SEOUL, March 20 (Korea Bizwire) — The Supreme Court has ordered tax authorities to refund Samsung Electronics Co. 11.3 billion won (US$9.3 million) in undue corporate taxes from a former patent deal with U.S. software giant Microsoft Corp., court officials said Sunday.
Samsung filed the complaint against local tax officials, who purported that the South Korean tech company avoided paying corporate taxes for using Microsoft’s patents in its smartphones following a deal in July 2011. Two lower courts also ruled in favor of Samsung.
In compliance with the Korean tax rules and a treaty between Seoul and Washington, Samsung paid 15 percent of the annual patent fee to the South Korean tax authorities on behalf of Microsoft in corporate taxes. The fee was paid from the royalty that was due to Microsoft.
In 2016, tax authorities collected from Samsung 113 billion won in undue taxes after learning through a probe that the South Korean company paid some 69 billion won less in its patent royalty to Microsoft.
Samsung later objected to the tax collection, arguing that the use of Microsoft’s patents unregistered in South Korea should not be subject to domestic withholding taxation.