해외투자 관련 조세제도 및 실무적 쟁점

Abstract

This study is related to the taxation systems which Korean companies should take into consideration at the time of overseas investment, major decisions to be encountered in the course of overseas investment, and the recent issues in question in working practices. The major taxation systems related to the overseas investment are tax treaty for the adjustment of double taxation and foreign tax credit system. In order to prevent tax avoidance, transfer pricing rules, thin capitalization rules and anti-treaty shopping rules are being operated. With respect to the major decisions to be made for overseas investment, the following matters should be decided Whether to do business as a branch or to establish a subsidiary; Whether to invest its own capital or provide loan; Whether to directly invest in the invested corporation or to indirectly invest in the invested corporation through a holding company; and How to recover the return on investment, i.e., through the distribution of dividend or through the transfer of shares. From the point of working practices regarding the overseas investment, the indirect investment through a holding company and the indirect transfer of shares are also frequently used in investing overseas. However, Indian and Chinese tax authorities intend to exercise the right of taxation on the indirect transfer of shares. In India, taxation on the indirect transfer of shares was postponed but the Chinese tax authorities have been exercising the right of taxation on the indirect transfer of shares since 2010. With regard to the working practices related to the taxation acts of Korea, although the indirect foreign tax credit system is being operated, if a Korean corporation indirectly invests through a holding company incorporated in a state or area which does not have the corporate tax law system, it cannot enjoy the benefit of the indirect foreign tax credit system. Furthermore, in case of even the tax paid in the state where the overseas sub-subsidiary is located, only 50% of the tax paid may be subject to the application of the indirect foreign tax Credit in Korea. Although the issue in calculating the normal price of the fees for overseas payment guarantee was improved to a certain degree due to the amendment to the Enforcement Decree of the Adjustment of International Taxes Act, it is necessary to watch more whether the conflicts with the tax payers will be practically reduced.