Overview

Many of the tax treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes to which Korea is a party do not contain any express provisions concerning the requirement of beneficial ownership to clarify how the tax treaty is to be applied with respect to payments made to intermediaries.

The official position of the Korean National Tax Service is that if the formal recipient of certain passive income such as royalties, interest or dividends is only acting in the capacity of an intermediary or pass-through entity, then Korea is not obligated to recognise such recipient’s eligibility for treaty benefits under the relevant tax treaty, regardless of whether or not the relevant the treaty expressly requires beneficial ownership status as a condition for enjoying the relevant benefits.

In this article, Korea's Lee & Ko takes a closer look. Click 'View Briefing' to read more.