Kia Awarded $320 Million In Tax Refund

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Kia Awarded $320 Million In Tax Refund

The National Tax Service will return 420.8 billion won ($320 million) of tax to Kia Motors, which the tax service had imposed when Kia's creditors wrote off its debts. The refund will be the biggest in the tax service's history.

"The commissioner of the National Tax Tribunal judged that the tax service's levy was inappropriate after a review requested by Kia," an official of the company said Wednesday. "Kia is expected to receive 406.8 billion won plus 14 billion won in interest by next week. With the refund, Kia's debt ratio will decrease by 26 percentage points."

Before the auto manufacturer went under court receivership, seven years of account manipulation worth 4.57 trillion won was revealed, and the creditors reduced its debts by similar amount, 4.87 trillion won. The tax service concluded that the debt writeoff amounted to a profit to Kia and imposed the tax, including corporate tax and asset revaluation tax.

"Kia incurred losses between 1991 and 1997, but the management rigged the books to pretend the company was making money," said the Kia official. "Though the debts were written off on the basis of hidden losses, it is unfair to impose tax, because the company did not make a profit."

The tax tribunal decided to accept Kia's argument and asked the tax service to return the tax.

"It is true that what the company did was illegal, but it is also true that the company was losing money. The tax tribunal made the decision based on a principle of imposing tax on real income," the official said.

by Lee Young-lyoul

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