DL E&C said it received a notice from Saudi tax authorities to pay an additional 853.3 billion won in corporate tax related to projects previously won in Saudi Arabia.
According to a disclosure posted on the Financial Supervisory Service's electronic filing system on the 23rd, DL E&C disclosed the move on the 22nd. DL E&C said the action concerns engineering, procurement and construction (EPC) services awarded by Saudi clients between 2006 and 2019.
DL E&C said it will proceed with an appeal, calling the assessment unjust.
DL E&C argued that even though design and procurement services for the project were performed in Korea, Saudi tax authorities unilaterally deemed the services to have been carried out through a local permanent establishment and decided to impose corporate tax on the income attributed to it.
DL E&C added that the authorities imposed tax including periods already beyond the statute of limitations under Saudi Income Tax Act, and did not present the tax basis such as the standard for calculating the amount and the calculation method.
DL E&C added that because the project's design and procurement services were performed in Korea, the taxable income was already reported and paid as corporate tax in Korea, so taxation in Saudi Arabia would amount to double taxation.
DL E&C said, "We plan to argue the illegality and unfairness of the assessment based on the Korea-Saudi taxes treaty and relevant laws," adding, "We will respond by considering all possible legal means, including local appeal procedures and the mutual agreement procedure (MAP) between countries."