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South Korean mobile carrier LG Uplus will face hefty fines issued by the nation’s tax authority for not paying value-added tax for some of its smartphone sales, according to the firm Friday.
The National Tax Service recently imposed a fine of 3.1 billion won ($2.7 million) on the firm for not paying value-added tax in the process of selling smartphones to US forces in Korea over five years since 2013.
The 3.1 billion won fine is only for the year 2013, and the penalty is expected to be more than 10 billion won when the five-year period is considered.
LG Uplus has appealed against the ruling and requested the Board of Audit and Inspection of Korea to look into the matter.
The telecom company said it had not paid the value-added tax because it had considered US forces “nonresidents” and therefore sold the phones to them at a zero-tax rate.
“Because we did not receive value-added tax from the phone sales, there was nothing to pay with regard to the value-added tax,” said an official from LG Uplus.
By Shin Ji-hye (shinjh@heraldcorp.com)
