2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

(3) Disposition of imposition of the value-added tax of KRW 4,47,196,50 (including the additional tax), KRW 208, KRW 208, KRW 207, KRW 208, KRW 208, KRW 205 (including the additional tax); KRW 167,698, KRW 460 (including the additional tax); KRW 2,307, KRW 75,710 (including the additional tax); KRW 5,79, KRW 207, KRW 208, KRW 206, KRW 257, KRW 208, KRW 205, KRW 205, KRW 206, KRW 257, KRW 205, KRW 206, KRW 257, KRW 205, KRW 205, KRW 206, KRW 257, KRW 209, KRW 205, KRW 205, or 36,57, or 29.

A. The Plaintiff is a company established pursuant to the Special Act on the Assistance to the Development of Abandoned Mine Areas (hereinafter “Abandoned Mine Area Act”), which runs the casino business, retail business, food and accommodation business, which is a duty-free business, and completed business registration for the said 1 business and 2 business places, respectively.

B. The Defendant: (a) imposed value-added tax on the following grounds that: (b) the Convention hotel completed in 2011 is used for both tax-free business and taxable business; (c) input tax amount of KRW 10,510,149,315 (excluding land and parking lot-related input tax; hereinafter referred to as “market purchase tax amount”) related to the extension of the Convention hotel shall be divided into the tax-free business and the tax-free business amount based on the supply price of the taxable business; (d) the input tax amount corresponding to the tax-free business portion shall not be unlawfully deducted from the output tax amount; and (e) the Defendant illegally deducted the input tax amount corresponding to the tax-free business portion from the output tax amount; and (e) the Defendant imposed value-added tax on the following grounds that:

C. On May 7, 2015, the Defendant: (a) on July 17, 2008, the Plaintiff acquired non-interest-free and conditional convertible bonds issued by the BB Tourism Development Corporation (hereinafter “instant convertible bonds”); (b) deemed that the acquisition of the instant convertible bonds constitutes subject to the avoidance of wrongful calculation under Article 52 of the Corporate Tax Act; and (c) imposed corporate tax for the business year from 2009 to 2012, including inclusion of the recognized interest in the calculation of earnings (hereinafter “instant imposition disposition of initial corporate tax”).

D. On August 8, 2015, the Plaintiff dissatisfied with each of the above dispositions and filed an appeal with the Tax Tribunal on August 8, 2015, and taxes.

On June 4, 2017, the Tribunal dismissed each of the instant dispositions on imposition of value-added tax, and rendered a decision to rectify the initial disposition on imposition of corporate tax, excluding the part related to the instant convertible bonds among the initial dispositions on imposition of corporate tax by the Plaintiff.

E. The defendant notified the original disposition of corporate tax in accordance with the above decision of the Tax Tribunal (which is so notified).

(n) The imposition of the corporate tax of this case(hereinafter referred to as the "disposition") and its details are as follows:

Facts without dispute over the basis of recognition, Gap evidence 1, Gap evidence 7 through 10

Each entry, including branch numbers, hereinafter the same shall apply) and the purport of the whole pleading

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) ① Casino business and tourist accommodation business are separate and independent businesses, and the Plaintiff newly constructed a convention hotel (hereinafter “instant hotel”) to enter the new business, separate from the casino business. ② The instant hotel cannot be deemed as a facility used for casino business because it is independent of the existing casino building and the AAAA hotel, ③ there is no facility provided for the casino business within the instant hotel, ④ there is only a facility provided for the hotel and convention function, ④ the customer group of the instant hotel is separated from the customer group of the instant hotel, which is separate from the duty-free casino business sector. Accordingly, the key purchase tax amount is irrelevant to the casino business, so it does not constitute a pro rata distribution of common purchase tax (negative).

