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

Cheong-gu Office

The Defendant’s imposition of corporate tax of KRW 29,859,300 for the year 2014 and corporate tax of KRW 27,335,940 for the year 2015 shall be revoked on September 1, 2017.

A. The Plaintiff, when filing the annual final return of corporate tax for the business year from 2010 to 2015, included the “interest rate on the current loan from 2010 to 2013” in the calculation of the interest rate on the recognition of the provisional payment to the representative director, and in the business year from 2010 to 2013, “the average interest rate on the current loan” in the year 2014 and 2015, and reported and paid corporate tax to the Defendant.

B. As the Plaintiff selected the interest rate on the current loan at the market price in the business year 2013, the Defendant continued to apply the interest rate on the current loan in 2014 and 2015 to the interest rate on the current loan for the business year 2014 and 2015, which is three years, and determined that the Defendant reported and paid the current loan interest rate at will by applying the weighted average loan interest rate, and that the Defendant corrected and notified the corporate tax for each business year on September 1, 2017 (hereinafter referred to as the “instant disposition”).

(unit: Won)

Recognition Interest

Amount of payable tax

Reporting

Correction

Differents

Reporting

Correction

Differents

guidance.

451,751,338

673,969,712

22,218,374

296,633,868

353,438,296

56,804,428

2014

234,663,346

346,946,261

12,282,915

137,975,533

167,646,477

29,670,944

2015

217,087,992

327,023,451

109,935,459

158,658,335

185,791,819

27,133,484

C. On December 4, 2017, the Plaintiff filed a petition with the Tax Tribunal for a trial seeking the revocation of the instant disposition, but the Tax Tribunal rendered a decision to dismiss the said claim on March 2, 2018.

D. The statutes related to the disposition of this case are as shown in the attached Form.

Facts without any dispute over recognition, Gap's evidence 1 through 3 (including branch numbers; hereinafter the same shall apply), Eul's evidence 1 through 3, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 89 (3) 2 of the Enforcement Decree of the Corporate Tax Act provides that when selecting and applying the interest rate on overdraft as the market price, the business year and the following business year shall be limited to the market price. Since the three-year period of obligation is not stipulated, the corporation may choose the interest rate on overdraft each year after the first three-year period of corporate tax return.

Since the Plaintiff’s first choice of the market price in the year 2010 for the interest rate on the overdrafted loan, the Plaintiff selected more than three years of the obligation period and calculated the interest rate on the provisional payment to the representative director in such a way as the market price was to be recognized, there is no error of law in selecting the “overdraftd loan interest rate” in 2014 and 2015 later. Nevertheless, the instant disposition that calculated by applying the “overdraftd loan interest rate” in the above business year is unlawful.

(b) The amendment process of the relevant statutes;

1) As to the lending of money between a corporation and a related party, Article 89(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) stipulates that the interest rate on the lending of money between a corporation and a related party should be

2) Since Article 89(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) amended by Presidential Decree No. 19891 on February 28, 2007, “The weighted average interest rate on loans between related parties with respect to money lending between related parties shall be the market price, but where it is impossible to apply the weighted average interest rate on loans between related parties, the weighted average interest rate on loans shall be the market price.” Thus, in relation to money lending between related parties, the recognition interest rate in principle applies the weighted average interest rate on loans between related parties. The reason for the amendment is that “In the case of loans between related parties, the interest rate on loans between related parties shall be applied regardless of the interest rate on loans which are deemed the market price at the time of loans between related parties, which does not reflect the substance of the transaction, thereby contributing to the relaxation of corporate tax burden.”

3) In addition, Article 89(3) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 22577, Dec. 30, 2010 provides that “The weighted average interest rate on loans between related parties shall be the market price, but where the pertinent corporation selects the interest rate on overdraft loans as prescribed by Ordinance of the Ministry of Strategy and Finance along with the report under Article 60 of the Corporate Tax Act, the interest rate on overdraft loans shall be the market price for the business year in which it selects the interest rate on overdraft loans as the market price and the two business years thereafter shall be

C. Determination

If the contents and amendment of the Corporate Tax Act and the Enforcement Decree of the same Act and the following circumstances revealed through the process of the aforementioned disposition and the purport of the entire pleadings are gathered, the purport of the amended provisions of this case is to interpret that the interest rate on overdraft loans between a corporation and a related party should be the market price for the business year chosen if they choose the interest rate on overdraft loans as they are, and that if they choose again the interest rate on overdraft loans, the interest rate on overdraft loans shall be the market price for the two business years thereafter. In this case, it is reasonable to interpret that Article 89(3)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) (hereinafter referred to as “instant provision”), which was subsequent to the enforcement of Article 89(3)2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2011); thus, the Plaintiff is obliged to apply the above overdraft interest rate for 2 years and 10 years thereafter.

① A request for clarity of tax-related provisions is the core content of the no taxation without law, and the tax-related Acts ought to be strictly interpreted as it is (see, e.g., Supreme Court Decision 94Da34968, Jun. 11, 1996).

② The instant revised provision provides that “In the case of selecting the interest rate on the overdraft, the period of compulsory selection shall not be “the business year which selects the interest rate on the overdraft as the market price and at least two business years thereafter” but “the business year in which the interest rate on the overdraft was selected as the market price and the two business years thereafter.”

③ Article 89(3) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22577; Presidential Decree No. 22577; however, in cases where a corporation selects the overdraft loan interest rate, the overdraft loan interest rate shall be applied to the overdraft loan interest rate in two business years thereafter. In light of the literal meaning of the language and text, the weighted average loan interest rate, which is the principle, shall be applied again after the business year in which the overdraft loan interest rate was selected as the market price and the two business years thereafter, should be applied. In other words

④ The instant provision requires a corporation to choose the interest rate under Article 60 of the Corporate Tax Act, along with a report under Article 60, as prescribed by Ordinance of the Ministry of Strategy and Finance. Article 43(5) of the Enforcement Rule of the Corporate Tax Act requires a corporation to prepare and submit a statement of recognition of interest on provisional payment, etc. in attached Form 19, where the corporation selects the interest rate, and the above statement is required to choose the applicable interest rate. The Plaintiff appears to have selected the applicable interest rate in each business year from 2010 to 2013, each business year after the enforcement of the instant provision. The Plaintiff appears to have reported and paid the corporate tax for the pertinent business year by applying the applicable interest rate in the above statement of settlement to the current statement of settlement, and by applying it to the weighted average loan interest rate in each business year from 2014 and 2015.

⑤ Article 1 of the Addenda of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) stipulated in the instant provision along with the instant provision provides that “The amended provisions of Article 89(3) shall apply to the first reported business year after this Decree enters into force,” and Article 11 of the Addenda provides that “The provisions of Article 89(3) shall apply to the first reported business year after this Decree enters into force.” Thus, the instant provision, which introduced the choice interest rate and the applicable period, shall apply from the corporate tax for the business year of 2010 reported after January 1, 201.

④ Around 2011, the amendment of the Enforcement Decree of the former Enforcement Decree, the Plaintiff first selected the interest rate on the current loan at the time of filing a corporate tax for the business year 2010 to the Defendant, regardless of the application of the recognized interest rate for the previous business year, the two business years thereafter (201 and 2012) shall be applied fixedly to the current loan interest rate. Since the Plaintiff again selected and applied the current loan interest rate in the business year 2013, which was after the end of the said three business years, the said three business years thereafter, the current loan interest rate shall be applied fixedly in the business year 2014 and 2015.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.