There was an issue regarding whether the lower 10% reduced tax rate under the Korea-Singapore Tax Treaty may be applied to dividend paid by the Plaintiffs to their intermediary Singaporean holding company.   Kim & Chang, as the Plaintiffs’ counsel, asserted that (i) in line with Supreme Court precedents, the intermediary Singaporean holding company’s status as the ‘beneficial owner’ of dividend should be respected given that it had legitimate business purposes and activities, regardless of whether it lacked personnel or physical facilities or the fact that dividends were transferred directly to the parent company (primary argument); and (ii) if the upper-level parent company is viewed as the ‘beneficial owner’ for tax purposes, then such upper-level parent, not the intermediary parent, should be viewed as ‘directly’ owning 25% of the Plaintiffs (supplementary argument).  The lower court, appellate court and the Supreme Court all recognized the Plaintiffs’ primary argument and accepted Plaintiffs’ petition. 

Consistent decisions rendered at various levels of court in this case are in line with the Supreme Court precedents, which hold that the status of beneficial owner of an intermediary parent company that is established for the legitimate purpose of holding the shares of its subsidiary and that has actually conducted business for such purpose shall not be denied regardless of the fact that it lacks personnel or physical facilitates or the fact that the dividend received was subsequently transferred to its upper-level parent.