been interpreted by multinational companies as pressure from the Korean tax agency."

“I trust that this meeting will serve as a catalyst for deepening the collaborative ties between the NTS and foreign companies,” Kim added. “The NTS remains committed to ongoing dialogue with the foreign business community, including U.S. firms operating in Korea, and diligently incorporating their on-the-ground feedback into our tax policies.”

Source:https://koreajoongangdaily.joins.com/news/2024-03-11/business/industry/Amcham-presses-national-tax-agency-for-quicker-policy-talks/1999434

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