Article 26 of the Value-Added Tax Act

2. The costs of appeal are assessed against the defendant.

The Defendant’s imposition of value-added tax against the Plaintiff on December 6, 2005 of KRW 30,319,510 for the second term of 2002 and KRW 1,716,640 for the first term of 2003 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

Therefore, the judgment of the first instance court is just, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2006Guhap32603, October 26, 2007]

2. The costs of the lawsuit are assessed against the defendant.

A. From July 1, 200 to 200, 200 20 ○○○○○○○ 2,000 2,000 A. 2, and registered a business as a general taxable person on the 28th day of the same month. The Plaintiff reported the sales of the value-added tax for the second half year 200 3,00 3,000 , and then converted the Plaintiff’s taxation type into a simplified taxable person on July 1, 200 20 1,000 3,000 20,000 20,000 20,000 2,000,000 2,000 2,000,000,000 2,000 3,00,000 won, and the Defendant did not make a simplified taxable person for 20 years 20,000,000 won.

Facts without dispute, Gap 1,2, Eul 1-1, 2

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Article 26(7) of the Value-Added Tax Act shall apply only to cases where a simplified taxable person has reported the proceeds from supply for a calendar year to less than 48 million won, but thereafter a simplified taxable person returns the proceeds from supply exceeding 48 million won due to such reasons as the omission in filing a return thereafter, etc. In cases where a simplified taxable person files a return on the tax base of the proceeds from supply exceeding 48 million won, this provision shall not apply without conversion into a general taxable person even if the proceeds from supply are corrected. Therefore, even though the Plaintiff filed a return on the proceeds from supply for the first calendar year of 2001 as a simplified taxable person, even if the proceeds from supply are corrected, this provision shall not apply without conversion into a general taxable person. Therefore, even though the Plaintiff filed a return on the proceeds from supply for the second calendar year of 2002 and the amount of the tax imposed by applying the method of calculating the amount of the tax payable by a general taxable person with respect to the second calendar year of 203, without notifying the Plaintiff of a conversion of tax type.

(b) Related statutes;

Article 25 of the former Value-Added Tax Act (amended by Act No. 7007 of Dec. 30, 2003; hereinafter the same shall apply) shall be subject to a simplified taxation

(1) With respect to any individual entrepreneur (hereinafter referred to as a “simplified taxable person”) whose price for the supply of goods and services (referring to the price which includes the value-added tax; hereinafter referred to as “price for supply”) in the immediately preceding calendar year is not less than 48 million won and less than the amount prescribed by the Presidential Decree within the limit of not less than 130/100 of that amount, notwithstanding the provisions of Chapters IV through VI, value-added tax shall be imposed and collected pursuant to the provisions of this Chapter: Provided, That this shall not apply to any entrepreneur prescribed by the Presidential Decree in view of type, scale

(6) An individual entrepreneur whose proceeds from supply corrected or re- corrected pursuant to the provisions of Article 28 (1) exceed the amount provided for in paragraph (1) shall be deemed a simplified taxable person until the taxable period in which the date of correction or re-revision falls.

Article 26 (Tax Base and Tax Amount) Simplified taxable person shall be the tax base for the proceeds from supply.

(7) Notwithstanding the provisions of Article 25 (6), in case where the proceeds from supply in the calendar year of a simplified taxable person who has been corrected or re- corrected under the provisions of Article 28 (1) are in excess of the amount under the provisions of Article 25 (1), the tax amount to be paid in the taxable period as prescribed by the Presidential Decree shall be the amount that is computed by the provisions of Article 17 mutatis mutandis. In this case, the supply price shall be the amount that is computed by multiplying the proceeds from supply by 100/110, and in calculating the input tax amount

Article 74 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 18207 of Dec. 30, 2003; hereinafter the same shall apply) (the scope of simplified taxation)

(1) The term "amount prescribed by Presidential Decree" in the main sentence of Article 25 (1) of the Act means 48 million won.

○ Time of applying simplified taxation and general taxation under Article 74-2

(1) The period in which the provisions concerning a simplified taxable person apply or is not applicable under Article 25 of the Act shall be the first taxable period in the following year from the second taxable period in the year in which the proceeds from supply in one calendar year fall short of the amount prescribed in Article 74 (1) or comes to fall short of or exceed the amount prescribed in Article 74 (1): Provided, That in case where a business is newly commenced, the period

(2) In the case of paragraph (1), the head of the competent tax office of the enterpriser concerned shall notify the fact not later than 20 days prior to the commencement of the taxable period to which the provisions concerning a simplified taxable person are applied or not applied under Article 25 of the Act, and deliver a business registration certificate until the beginning of the taxable period after correcting the business registration certificate.

○ Calculation of the tax base and amount of tax for simplified taxable persons under Article 74-3

(8) The term “taxable period prescribed by the Presidential Decree” in the main sentence of Article 26 (7) of the Act means the second taxable period from the year following the year in which the rectification or re-revision taxable period falls to the first taxable period in the following year: Provided, That in case where the taxable period for the rectification or re-revision is the first taxable period of a person who starts a business anew, it means the taxable period beginning after the final return on

C. Determination

Article 25(6) of the former Value-Added Tax Act provides that an individual entrepreneur whose proceeds from supply corrected or re-revision under Article 28(1) are not less than the amount provided for in paragraph (1) (48 million won) shall be deemed a simplified customs duty until the taxable period including the date of rectification or re-revision. Article 26(7) of the former Value-Added Tax Act provides that where the proceeds from supply corrected or re- corrected under Article 28(1) of the Act are not less than the amount provided for in Article 25(1), the amount of payable tax for the taxable period prescribed by the Presidential Decree shall be calculated by applying Article 17 mutatis mutandis, notwithstanding Article 25(6) of the former Enforcement Decree of the Value-Added Tax Act. Article 74-3(8) of the former Enforcement Decree of the Value-Added Tax Act provides that a simplified taxable period shall be calculated for a more than 6 taxable period beginning with the second taxable period following the year in which the rectification or re-assessment taxable period belongs, and thus, the latter provision shall be deemed to be more than 4800 won after the final taxable period.

3. Conclusion

If so, the plaintiff's claim is reasonable and acceptable.

[Supreme Court Decision 2007Du23446, Oct. 31, 2008]

The costs of appeal are assessed against the defendant.