Seoul court clears heavy tax for Lone Star's skyscraper purchase

SEOUL, Aug. 2 (Yonhap) -- A South Korean high court on Sunday delivered a final
ruling ordering the Seoul metropolitan government to withdraw large tax levy on
U.S. private equity firm Lone Star Funds for the purchase of a skyscraper in
2001.
The ruling, upholding an earlier lower court decision, said there is no legal
basis for Seoul to levy 25.3 billion won (US$20.6 million) in registration tax,
or three times the normal level.
The court said the Dallas-based fund's 100 percent acquisition of the defunct
firm that owned the Star Tower building in southern Seoul -- changing its name
and the focus of the business -- did not consitute the establishment of a new
corporate entity.
The city had originally claimed that Lone Star's purchase of the building and the
company that occupied it was aimed at launching a new firm.
Current law requires a newly founded company to pay three times the normal
registration tax on the acquisition of real estate during its first five years.
The final decision wrapped up a three-year court battle between Lone Star and the
city of Seoul. The U.S. fund filed the suit in May 2006.
pbr@yna.co.kr
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