2) ① The acceptance of the instant convertible bonds was conducted in terms of mutual cooperation among the public agencies established to achieve the common public interest purpose of “economic revitalization in abandoned mine areas”, and it is evident that the Plaintiff and BB Tourism Development Corporation were involved in the transaction that occurred even without any special relationship. ② The economic benefits that the Plaintiff acquired by converting the convertible bonds into the stocks are approximately KRW 1,204,00,000 per annum, and when converting them into annual interest rate, amounting to 2.01% per annum, and ③ the acceptance of the instant convertible bonds is adequate in light of the Plaintiff’s purpose of establishment, social norms and commercial practice, etc., the Plaintiff’s act of acquiring the instant convertible bonds is not subject to the avoidance of wrongful calculation under the Corporate Tax Act (the second assertion).

3) Where a casino customer purchases goods using ii points accumulated and paid in proportion to the amount of casino sales at a non-casino business place, the value reduced by ii points shall be considered as a discount under the Value-Added Tax Act (the third argument).

4) Even if each of the dispositions of this case is lawful, in light of the following: (a) all of the issues of the dispositions of this case are conflicting opinions in interpretation of tax-related Acts; (b) the Plaintiff received advice from tax agent, who is a tax-related expert, on the amount of value-added tax and the amount of corporate tax paid; and (c) the Plaintiff’s return and payment amount was not unfair according to legal advice received by the Plaintiff before and after each disposition of this case; and (d) the Defendant did not raise any objection against the Plaintiff’s return and payment prior to the tax investigation of the secondary regional tax office; and (e) there is a justifiable reason for the Plaintiff to refuse to timely return

B. Relevant statutes

It is as shown in the attached Form.

C. Determination as to the first argument (related to the deduction of input tax amount of the hotel of this case)

1) Facts of recognition

A) The Plaintiff was established in accordance with the Abandoned Mine Area Act of 1998 and around 2000 cD e-Eup

Around 203, 424-1, a person opened a e-ri 424 e-mail, and newly built a casino and AAAA hotel and relocated the previous casino facilities. In addition, on July 22, 2011, the Plaintiff completed the instant hotel (the total floor area of 46,498.98 square meters, a total of 23 square meters) and obtained permission for extension of the casino business around June 2013.

B) The location of the existing casino, AAA hotel, the hotel and the extended casino, and the entire drawings of the workplace operated by the Plaintiff are as follows.

(C) AAAA hotel 4 and a casino building connected to a AAA hotel are casino sites, and the AAAA hotel (3 to 5 floors) and the instant hotel are linked to the passage.

D) The existing AAAA hotel provides that the allocation of guest rooms of the instant hotel is the same as that of the instant hotel, and the division between 'VIP customers' and 'general customers' from 'Ⅰ.' In the above VIP customers' items, ii points (hereinafter 'II points') shall be confirmed if a customer wishes to have guest rooms in the game, and the Room Key shall be delivered directly to the customer. In addition, some of the guest rooms shall be secured for the casino customers (PO Room Blocks), and the settlement of accommodation points shall be different based on the above ii points for the casino use.

(e) In the terms and conditions of the IIL Card Agreement, the main contents relating to the above ii points are as follows, and ii points may be used by the workplace operated by the Plaintiff and other affiliated member stores, in addition to casino establishments.

(f) The current status of the sales from 2009 to 2012 of the instant hotel and AAAA hotel’s business year and the sales by ii points are as follows:

G) The details of sales, profits, and losses by the Plaintiff’s business division (casino business and tourist business) are as follows.

2) Relevant legal principles

According to Article 17(7) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) and the main sentence of Article 61(1) of the Enforcement Decree thereof (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013); where an entrepreneur concurrently runs a taxable business and a tax-free business, the input tax amount related to the tax-free business shall be calculated based on the actual ownership; however, where an entrepreneur concurrently runs a taxable business and a tax-free business, the input tax amount related to the tax-free business shall be calculated based on the actual ownership; however, the input tax amount, which cannot be classified into actual ownership (hereinafter referred to as “common input tax amount”) shall be divided into the parts related to the taxable business and the tax-free business, and as a matter of principle, the common purchase tax amount shall be calculated based on the ratio of the supply value to the total supply value. If each business is separated or independent, the common purchase tax amount shall not be determined based on the supply value.

