Examination Other 2014-0031 ( December 05, 2014)

A disposition of bonus for the amount embezzled by a substantial operator is reasonable;

The representative director's act of embezzlement of corporate funds and use them as funds for rebates in relation to business falls under the outflow from the company because it was not conducted under the premise of recovery from the beginning and disposition of bonuses is legitimate.

Article 67 of the Corporate Tax Act

2014Guhap76165 Notice of Change in Amount of Income

○○○○ Corporation

○ Head of Regional Tax Office

May 28, 2015

July 2, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On June 3, 2013, the Defendant revoked each of the following notice of change in the income amount, issued against the Plaintiff:

(c)

Type of income;

Year

Income Earners

Amount of income;

Bonuses

208

AA, 0B

4,319,77,414 won

Bonuses

2010

AA, 0B

411,753,384 won

Bonuses

2011

AA, 0B

29,978,091 won

1. Details of the disposition;

A. At the time of the business year from 2008 to 2011, the Plaintiff excluded the amount of KRW 5,357,704,00 (less than KRW 5,00,00; hereafter the same shall apply in this paragraph) that was the representative director of the Plaintiff company, from the deductible expenses of KRW 2,477,823,00 (208) for entertainment expenses, 2,823,00,00 (208) for other outflow, 2,879,81,81, 200 (208) for the management team head of the management team of the ○○ Project, 24 Section 20 Section 20 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 24 Section 200,00 for the management team of the same construction section 208 Section 307,201307 Section 2001.

B. From February 25, 2013 to May 15, 2013, the Defendant’s law for the business year of 2007-201 against the Plaintiff

As a result of the comprehensive investigation of human rights, 3,143,802,000 won in addition to the amount of the Plaintiff’s revised return (1,000 won)

Recognizing that there is any further appropriation of the processing expenses for less than but not more than 100s (hereinafter the same shall apply in this paragraph), the losses

The corporate tax for the pertinent business year was corrected in addition to the amount of 8,501,506,000 won in total.

(i) The amount of KRW 5,357,704,00 + KRW 3,143,802,00,000 + details were leaked out of the company as set out in the table 1 below. Considering that the ownership is unclear, it shall be disposed of as bonus to the competent A and 0B, which was the representative director of the pertinent business year, and the notification of the change in the amount of income (hereinafter referred to as “the notification of the change in the amount of income”) was made to the Plaintiff on June 3, 2013 as set forth in the table 2 below.

1. Table 1. Details of appropriation of expenses for the plaintiff's processing;

(unit:,000 won)

Business year

Damage Claim

Outgoing Processing Cost

Compensations

Entertainment Expenses

Deposit

guidance.

208

965,407

1,588,802

85,000

2,477,823

-

5,217,032

209

252,743

20,000

80,000

-

150,000

702,743

2010

1,041,753

-

-

-

20,000

1,261,753

2011

619,978

265,000

-

-

435,000

1,319,978

Total

2,879,881

2,073,802

265,000

2,477,823

805,000

8,501,506

Jinay

SectorRevised Reports

Investigative Withdrawals

Investigative Withdrawals

SectorRevised Reports

Investigative Withdrawals

Table 2. Notice on June 3, 2013:

Type of income;

Year

Income Earners

Amount of income (income)

Bonuses

208

AA, 0B

5,217,033,539

Bonuses

209

AA, 0B

702,743,875

Bonuses

2010

AA, 0B

1,261,753,384

Bonuses

2011

AA, 0B

1,319,978,091

C. On September 2, 2013, the Plaintiff dissatisfied with the notice of change in the amount of income in this case, and filed an objection with the Defendant on September 2, 2013, and the Defendant: “3,540,000,000 won, which is confirmed to have been delivered by the Plaintiff to ○○ Construction Officers, etc., out of the non-funds created by the processing expenses, is confirmed by the person to whom the amount was discharged out of the company; thus, it is reasonable to exclude the amount of bonus disposal from the amount of bonus disposal.” On May 22, 2014, the Plaintiff decided to reduce the amount of income as follows (hereinafter “the instant disposition”).

Year

The original amount of income (source)

Amount of cited objection (won)

Amount remaining after reduction (cost)

208

5,217,033,539

897,256,125

4,319,77,414

209

702,743,875

702,743,875

0

2010

1,261,753,384

850,000,000

411,753,384

2011

1,319,978,091

1,090,000,000

29,978,091

Total

8,501,508,889

3,540,000,000

4,961,508,889

D. On August 18, 2014, the Plaintiff filed a petition for examination with the Commissioner of the National Tax Service for objection against the above filing result.

