[THE INVESTOR] US-based patent holding company NTP has requested Korea’s National Tax Service to return US$2.1 billion worth of corporate taxes it paid, according to industry and government sources on Sept. 26.

They noted that NTP has filed a lawsuit for the tax refund at the Seoul Administrative Court. The US firm is demanding the local tax office to return taxes it paid on royalties it collected from Korean companies for using its patents.

The move follows a lawsuit filed by another US company – Microsoft – which requested refund of billions of won taxes it paid to the Korean government. 




Microsoft issued a claim for rectification to the local tax office in August this year, demanding a refund of 634 billion won (US$ 573.64 million) of taxes it paid for profit it reaped from Samsung Electronics for using its patents.

A previous law revision states that even if the patents are not registered in Korea, related profit is taxable if they were created or sold in Korea.

Despite the revision, the local Supreme Court has sided with US companies on such issues following a ruling in 1992 based on clauses in the Korea-US tax treaty.

The court has ruled that for US firms not registered in Korea cannot be taxed for patents they hold.

US companies, however, hold key patents, such as those for manufacturing smartphones and computers, from which they reap profits. The Bank of Korea data recently showed that up to 80 percent of the patent costs Korean firms paid during 2011 and 2015 -- reaching around 23.5 trillion won -- were to US firms.

By Kim Ji-hyun (jemmie@heraldcorp.com)