3) Determination

Examining the following facts and circumstances revealed in light of the aforementioned facts and the purport of the entire pleadings in light of the legal principles as seen earlier, the key purchase tax amount constitutes a case where the actual attribution cannot be separated by using both the taxable business and the tax-free business, and the said input tax amount cannot be deemed unrelated to the casino business. Therefore, the key purchase tax amount is that the input tax amount equivalent to the tax-free business portion cannot be deducted from the output tax amount in proportion to the supply value of the tax-free business and the taxable business. Therefore, the disposition imposing value-added tax is lawful, and the Plaintiff’s assertion

The hotel of this case was expanded to AAA hotel used as a casino business place and the immediate side of the extended casino building, and the actual AAAA hotel and the instant hotel can easily access the instant hotel even though some floors are connected to the casino customer, without going through the outside. Furthermore, compared to the fact that other hotel and container facilities operated by the Plaintiff are located separately in a location close to the leisure industry such as golf courses and skiing grounds, the instant hotel and the duty-free casino business place are very accessible because they are geographically connected.

B) The hotel of this case, while using a lifts such as AAA hotel newly constructed and used for casino business, assigned guest rooms to customers in accordance with the same work guidelines.

The hotel of this case is operated by separately setting the rate of guest rooms for customers, and if a casino customer wishes to have a guest room among the games, it is confirmed ii points, and then allocating a guest room, and the criteria for calculating the calculation of the statement according to the ii point grade are different. Therefore, the hotel of this case is basically used for the convenience of casino users, as in the previous AAA hotel.

C) The Plaintiff’s total sales amounting to 97% of the total sales amounting to 97%, and the sales amounting to 80% of the instant hotel and AAA hotel sales amounting to 2 points held by the casino customer.

D) The Plaintiff asserts that “the instant hotel was expanded solely to expand the hotel business in order to enter into the MIC business.” However, the Plaintiff: (a) in a situation where a large-scale large-scale passenger has occurred in the hotel business sector, which has increased the instant hotel by inserting large amounts of funds; and (b) there has been no change in the volume of sales by ii points out of the hotel sales after the extension; and (c) there has been no change in the volume of sales by ii points out of the hotel sales. It is difficult to deem that the instant hotel was extended to run an independent tourist business regardless of the casino business, which is a large-scale black business.

E) Since permission for the extension of the casino business place was obtained on June 2013 after the extension of the instant hotel, the Plaintiff appears to have expanded the instant hotel prior to the extension of the casino business place.

D. Determination as to the second argument (whether it falls under the category of 'statement of wrongful calculation' of the Corporate Tax Act)

1) Facts of recognition

A) BBP is a corporation established by BBP as a joint investment with private enterprises for the operation of LbP business around December 2001. At the time of the acquisition of the instant convertible bonds, it constitutes the Plaintiff’s specially related person pursuant to Article 52(1) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 201; hereinafter “former Corporate Tax Act”).

B) On April 13, 2001, the cc balanced development council for abandoned mine areas agreed on the dispersion of casino facilities in three Sis/Guns (bb. Si, Aa Gun and g Si) in order to make an investment in 15 billion won per local government.

C) On June 8, 2007, the board of directors held on June 69, 2007, the Plaintiff decided to acquire KRW 15 billion per share for the conversion of B/tourism Development Corporation, and some of the minutes of the board of directors at that time are as follows.

D) On May 208, 2008, in order to maintain the status of a local government-invested public corporation of b.B. Development Corporation, the Plaintiff was requested to change its investment from the investment method of 15 billion won to the method of acquiring convertible bonds.

