외국법인의 고정사업장 귀속 이자에 대한 외국납부세액공제 문제

Abstract

The source country, the country where there is a Permanent Establishment (hereafter, “the PE country”) and the residence country can levy tax on the interest attributed to a PE of a foreign corporation in the PE country. The OECD Model Tax Convention on Income and on Capital (“the Tax Convention”) does not specify which country between the PE country and the residence country has the primary taxation authority on the income attributed to the PE arising in the third country or the residence country. According to the view that the Tax Convention Article 7(1) applied in this case, the PE country has the primary right of taxation and the residence country has a secondary right of taxation. While depending on the view that there is no allocation criteria for the taxation authority to make a determination between the contracting parties for this kind of income, both the PE country and the residence country can levy tax without any restriction. Whichever view is correct, it depends on the PE country’s domestic law and whether the PE country grants foreign tax credits (hereafter “FTCs”) under the Tax Convention Article 24 (Non-discrimination). The Enforcement Decree of Corporation Tax Act Article 132(3) provides that the income, arising outside of Korea, attributed to a PE is Korean sourced as business profits, and as such it seems not to be included in the foreign sourced income for FTC purposes. If Article 132(3) can be excluded from the application for the purpose of FTCs, a FTC can be used to offset the income, arising in the residence country. Since a FTC can not be given without reasonable grounds, the following factors such as the status (source country or residence country), the allocation of taxation rights in the tax treaty and whether the taxpayer’s facts and circumstances are consistent with a reasonable interpretation and application of the foreign tax law will be taken into consideration.