SOUTH KOREA Law and Practice Contributed by: Steve M Kim, Philje Cho, Gijin Hong and Kyu Bin Kang, Lee & Ko
16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes Every year, the NTS publishes an APA Annual Report, which details the APA processing pro - cedures and various statistics, and provides a description and history of the APA. The latest one available is the 2023 version published in November 2024. 16.2 Use of “Secret Comparables” Taxation With Asymmetry of Information An NTS internal administrative order states that, when a taxpayer requests information neces - sary for 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 assess - ment. 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 recently changed the existing regula - tions 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 asymmetry 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 tax - payers’ TP when there is non-compliance.
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