UAE oil firm loses tax lawsuit against S. Korean gov’t
SEOUL, Aug. 6 (Yonhap) — The top court ruled Thursday against an oil company of the United Arab Emirates, headed by a member of the Abu Dhabi royal family, saying that it must pay millions of dollars in stock trading tax to South Korea.
IPIC International B.V. (IPIC), a state-run petroleum investment company, led by Sheikh Mansour Bin Zayed Al Nahyan, the deputy prime minister of the UAE, lost a lawsuit it filed to cancel a corporation tax imposed on the company.
Hanocal Holding B.V. (Hanocal), a Dutch subsidiary of IPIC, also lost its case on canceling the denial of a tax refund claim.
According to the ruling, IPIC and Hanocal have to pay 60.3 billion won (US$51.3 million) and 183.8 billion won, respectively, to the South Korean government.
The legal dispute began as Hanocal bought more than 122 million shares in Hyundai Oilbank, worth some 612 billion won, accounting for 50 percent of Hyundai Oilbank, in 1996.
When Hanocal resold 49 million shares to IPIC, the company paid only 1.1 billion won to the South Korean government in stock exchange tax, citing an agreement between South Korea and the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion.
The National Tax Service, however, said actual capital gains went to IPIC, which is an Abu Dhabi state-run firm, and thus the agreement does not apply. Dissatisfied with the tax imposed, IPIC filed a lawsuit.
In 2010, Hanocal sold 490 million ordinary shares and 73.5 million preferred shares of Hyundai Oilbank to Hyundai Heavy Industries Co.
In the process, Hyundai Heavy paid 183.8 billion won, or 10 percent of the purchase price, to the tax administration. But Hanocal demanded a refund, citing the agreement.
When it was denied, Hanocal took the case to the court.
The Supreme Court said Hanocal serves as a superficial trade body to get the benefits of the agreement between South Korea and the Netherlands, when IPIC was the de facto trader.
IPIC and Hanocal lodged lawsuits for an investment-state dispute settlement, citing a violation of the Investment Protection Agreement in May when the appeals court ruled against them.
