Incheon City to Recover 17.4 Billion KRW in Corporate Tax Paid During Asian Games

AG Committee Wins Supreme Court Case Against Nam Incheon Tax Office

Incheon City Hall

[Asia Economy Reporter Park Hyesook] Incheon City has recovered 17.4 billion KRW in taxes paid after the 2014 Incheon Asian Games following a lawsuit lasting 3 years and 7 months.

According to Incheon City on the 13th, the Supreme Court Special Division 3 (Presiding Justice Noh Jeonghee) confirmed on the 10th the appellate court's ruling in favor of the plaintiff in the appeal trial of the 'corporate tax and other imposition cancellation lawsuit' filed by the 2014 Incheon Asian Games Organizing Committee (AG Organizing Committee) against the Nam Incheon Tax Office.

Accordingly, the city will receive back the 17.4 billion KRW in corporate tax, value-added tax, and additional charges previously paid to the Nam Incheon Tax Office.

The tax dispute began in 2015, after the conclusion of the Incheon Asian Games.

The Board of Audit and Inspection conducted an audit immediately after the Asian Games ended and ordered the tax authorities to collect corporate tax and other taxes, considering the 59.1 billion KRW marketing revenue distributed by the Organizing Committee to the Olympic Council of Asia (OCA) as taxable income.

The Nam Incheon Tax Office also imposed 17.4 billion KRW in corporate tax and other taxes on the Organizing Committee, viewing the marketing revenue as 'royalties' subject to taxation under the Korea-Kuwait tax treaty.

However, Incheon City argued that the payments made to the OCA were not royalties but 'business distributions,' which under the same tax treaty cannot be taxed domestically. After going through administrative appeals, the city filed a lawsuit in 2017 to cancel the corporate tax imposition, winning in the first and second trials as well as the appeal.

Kim Yonghui, the attorney representing the AG Organizing Committee (Law Office Yulhui), stated, "The Supreme Court's final ruling reaffirms the fundamental principle of taxation, the 'principle of legality in tax law.'"