Interpretation of rights and legislative revision services
It's impossible to clearly define everything in tax law. This is why authoritative interpretations and amendments of tax legislation are important.
Interpretation of rights and legislative revision services
Introduction to Interpretation of rights and legislative revision services
1. Overview of the Interpretation and Amendment Services and Seohyun’s Strengths
Tax laws need to be clear, but it is practically impossible to define all economic phenomena explicitly in the tax law. This necessity of authoritative interpretation of tax law is the reason.
Obtaining proper authoritative interpretations from the competent tax authorities (National Tax Service, Ministry of Economy and Finance) regarding tax regulations is essential for companies to reduce tax risks and clarify payable taxes. However, it is difficult for companies to accomplish this alone, necessitating appropriate expert assistance.
To obtain an authoritative interpretation that aligns with the legislative intent of tax regulations and best reflects the company's situation, one must possess the best tax theory and practical knowledge and be able to communicate effectively with the tax authorities.
Seohyun provides tailored strategies for each authoritative interpretation body, such as the Ministry of Economy and Finance and the National Tax Service, with top experts in various tax law fields and experienced former national tax administrators. We offer services including National Tax Service pre-inquiries, Ministry of Economy and Finance authoritative interpretation requests, and post-response correction claims or tax refund claims through tax litigation.
2. Process of Interpretation and Amendment Services
STEP 1.
Understanding Facts and Current Status
STEP 2.
Analysis of Existing Authoritative Interpretations and Precedents
STEP 3.
Review of Necessity for New Interpretations
STEP 6.
Execution of Interpretation and Amendment Tasks
STEP 5.
Selection of Effective Solutions
STEP 4.
Development of Reasonable Logic
Detailed Services of Interpretation of rights and legislative revision services
National Tax Service Pre-Response
The pre-response system provides an official answer from the National Tax Service when a taxpayer inquires about a specific issue that has occurred or is objectively certain to occur in the near future. The inquiry must be submitted by the statutory tax filing deadline for the relevant tax item. This pre-response has binding power over subordinate institutions.
Seohyun leverages extensive practical experience and knowledge to help clients minimize uncertainty regarding tax issues by obtaining clear answers from tax authorities in advance.
National Tax Service Authoritative Interpretation
When a taxpayer has questions about the interpretation of tax law, the National Tax Service provides a written answer. Although these interpretations are not binding, they are respected in practice as they reflect the views of the highest tax administration body. Initial answers come from the relevant tax department, but new interpretations, conflicts with Supreme Court precedents, or significantly unreasonable existing interpretations are referred to the Legal Interpretation Division of the Taxation Bureau.
Seohyun has effectively obtained authoritative interpretations across various tax items and has rich experience in assisting clients with refunds of excessively paid taxes through proactive authoritative interpretations.
Ministry of Economy and Finance Authoritative Interpretation
The Ministry of Economy and Finance, the highest department related to tax administration, provides answers regarding tax law interpretations. Taxpayers usually must go through the National Tax Service before inquiring with the Ministry. If the National Tax Service's interpretation is unclear or questionable, or if it is difficult to agree with, an authoritative interpretation process can be initiated with the Ministry (including the Commissioner of the National Tax Service's reply).
Seohyun is known for not just drafting inquiry letters but providing solutions by organizing clear interpretation logic from the taxpayer's perspective.
Legislative Amendment
Important matters in the tax law, such as tax obligations, are stipulated in the main law. When specific and detailed matters cannot be regulated in the main law, they are delegated to enforcement decrees and regulations based on their importance. If the laws are unreasonable in light of economic realities and business conditions, or if they harm tax equity, a legislative amendment can be pursued for the taxpayer's rights. This process requires a thorough understanding of the legislative process and sufficient time.
- Legislative Process
- Central administrative agencies consult with relevant bodies on drafting issues and announce the draft for public comment.
- The Ministry of Government Legislation reviews the draft for validity.
- The draft is deliberated in the Vice Ministers’ Meeting and Cabinet Meeting.
- Presidential approval and submission to the National Assembly.
- Deliberation and approval by the National Assembly.
- Presidential approval and announcement of the law.
- Enforcement decrees do not go through the National Assembly legislative process and are announced immediately after review by the Ministry of Government Legislation.
Seohyun has experience resolving unreasonable tax laws through legislative amendments when authoritative interpretations were challenging.
Major Performance
- Derived a Ministry of Economy and Finance authoritative interpretation that acquisition cost of stocks obtained through in-kind contributions should not apply surcharge evaluation under the Inheritance and Gift Tax Act.
- Obtained an authoritative interpretation from the Ministry of Economy and Finance clarifying that for unlisted stock valuation under the Inheritance and Gift Tax Act, the business commencement period of a newly established corporation through physical division is counted from the business commencement date of the pre-division business.
- Obtained a National Tax Service pre-response confirming that acquisition costs of distribution rights received through in-kind contributions can be included in deductible expenses using the amortization method of intangible fixed assets.
- Obtained a National Tax Service authoritative interpretation on the method of calculating tax credit limits for foreign tax credit carryover amounts inherited from a merged corporation.
- Derived a National Tax Service authoritative interpretation that corporate tax reduction under Article 63-2 of the Special Tax Treatment Control Act applies even when relocating a factory outside the metropolitan area by replacing or expanding existing facilities.
- Obtained an authoritative interpretation that periods without sales but with normal business activities without actual suspension are included in the business commencement period when determining the inclusion of merger/division valuation gains and corporate tax reduction eligibility.
- Obtained a National Tax Service authoritative interpretation confirming that income generated from the business segment of the absorbed corporation is considered subject to tax reduction when the headquarters relocates outside the metropolitan area after a merger of corporations that have operated in the metropolitan area for more than three years.
- Derived an authoritative interpretation that delay damages received additionally with land compensation under a court ruling are not classified as other income.
- Obtained an authoritative interpretation that for unlisted stock valuation, when the business year is changed from one year to three months, the business year is considered one business year for calculating per-share net profit.
- Derived a National Tax Service authoritative interpretation that if a company qualifies as a small business after being excluded from a large enterprise group, it is recognized as a small business from the business year that includes the notification date.
- Derived an authoritative interpretation confirming that employees in a newly added business sector after relocating headquarters to a local area are not included in the calculation of the tax reduction ratio based on the total number of employees in the corporation and those in the relocated.