E) The contents of the “report on the status of the Plaintiff’s contribution to the transfer of the instant convertible bonds on May 21, 2008” are as follows.

F) On July 10, 2008, the Plaintiff entered into a contract with BB Tourism Development Corporation and BB Tourism Development Corporation to underwrite privately placed convertible bonds, and the main contents thereof are as follows.

G) On July 201, 201, the Plaintiff’s internal report on “hhh Hh Hh H H H H H H H H H H H H H H C bonds” contains the following contents:

H) According to the news report materials of the Ministry of the Interior and Safety on March 19, 2010, the Ministry of the Interior and Safety, while promoting the efficiency of the management of local public enterprises in Man-do and insolvent, he selected the bb development project as a subject of liquidation (private film) in which it is difficult to normalize its own management due to the unsound business prospects and the deterioration of its management.

Facts that there is no dispute over recognition, Gap evidence 5, Eul evidence 11, 12, 13, and 14, the purport of the whole pleadings, and the purport of the whole pleadings.

2) Relevant legal principles

A) Article 52(1) of the Corporate Tax Act provides that where the calculation of an act or income amount of a domestic corporation is deemed to reduce the tax burden on the corporation’s income through transactions with a specially related person, the calculation of income amount for each business year of the corporation may be possible regardless of the act or calculation of the income amount of the corporation. Article 88(1) of the Enforcement Decree of the Corporate Tax Act provides that “where it is deemed that the tax burden has been reduced unfairly” requires “an act or provision of money or other assets or services free of charge or at an interest rate, rate, or rent lower than the market price, or where it is deemed that an act or calculation equivalent thereto or a distribution of profits of the corporation was made.” Article 52 of the aforementioned Corporate Tax Act provides that the calculation of income amount of the corporation is deemed to be made by using the various forms of transactions listed in each subparagraph of Article 8(1) of the Enforcement Decree of the Corporate Tax Act with a specially related person, it shall be determined specifically by the Supreme Court’s 100-18 economic rationality or sound economic rationality practice.

3) Determination

Examining the facts and circumstances revealed in light of the aforementioned facts and the purport of the entire arguments in light of the legal principles as seen earlier, the Plaintiff’s acceptance of the instant convertible bonds on the condition of non-interest is deemed to lack economic rationality in light of the sound social norms and commercial practice, by lending and providing money to BB Tourism Development Corporation, a person with a special relationship at an interest rate lower than the market price, or by purchasing non-profit assets. Accordingly, the first Plaintiff’s assertion on a different premise is without merit, and thus, the disposition imposing the corporate tax of this case on the ground that the act of acquiring the instant convertible bonds constitutes the rejection of wrongful calculation under Article 52 of the former Corporate Tax Act.

A) At the time of June 8, 2007, the Plaintiff Council recognized that the conditions of convertible bonds issued by BB Tourism Development Corporation need to be determined no less favorable to the Plaintiff compared to the conditions of general convertible bonds, and that if the corporate interest rate is to be a non-interest, it may constitute “Calculation of Unfair Conduct with Persons with Special Relationship” under the Corporate Tax Act.

B) The Plaintiff asserts to the effect that, upon the Plaintiff’s request, the instant convertible bonds could be converted into common shares of BB Tourism Development Corporation upon the fulfillment of the terms of conversion, and that there was no contractual terms that exempt the issuer from the obligation to repay the principal of BB Tourism Development Corporation at the maturity, so it cannot be deemed that the Plaintiff did not grant the option of stock conversion or that the issuer did not have any obligation to repay the principal at the maturity.

However, Article 3 subparag. 10 of the Agreement on the Subscription of the instant convertible bonds provides that “The method and deadline for redemption of the instant convertible bonds shall be converted into common shares from three years after the date of the issuance of the bonds to the date before the maturity,” and it does not stipulate the method and deadline for redemption of the bonds or the right to claim early redemption of the bonds before the maturity date, and thus it is difficult to deem that the Plaintiff was granted the right to choose to convert the instant convertible bonds.

