Double taxation - Making Dispute Resolution Mechanisms more effective

The Korean government has introduced an Arbitration clause in the ‘Law for the Coordination of International Tax Affairs’ (LCITA) to deal with tax disputes effectively and efficiently. The arbitration process will be implemented on the basis of tax treaties. Key points are as follows:

In cases where the competent authorities are unable to reach agreement after starting the mutual agreement procedures within the certain period stipulated in the tax treaty, the taxpayers can request to the tax authorities that the unresolved issues be solved through an arbitration process. The process will be made through arbitration panels chosen by both the competent authorities in accordance with the tax treaty. The details of the arbitration process, such as qualification of the arbitration request, timing of request, scope of tax issues to be covered, composition of arbitrators, decision-making procedures, binding issues of the arbitration decision, and so on, depend on the arbitration provisions of the tax treaty.

Taxpayers can submit their opinions freely by written or oral statement to the tax authorities during the arbitration process, with regard to the interpretation and application of the tax treaty, issues of income adjustments, selection of arbitrators, procedures of arbitration process, and so on. The introduction of the arbitration clause in the tax law (LCITA) is one of the efforts made by the Korean government to actively resolve double taxation issues promptly and fairly through the arbitration process.

Key Mutual Agreement Procedure Statistical Data 

1. MAP Inventory in number of cases (2016-2020 start basis)​

2. MAP Caseload (year 2019)

*Group A: Cases started after 1 January 2016 / Group B: Cases started before 1 January 2016

Kwang Tae Oh
kwangtae.oh@bdo.kr

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