과소자본세제의 현황과 전망

Abstract

This paper reviews Korean thin capitalization rules in the context of

comparative and international law, and further analyzes the relation between thin

capitalization rules and tax treaties. The thesis of the paper is that the thin cap

rules do conflict the language and structure of typical tax treaties which adopted

the language of the OECD model treaty, although the OECD Model Commentary

does not admit the conflict. First, the arms length principle as it applied to the

thin cap situation would require the lender to demand more interest from the

debtor, and would reduce the taxable income of the debtor. The OECD argument

that an unrelated party would not lend money at all is inconsistent with the

arms length principle, which, for example, does not deny a related party license

and instead merely adjusts the royalty rate. Second, the thin cap rules are

inconsistent with the treaty obligation of non-discrimination between foreign and

domestic lenders, because the very essence of the rules consists of discriminatory

disallowance of interests paid to foreign lenders. The Commentary justifies the

rules again by reference to the arms length principle, which, however, does not

solve the problem as discussed above. Third, the rules are also inconsistent with

the obligation of non-discrimination of foreign-invested companies vis-a-vis

domestic-held companies. The Commentary argues that this obligation is trumped

by the aforementioned non-discrimination, but this argument is wrong in that the

two obligations have different coverages. The paper ends with the observation

that the thin cap rules were overtly and covertly overriding tax treaties for about

three decades, but are now being swept away by freedom of establishment under

EU law.