However, it was dismissed on December 5, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1 to 4, Gap evidence 3, and 4

Statement, the purport of the whole pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) In light of the fact that the president of the competent Do-Eup, Do-Eup, most of the shares of the Plaintiff corporation was owned by the Plaintiff corporation, and the 0B, etc., the principal agent of embezzlement, is merely the employee of the Plaintiff corporation, and the 0B, etc. embezzled out by raising the extra funds from the chairman of the competent Do-Eup, Do-Eup, Do-Eup, and the president of the competent Do-Eup, Myeon-won, who did not have participated in the embezzlement. The Plaintiff, after being known of the embezzlement, extracted part of the embezzled amount by starting the exercise of the rights against 0B, etc., and did not have any circumstance to deem that the Plaintiff implicitly or ratified or ratified the embezzlement of 0BB, etc., the Plaintiff corporation still has the liability to compensate for damages arising

2) Even if the amount of the instant embezzlement was out of the company, if the user clearly proves that the amount of the instant embezzlement was not used for a private purpose as alleged in BB, etc., it would be the disposal of income depending on its attribution. Thus, the instant disposition that was disposed of as a bonus to the representative on the ground that the attribution is unclear is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes shall be as follows.

C. Determination

1) The act of a representative director, etc., who is the actual manager of a corporation, uses the corporation’s funds on the premise of early recovery, and thus, constitutes an outflow from the company as an expenditure itself. As to special circumstances that cannot be deemed as not premised on recovery from the utilization time, it shall be determined individually and specifically by taking into account all the circumstances, such as where the intent of the representative director, etc. is identical to the intent of the corporation or where it is difficult to see that the corporate economic interest with the representative director, etc. is in fact identical, through the representative director, etc., the principal manager of the embezzlement, etc., the degree of substantial status within the corporation, such as the degree of control over the corporation, the circumstances leading to the embezzlement, and the measures taken by the corporation after the embezzlement, etc. (see, e.g., Supreme Court Decision 2007Du20959, Jan. 28, 20

2) In light of the above legal principles, the following facts are acknowledged in full view of the following facts: (a) evidence Nos. 5 through 7, evidence Nos. 8-1 through 3, evidence Nos. 10, 14, 16, evidence Nos. 17-1, 2, evidence No. 18-1 through 3, evidence Nos. 18-2 through 4, evidence Nos. 2 through 4, and evidence Nos. 6-1 through 6-3.

① The Plaintiff is a construction company that is dependent on the subcontract price that is awarded from ○○ Construction Co., Ltd. (hereinafter “○○ Construction”). 0B is a person in a relationship with the wife of the competent Do-won in the city of △△, a major shareholder of the Plaintiff company, and is bound by the charge that the said Do-won in the city of △△, a major shareholder of the Plaintiff company, raises extra funds for the purpose of offering rebates to ○○ Construction, etc., the Plaintiff was bound by the charge that the said Do-won in the city of △△, a major shareholder of

② Around October 200x. Around 200x. (x.) imprisonment, the competent △△△△ was charged with embezzlement and sentenced to a suspended sentence year. B from around 6 months thereafter, around 200x.x.x. x. to determine whether to make a rebates, etc. to the ○○ Construction for the purpose of receiving construction orders by again raising foreign funds from around 6 months, and ordering regularCC, a team leader of the Plaintiff Company, to make a report on the monthly status, etc. The Plaintiff Company, and received part of the foreign funds that he/she received under the direction from regularCC whenever the funds, such as rebates, were needed. The 0B used most of the foreign funds transferred as above for the purpose of ○○ Construction and the Plaintiff Company’s employees, for the purpose of paying ○○ Construction, leave expenses, name savingners, meeting expenses, entertainment expenses, entertainment expenses, etc.

(3) The methods used by the regularCC for raising extra capital shall be as follows:

By recruiting processed labor workers against their relatives and employees and paying processing allowances, 787,724,334 won was appropriated as processing labor costs from 200x to 20x.The regularCC recruited the nominal name holder by putting the head of Tong and seal mainly on the part of those who do not attend the Plaintiff Company's employees.

(C) After issuing a false bill, the (B) deposited the amount equivalent to the amount of the bill in the borrowed account when maturity is due, but (c) included approximately KRW 4,160,000,000 from 20x to 200x by allowing the employees of the Plaintiff company to withdraw it.

The agreement on compensation for damages to the deceased workers at a construction site caused by a disaster was included in the processing expenses of KRW 265,00,000, in a way that the compensation for damages is collected more than the actual amount.

