Lone star objects to tax on KEB sale to HanaThe Korean financial watchdog said yesterday it will deal with a tax complaint filed by U.S. private equity fund Lone Star.
According to the Financial Services Commission, Lone Star sent a request May 22 for a discussion on tax being requested by the National Tax Service. The request was sent to the Korean Embassy in Belgium.
In the document, Lone Star claimed that the Korean tax office slapped a 391.5 billion won ($348 million) tax on the private equity fund arbitrarily and discriminately on its recouping of its investment in Korea Exchange Bank (KEB).
The FSC said it will respond to the request.
“The FSC has been handling the U.S. private equity fund’s investment according to local laws and international provisions transparently and indiscriminately,” the watchdog said in a release. “The authority will carefully review the complaint.”
Lone Star requested a tax refund from the Korean tax office, saying it had paid a 10 percent withholding tax on its sale of KEB to Hana Financial Group.
Lone Star was entangled in a separate legal row with the NTS over a 119.2 billion won corporate tax imposed on the block sale of a 13.6 percent stake in KEB in 2007.
The Dallas-based company pocketed more than 4 trillion won in profit from its investment in the Korean lender in 2003.
Lone Star’s attempts to sell the stake since 2006 were derailed by courts, regulators and lawmakers due to foreign ownership rules.
Legal wrangling delayed the 51-percent stake sale to Hana for more than a year after an agreement was reached.
By Song Su-hyun, Bloomberg [firstname.lastname@example.org]