SOUTH KOREA Law and Practice Contributed by: Steve M Kim, Philje Cho, Gijin Hong and Kyu Bin Kang, Lee & Ko
the exercise of its rights during a tax audit, the NTS should provide the information in a timely manner. This means that the taxpayer has the right to review and dispute any evidence gathered by the NTS in support of its tax assessment. For this reason, it is difficult for the NTS to assess taxes through information that is not made available to taxpayers. Secret Comparables in Limited Circumstances In a bid to reduce the number of taxpayers that are non-compliant with BEPS Action 13, the MOEF changed the existing regulations to allow the NTS to determine arm’s length prices and make assessments based on non-public comparable data in cases where the local file, master file or CbC report is incomplete or absent.
In the past, taxpayers have challenged the NTS’s use of secret comparable data because of the asymme - try of information and the unavailability of the data to the public. However, as the LCITA now allows the tax authorities to use secret comparable data to assess non-compliant taxpayers, the NTS can legitimately and more aggressively assess taxpayers’ TP when there is non-compliance.
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