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Court says $27 million in tax, penalties should be scuttled
April 11, 2007
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| Lone Star Funds, a Dallas-based buyout firm, won an appeal against the city of Seoul’s decision to charge it 25.2 billion won ($27 million) in taxes and penalties. The Seoul Metropolitan Government should scrap the imposition of the taxes, the Seoul Administration Court ruled on April 6, according to a statement on the court Web site. The Seoul government can make a counter appeal to a higher court within 14 days. Choi Chang-jay, head of the government’s Tax Collection Division, said yesterday the government will decide its position later. Lone Star is involved in a number of legal disputes with the Korean government related to the purchase of property in Seoul in 2001. The U.S. buyout fund is also in a dispute with Korean prosecutors over the purchase of a controlling stake in Korea Exchange Bank in 2003. The Seoul government issued an invoice in June last year to Lone Star for 25.2 billion won for property registration and 194 million won in equity-related taxes involved in the purchase of a 45-story building in 2001. Lone Star made appeals in August. The equity-related tax case is still pending. Under Seoul’s tax laws, companies incorporated for more than five years pay lower registration taxes on properties they acquire in the city, Lone Star said. The office complex was purchased by Lone Star’s Star Tower Corp. subsidiary, which had been incorporated for more than five years when the transaction was made, Lone Star said earlier. Lone Star said the acquisition complied with local tax laws and it paid all necessary taxes related to the purchase of the Star Tower office building. Seoul city officials audited the transaction in 2003 and decided additional taxes weren’t due. The Seoul government can ask for additional taxes on the registration of a building within five years of the transaction if it finds irregularities, Shin Si-sup, then-head of the government’s Tax Collection Division, said in June. The city contends Star Tower was inactive before the transaction and should pay the higher taxes typically imposed on a newer company, Lone Star said. |
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