Transaction tax

National Tax Service launches tax probe into Intel Korea

Korea’s National Tax Service (NTS) has launched a full-scale tax investigation into Intel Korea.

Korea’s National Tax Service (NTS) has reportedly launched a full-scale tax investigation into Intel Korea.

The NTS announced on February 22 that it had launched an intensive tax investigation into a multinational company after detecting allegations of tax evasion. The announcement coincided with the tax authority’s launch of a tax probe into Intel Korea.

The NTS reportedly dispatched officials from the Seoul Regional Taxation Bureau’s International Transaction Investigation Bureau to Intel Korea in late February.

The tax authority said at the time that it was investigating multinational companies engaged in booming businesses, including semiconductors, logistics and equipment, which were suspected of tax evasion by disguising their offices into bogus liaison offices or concealing their permanent establishments in Korea.

Intel Korea generates sales in Korea, but pays its corporate taxes in the United States. If a foreign company does not have a permanent establishment in Korea or only provides simple business support services here, it has no obligation to declare its corporate tax in Korea. However, the National Tax Service believes that Intel Korea operates virtually as a “permanent establishment”, performing customer management, sales, after-sales services and risk management in accordance with instructions from its US headquarters.