Lawsuit for Returning Unfair Gains Worth 250 Billion KRW Filed Against 8 Card Companies and 3 Telecom Firms

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Eight domestic card companies have filed a lawsuit worth 250 billion KRW against the three major telecommunications companies SK Telecom, KT, and LG Uplus.

According to the card industry on the 22nd, eight domestic card companies including Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, BC, Hana, and NH Nonghyup Card filed a lawsuit last July at the Seoul Central District Court against the three telecom companies demanding the return of unjust profits. In the case of Woori Card, since it was a member of BC Card until last year, BC Card took the lead in the lawsuit.

This dispute arose because value-added tax (VAT) was imposed on telecom bill discounts, which are partnership services between card companies and telecom companies. Telecom companies provide telecom bill discounts ranging from 10,000 to 20,000 KRW when consumers meet certain card usage requirements through partnerships with card companies.

The government issued an authoritative interpretation in 2022 stating that the telecom bill discounts provided by card companies are not subject to VAT. Accordingly, the three telecom companies filed amended tax returns and recovered about 250 billion KRW in VAT paid to the National Tax Service over approximately five years since 2016. An amended tax return is a request made to the National Tax Service by taxpayers to correct overpaid taxes.

The card companies argue that since they directly bear the cost of the discounts through partnerships with the three telecom companies, the VAT refunds recovered through the amended tax returns should also belong to the card companies. A card industry official stated, "The amount spent on telecom bill discounts is borne by the card companies," adding, "We will proceed with additional lawsuits in the future."

This content was produced with the assistance of AI translation services.