Google Korea finally wins tax dispute against S. Korean tax office

The Supreme Court has ruled against South Korea's tax authority in a case involving Google Korea, upholding a lower court's decision in favor of the tech giant. The dispute centered around a tax cancellation case where Google Korea was charged about 154 billion won (US$115.3 million) in corporate and local income taxes for the year 2020.

The tax authority argued that Google's transfer of a portion of its income to Google Asia Pacific, located in Singapore, was subject to taxation under the guise of royalty income derived from copyrights and knowhow. However, Google Korea contested this claim, asserting that the payments were actual business income for Google Asia Pacific, which should not be subject to South Korean taxation.

The Seoul Administrative Court initially sided with Google Korea, determining that the payments could not be easily categorized as royalty income, and the Seoul High Court subsequently confirmed this ruling. The tax office's appeal was dismissed without thorough review, leaving the original decision in place.