In this case, Lee & Ko represented the Association for Redevelopment of the Third Resident District in Hwagok (the “Association”), successfully leading the Supreme Court to cancel the acquisition taxes imposed by the relevant municipality in their entirety.
The municipality claimed that acquisition of the infrastructures from the government by the Association in the process of the redevelopment of the residential district should be regarded as “acquisition for value” that would be subject to enormous acquisition tax under the Korean tax law. Against such aggressive tax position taken by the local government, Lee & Ko tax litigation team utilized thorough legal and factual analysis to negate and refute with the alleged rationale and to represent the client’s tax position in the best possible way.
This case has significant value that it set a precedent applicable to many redevelopment associations in Korea that have had to pay a large amount of acquisition taxes when exchanging maintenance infrastructure with the government, which is mandatory in the process of the redevelopment. Therefore, this case is expected to give more opportunities to Lee & Ko Tax Practice Group to help the clients in similar circumstances and eventually amend the common practice of the local governments with respect to imposition of acquisition tax on similar transactions.