- South Korea’s Supreme Court overturned lower-court rulings in the “loyalty points VAT” case, holding that VAT imposed under an Enforcement Decree for a period before any statutory delegation existed was unlawful.
- The Court reaffirmed that discounts reduce the VAT tax base; amounts paid with points that function as a price reduction cannot be treated as taxable consideration absent a clear statutory basis.
- It ruled that the 2017 Enforcement Decree amendment, which included partner-company point reimbursements in taxable supply value, conflicted with the VAT law because the statute did not yet provide for mileage points.
- The Court held that an Enforcement Decree cannot expand the VAT tax base beyond what the National Assembly authorized, and cannot override the law’s exclusion of discounts from supply value.
- The case was remanded after the Court found the decree provision invalid, emphasizing the principle of taxation by law.
Source: asiae.co.kr
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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