2. The costs of appeal shall be borne by each party.

The Defendant’s disposition of imposition of KRW 5,450,731,770 for the business year 2002 against the Plaintiff on October 14, 2005 and corporate tax of KRW 157,069,480 for the business year 2003 is revoked.

2. Purport of appeal

Of the judgment of the court of first instance, the part against the plaintiff shall be revoked. The defendant shall revoke the disposition of imposition of corporate tax of KRW 5,450,731,770 for the plaintiff on October 14, 2005, KRW 376,197,470 for 202.

The reasoning for the court's explanation on this case is as follows. Even if it is legitimate for the defendant to select the comparison transaction of this case, which is a domestic transaction, as a comparative transaction for calculating the arm's length price (ordinary interest rate) of bond-backed securities of this case, the reasons for the court's explanation are as stated in the reasoning of the court's judgment, except for adding "Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act, it is cited as it is in accordance with the main sentence of Article 420 of the Civil Procedure Act.

2. Parts to be dried;

(C) Whether the instant comparative transaction constitutes a justifiable comparative transaction

① Article 5(2) of the Enforcement Decree of the International Tax Adjustment Act delegates specific matters concerning the computation method of arm’s length price to the Presidential Decree. According to delegation, Article 5(1)1 of the former Enforcement Decree of the International Tax Adjustment Act provides that “The possibility of comparison is high between international trades between related parties and those between unrelated parties” as one of the criteria for computing arm’s length price. However, the above provision was amended by Presidential Decree No. 18628 on December 31, 2004 by Presidential Decree No. 18628 on December 31, 2004.” As the Enforcement Decree of the International Tax Adjustment Act was amended, the content was changed to “the high comparable possibility is between international trades between unrelated parties and those between unrelated parties.” The above amendment was applied from the taxable year beginning on January 1, 2005 (see Addenda 1 and 2).

The reason why such amendment is made is as follows: Article 5(1)1 of the former Enforcement Decree of the International Tax Adjustment Act limits the comparative transaction selected by a resident to calculate the arm's length price in international trade with a foreign specially related person; (b) it is difficult to secure data or has caused problems that require taxpayers to cooperate with tax payment; and (c) accordingly, Article 5(1)1 of the Enforcement Decree of the former Enforcement Decree of the International Tax Adjustment Act is amended as above; and (d) if the possibility of comparison is high, the scope of comparative transaction is extended so that the domestic transaction can be selected as the comparative transaction, thereby enhancing the rationalization of the computation of arm's length price and reducing taxpayers' tax cooperation costs (see, e.g., the amended Enforcement Decree of the International Tax Adjustment Act as amended by Presidential Decree No. 18628, Dec. 31, 2004).

② In calculating the normal interest rate on the bonds-backed securities of this case, the director of the Seoul Regional Tax Office shall select the comparable third party price method (in international trades between a resident and a special relationship, the method of deeming the transaction price between an independent business operator who is not a special relationship as the arm’s length price) under Article 5(1)1 of the International Tax and Trade Act, and as a result, the comparative transaction of this case issued by the 15 domestic special purpose companies to the unrelated parties was selected by means of public offering.

(3) If so, the defendant violated Article 5(2) of the former Enforcement Decree of the International Tax Act and Article 5(1)1 of the Enforcement Decree of the former Enforcement Decree of the International Tax Act by expanding the transaction subject to comparison to a domestic transaction, which is a "domestic transaction," although the comparable transaction was limited to an international transaction under the above provision at the time, prior to January 1, 2005, which was subject to Article 5(1)1 of the former Enforcement Decree of the International Tax Act (in light of the principle of strict interpretation of tax law, as alleged by the defendant, Article 2(10) of the International Tax Act does not limit the contents of the transaction to an international transaction in defining the "normal price" as alleged by the defendant, and even if considering the purport of the entire international tax law and the content of the entire international taxation standards, problems of inequality in taxation burden, etc., the domestic transaction cannot be interpreted as an "international transaction" under Article 5(1)1 of the former Enforcement Decree of the International Tax Act.

3. Conclusion

Therefore, the judgment of the court of first instance is just in its conclusion, and all appeals by the plaintiff and defendant are dismissed. It is so decided as per Disposition.