DL E&C shares fell sharply after the company received a tax notice from Saudi authorities for approximately 8.5 trillion won ($6.4 billion).
As of 9:57 a.m. on June 23, the Korea Exchange reported that DL E&C's stock was trading at 63,200 won, down 10,800 won (14.59%) from the previous trading day.
The company announced on June 22 that it had received a tax notice from the Saudi tax authority (ZATCA) for a total of 8.533 trillion won. This amount represents 16.27% of the company's equity, which is 52.441 trillion won.
The Saudi tax authority claims that DL E&C is liable for corporate taxes on design and procurement services conducted domestically for local EPC (engineering, procurement, and construction) projects between 2006 and 2019, asserting that these services were effectively carried out through a fixed establishment in Saudi Arabia.
However, the company stated that the likelihood of this tax assessment resulting in actual payment is limited. They argue that the assessment includes tax years from 2006 to 2015, which are beyond the maximum assessment period of 10 years under Saudi income tax law, and that the basis for taxation and the method of calculating the tax amount have not been provided.
DL E&C also noted that it has already reported and paid corporate taxes on the income in South Korea, asserting that the Saudi taxation constitutes double taxation in violation of the Korea-Saudi tax treaty.
The company plans to pursue legal remedies, including local appeals and mutual agreement procedures (MAP) between countries. DL E&C stated, "We will actively demonstrate the illegality and unfairness of the tax assessment based on the Korea-Saudi tax treaty and relevant laws."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.