SEOUL, March 20 (Yonhap) — The Supreme Court has ordered tax authorities to reimburse Samsung Electronics Co. 11.3 billion won ($9.3 million) in undue corporate taxes, resulting from a former licensing agreement with US software giant Microsoft Corp, court officials said on Sunday.
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Samsung had filed a lawsuit against local tax authorities, who claimed that Samsung avoided paying corporate taxes by using Microsoft patents in its smartphones following a settlement reached in July 2011. Two lower courts have also ruled in favor of Samsung.
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In accordance with South Korean tax rules and a treaty between Seoul and Washington, Samsung paid 15% of the annual patent royalty to the South Korean tax authorities on Microsoft’s behalf as corporate tax. These fees were paid from the royalty that was owed to Microsoft.
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In 2016, tax authorities collected 113 billion won in undue taxes from Samsung after learning during an investigation that the South Korean company had paid some 69 billion won less in its royalties. patent to Microsoft.
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Samsung later objected to this tax collection, arguing that the use of Microsoft patents not registered in South Korea should not be subject to domestic withholding tax.
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