Article 157 (7) Scope of Large Stockholders of the Enforcement Decree of the Income Tax Act

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

The reasoning for this Court’s explanation is as follows: at the bottom of the sixthth judgment of the court of first instance, the following is the same as the entry of the corresponding part of the judgment of the court of first instance except for the addition of the description. Thus, this Court’s explanation is accepted in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

8) The plaintiffs asserts that when applying the concept of major shareholders under Article 157 (4) of the former Enforcement Decree of the Income Tax Act (hereinafter referred to as "the provision of this case") to non-permanent small and medium enterprises, the non-permanent small and medium enterprises would suffer disadvantages compared to those listed on the KOSDAQ market, etc., and that it would result in the private culture of Article 104 (1) 11 (b) of the former Income Tax Act, which prescribes preferential tax rates for small and medium enterprises.

However, in order to promote the initial stock market, the system has been amended in the direction of imposing capital gains tax on the stock transfer of a stock-listed corporation on the stocks of an unlisted corporation other than a stock-listed corporation, taking into account the taxation equity on capital gains. In particular, in cases where the revitalization of the stock market is contrary to the activation of the stock market, (i) the listed stocks transferred by a large shareholder and the listed stocks transferred outside the securities market are subject to taxation; (ii) as such, in cases of an unlisted corporation, regardless of whether it is a large shareholder or a minority shareholder, the scope of taxation is expanded; (iii) it is difficult to readily conclude that an unlisted small or medium enterprise is disadvantaged without due consideration to other circumstances solely because the major shareholder standard is equally applied to the listed corporation and the unlisted corporation; (iv) even if there is a problem as alleged by the Plaintiffs, such problem can not be seen as being difficult to apply to the unlisted corporation by different application of the major shareholder standard from the listed corporation; and (v) the above provision on capital gains tax base can not be applied to the above large shareholder under Article 104(1(1) of the former Income Tax Act.

9) The plaintiffs asserts that even in light of the circumstances and contents of the amendment of the income tax-related Acts and subordinate statutes, "large shareholders" under Article 94 (1) 3 (a) of the former Income Tax Act are premised on the stock-listed

However, it is difficult to accept the Plaintiffs’ above assertion as it is and there is no other evidence to acknowledge it.

Rather, comprehensively taking account of the overall purport of arguments as stated in Eul evidence Nos. 5 through 7, the following circumstances, i.e., the amendment of Article 104 (1) 11 (b) of the Income Tax Act (amended by Act No. 10450, Dec. 15, 2015; see subparagraph 5, 6, and 7) merely stipulate that the tax rate of shares transfer should be adjusted from 10% to 20% (see, e.g., evidence No. 5, 6, and 7) and that the standards for major shareholders apply only to listed corporations, and the Local Tax Law No. 167-8 (1) of the Enforcement Decree of the Income Tax Act (see, e.g., Supreme Court Decision 2000 million won). In light of the legislative purport of Article 104 (1) 11 (b) of the Income Tax Act, there is no reason to view that the standard of shares transfer to non-listed corporations would be more than 100 billion won and less than 25 billion won.

(10) The Constitutional Court Decision 2013HunBa460 Decided July 30, 2015 is subject to adjudication under Article 94 (1) 3 (a) of the former Income Tax Act, and it is merely constitutional to delegate the scope of a major shareholder of listed stocks subject to taxation to the Enforcement Decree, and it is difficult to conclude that “major shareholder” under Article 94 (1) 3 (a) of the former Income Tax Act means only a major shareholder of a listed corporation, as alleged by the Plaintiffs. There is no other evidence to support the decision.

2. Conclusion

Therefore, the claim of this case against the defendant of this case is dismissed as it is without merit, and the judgment of the court of first instance is just and it is dismissed in its entirety. It is so decided as per Disposition by the assent of all.