C) The Plaintiff acquired the instant convertible bonds with no interest-free and non-guaranteed terms, for which no stock conversion option is granted and no obligation to repay principal is granted to the issuer at maturity, which is in violation of general commercial practices.

D) As the Plaintiff calculated the converted value to the amount lower than the appraised value of shares at the time of the acquisition of convertible bonds, the Plaintiff asserts that “the converted value to the amount lower than the appraised value of shares at the time of the acquisition of convertible bonds is different from the leased interest rate of 15 billion won.” However, setting the converted value at lower than the appraised value of shares at the time of conversion at the time of the acquisition of convertible bonds is at a discount in consideration of the corporate tax cost that may be imposed in the future, so the difference between

E) As acknowledged by the Plaintiff, the non-interest-free convertible bonds are exceptionally issued when the value of the right to convert is higher than interest income. However, it is difficult to find out that the business of the Seocho Leisure Complex, which was conducted by the bB Tourism Development Corporation at the time of the Plaintiff’s acquisition of the instant convertible bonds, was anticipated to incur investment profits to the extent that the Plaintiff would win the Plaintiff’s interest income. Since bB Tourism Development Corporation was selected as a public corporation subject to liquidation after 2 years, it seems that the financial situation at the time of the acquisition of the instant convertible bonds was very good. Therefore, in the case of the instant convertible bonds, it is difficult to view that the value of the right to convert is high to the extent that it is acceptable to issue and acquire the instant convertible bonds on an exceptional basis as an interest-free return.

E. Determination as to the third argument (whether ii points discount part corresponds to 'Enuriium discount')

1) Facts of recognition

Next, there is no dispute between the parties regarding the "Operational and Management Guidelines of Two Points".

2) Relevant regulations and legal principles

The latter part of Article 29(1) and (3) of the former Value-Added Tax Act (amended by Act No. 15223, Dec. 19, 2017; hereinafter the same shall apply) shall be the total amount of supply value of goods or services supplied for the pertinent taxable period. In such cases, the tax base of value-added tax on the supply of goods or services shall be the total amount of supply value of goods or services supplied for the pertinent taxable period. In such cases, goods

"All goods or services provided by a person" include the value of supply in the main sentence and subparagraphs of paragraph (3), in the case of receiving the price in money, in the case of receiving the price in money, in the case of receiving the price in addition to money, the market price of the goods or services provided by the person himself/herself (No. 2), in the case of the supply of other goods or services, such as credit transactions, installment transactions, etc., the value prescribed by Presidential Decree (no. 6) shall be considered as the value of supply.

On the other hand, Article 29(5) of the former Value-Added Tax Act provides that "the amount that is not included in the supply price," one of them refers to "the amount that is directly reduced from the ordinary price in accordance with the quality, quantity, conditions of delivery, payment method of the consideration for supply, or other supply conditions when the goods or services are supplied," and Article 29(5) of the former Value-Added Tax Act provides that "the amount that is paid by the business operator to the person to whom the goods or services are supplied, or similar amount, and the bad debt amount under Article 45(1) is not deducted from the tax base."

3) Determination

In full view of the following facts revealed in addition to the purport of the entire pleadings, the points used by casino users at the Plaintiff’s direct store constitutes “those with monetary value in the secondary transaction where goods, etc. were supplied” and “price relationship”. Thus, the amount used by the instant two points in the secondary transaction shall be included in the value of supply received by the Plaintiff as the price received by the Plaintiff, and shall not be considered as “the cumulative amount”. The first Plaintiff’s assertion on a different premise is without merit.

