Following the leading case (Dongbu HiTek case), Lee & Ko also successfully represented another client with respect to the corporate income tax based on the valuation gain from mergers. In this case, the Korean tax authority made assessment of corporate income tax by regarding goodwill acquired by the client through mergers and acquisitions as valuation gains from mergers.
In that respect, Lee & Ko effectively attested the client’s accounting policy and tax position before the Seoul Administrative Court based on its prior experience of representing on the same issue, and successfully obtained the cancellation of the entire tax assessment in the amount of KRW 2.6 billion at the Seoul Administrative Court.
This case drew a lot of attention from the industry, media, and academic community as it involves business interests of numerous companies relating to goodwill acquired through mergers and acquisitions. Following the triumph in the Supreme Court on the same issue, Lee & Ko confirmed its leading expertise on defending against the Korean tax authority’s argument that the acquisition of goodwill should be included as valuation gain from mergers.