Foreigners to Pay Tax on Lawsuit Awards Exceeding their Losses

In the event that foreigners win a lawsuit and receive compensation above their actual losses, they will have to pay tax on the amount by which the compensation surpasses the loss.
Until now, there was no legal precedent to tax foreigners who received more compensation than their actual stated losses in lawsuits arising from the process of commercial trades.
But to impose a tax, the Ministry of Finance and Economy (MOFE) decided to revise the related law, and announced, on March 19, that it will implement the revised law at the end of this month.
According to the revised law, foreigners or foreign companies will have to pay a 25-percent tax on awards exceeding actual losses.
For example, if a foreign company suffered a loss of 100 million won due to a Korean company's contractual violation and is awarded 130 million won in compensation through a lawsuit, the foreign company will have to pay 30 million won in tax.
Hyeong Ki Kim: myriad@joongang.co.kr