2) The former Value-Added Tax Act and the former Enforcement Decree of the Value-Added Tax Act before wholly amended by Act No. 11873, Jun. 7, 2013; and the former Enforcement Decree of the Value-Added Tax Act before wholly amended by Presidential Decree No. 24638, Jun. 28, 2013; however, there are differences in the order and expression of articles, etc. due to the entire amendment, the substantive contents are identical (see attached statutes). Therefore, for the convenience of discussion, the former Value-Added Tax Act (Amended by Act No. 15223, Dec. 19, 2017) and the former Enforcement Decree of the Value-Added Tax Act (Amended by Presidential Decree No. 27838, Feb. 7, 2017) are to be explained.

(A) The instant case ii points are the weakest of "Common Service," which is used as the exception of "compact in the casino business," and refer to accommodation, food and beverage, transportation, and other customer convenience services provided by a casino operator without compensation or at a discounted price to customers. The type of two points used in the Plaintiff's direct retail store as in the instant case is "ii point ballast," "after the type of game and then the flouder and flouds are automatically produced according to the number of games per hour entered in the instant game and the casino winning rate," as cited by the Plaintiff, and the Supreme Court en banc Decision 2015Du5899 Decided August 26, 2016 ruled that it is difficult to use the same as the value of the said game products to be accumulated in the next taxable business in accordance with the basic rate of sales, and thus, it is difficult to use the same as the value of the goods accumulated in the next taxable business to be deducted from the value of the goods supplied by the Plaintiff to customers."

C) The above two points that can be used at a store operated directly by the Plaintiff can also be used by a regional company registered as a registered entity of ii point franchise stores (the daily amount and monthly limit exist), which constitutes “compensation other than money with monetary value.”

D) Two points are offered at a casino business, which is a tax-free business, and where the value-added tax is not imposed on the part of the business that is settled by two points, the business that operates a tax-free business and a tax-free business can operate a taxable business as a substantial tax-free business using the “points paid for attracting customers and providing convenience to customers” in the tax-free business, which goes against the purpose of the Value-Added Tax Act. In interpreting and applying tax law, the territory of the tax-free business and the territory of the taxable business should be clearly distinguished.

F. Determination on the argument No. 4

1) Additional tax under tax law is an administrative sanction imposed, as prescribed by the Act, in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. The taxpayer’s intention or negligence is not considered, but does not constitute justifiable grounds that do not cause the taxpayer’s breach of such obligations (see, e.g., Supreme Court Decision 2008Du12986, May 13, 201).

In addition, justifiable grounds that constitute grounds for preventing the imposition of penalty tax are grounds for exemption of penalty tax. Therefore, barring special circumstances, a taxpayer has justifiable grounds.

shall have the responsibility to prove the violation.

2) In light of the following circumstances acknowledged based on the facts acknowledged as above and the purport of the entire pleadings, it is difficult to deem that there is a justifiable reason to exempt the Plaintiff from additional tax. Therefore, the Plaintiff’s assertion on this part is without merit.

A) It is difficult to deem that there was a justifiable reason not to mislead the violation of the duty solely on the ground that the Plaintiff reported the value-added tax and the corporate tax in this case upon consultation by a tax agent, who is a tax agent.

B) The Plaintiff seems to have known that the initial acquisition of convertible bonds of this case constitutes the denial of wrongful calculation under the Corporate Tax Act.

C) From 2009, the Plaintiff deemed the sales accrued from direct sales stores as deemed sales, and was reported and paid as included in the value-added tax base. The instant disposition imposing value-added tax was rendered on the part of the sales accrued from two points, on which the value-added tax return was omitted, and it appears that the Plaintiff was negligent in filing the return and payment for the purpose of tax evasion.

(c)

D) The fact that the Defendant, who is the tax authority, received a report in violation of the tax-related Acts and did not issue a corrective order cannot be deemed to have justifiable grounds to reduce or exempt penalty taxes on the sole ground that

3. Conclusion

Therefore, the plaintiff's claim is without merit, and all of them are dismissed. It is so decided as per Disposition.