Justice Ministry Pays 74.6 Billion KRW to Mason After Deducting 15.8 Billion KRW in Korean Taxes for ISDS Compensation
Korean Government Imposes Tax on Mason Private Equity Fund Compensation
The Ministry of Justice announced on July 29 that it had paid 7.46 billion KRW to Mason, deducting approximately 1.58 billion KRW in taxes, in relation to the compensation for the Mason international investment dispute (ISDS) arbitration award.
In April of last year, the arbitration tribunal for the ISDS case filed in 2018 by the U.S. private equity fund Mason (with a claim amount of about 200 million dollars) ruled in favor of Mason, ordering the government to pay damages equivalent to approximately 32 million dollars plus delayed interest. The government filed a lawsuit to annul the award, but the first trial was dismissed in March of this year, and as the government did not appeal, the liability for compensation was finalized for Korea.
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However, the Ministry of Justice explained that it had reached an agreement to pay Mason only the remaining amount after withholding tax on the compensation. The government, after consulting with experts, established principles regarding the taxation of ISDS compensation and, based on these, persistently negotiated with Mason on the 'principle of exercising taxation rights.' A government official stated, "We will continue to thoroughly review follow-up measures in accordance with domestic law to ensure that taxpayers' money is not wasted."
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