Although having recovered approximately KRW 1,165,00,000 from 13 real estate, it was appropriated as a processed asset as if it were still leased due to injury.

A payment shall be made in the name of a large number of enterprises, such as ○○○○, etc., without any transaction of goods or services, and it shall be returned through a borrowed account.

④ A UD, the head of the ○○ Project 20 Section management team, was raising 808,287,361 won out of the 808,287,361 won by means of withdrawing expenses incurred at the construction site and refunding the difference between the actual expenses.

⑤ An E, the head of ○○ Project 24 Section 24 Section 2, also created an extra capital of KRW 700,521,640 in the same manner as above, and apF also worked as the head of the same Section 24 Section 2, performed the relevant work under the direction of E.

6. EE, etc. delivered a reasonable amount out of the outdoor funds created as above to the head office management team, such as the fixedCC, or used it differently for various expenses incurred at the construction site.

7) Even after the 0BB assumed office as the representative director of the Plaintiff Company, the competent △△△△△ had continued to engage in external activities as the actual owner of the Plaintiff Company, and had approximately KRW x00 million provided funds to the effect that it would be used for items difficult to manage normal expenses.

④ The 0x. From around 20x.x. to around 20x.x.m. due to the instant case of raising funds from the above side, the 0B et al. was charged with both the Defendant and the 1,270,000 won in terms of damage recovery during the criminal trial in the above criminal trial, the 00,000 won in terms of damage recovery, and the 300,000,000 won in UDR in terms of UDR, and the E shall pay 150,000,000 won in each Plaintiff.

3) The following circumstances revealed in the above recognition: (i) the Plaintiff relied on the subcontract price that the Plaintiff received from ○○ Construction; (ii) the Plaintiff appears to have paid long-term rebates to maintain the cooperative relationship with ○○ Construction; (iii) there was a history in the past in order to raise funds necessary for the payment of rebates; and (iv) as a result, the competent △△△△ was subject to the investigation into detention of the Plaintiff Company, the representative director was replaced to B in order to overcome the crisis situation of the Plaintiff Company; and (v) the 0B resumed resumed resumed resumed resumed resumed resumed resumed resumed extended the fund raising to pay illegal rebates to ○○○○ Construction while the competent △△△△△△△△△△ is in a relative relationship with the competent △△△△△△△△△△ Construction and is under the period of suspension of execution; and

6) The creation of the 00x throughout the long period from 200x to 20x. The amount is about KRW 200 million by mobilization of the employees of the Plaintiff company. 7 During the above period, the Doi-Governing Province exercised its influence over the 0BB, etc. as the actual owner of the Plaintiff company. 80% of the amount of the embezzlement in this case was returned to the Plaintiff by 0B, etc., but it appears that the 00B, etc. received a payment order for the 00B, etc., but it cannot be seen that the Plaintiff received a payment order for the 00B, etc., but the Plaintiff did not appear to have been subject to a subsequent procedure such as compulsory execution, etc. 9B, and 9B, etc. was also subject to an implied decision (Evidence evidence 9) on the charge of raising the 00B funds for the creation of the 00B, etc., but the 197000 square meters of the Plaintiff company’s interest and the 19708000.

Therefore, since 0B et al. did not take advantage of the amount of embezzlement in this case under the premise of recovery from the beginning, it constitutes an outflow from the company, and the plaintiff's assertion otherwise is groundless.

4) Meanwhile, Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012) where it is obvious that the amount included in the calculation of gross income has leaked out of the company, the amount of income has been disposed of as dividends, bonuses from the disposal of profits, other income, and other outflow from the company according to the person to whom

shall be deemed to have been reverted to the representative in the case of uncertainty, and shall be deemed to have been reverted to the representative.

In full view of the purport of the entire arguments, the following facts are acknowledged: (a) the amount of the embezzlement of this case was paid as illegal rebates to the employees of the Plaintiff company; (b) the amount used for the purpose of salary, leave expenses, name cards, meal expenses, entertainment expenses, etc.; and (c) the amount used for various expenses at the construction site; and (b) the Plaintiff does not clearly express its ownership, except the amount paid as illegal rebates in relation to ○○ Construction; (c) therefore, the amount of the embezzlement of this case is unclear; and (d) the amount of the embezzlement of this case shall be treated as bonus to the representative of the Plaintiff corporation. Accordingly, this part of the Plaintiff’

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant statutes

Article 67 (Disposition of Income)

A report on the tax base of corporate tax on income for each business year pursuant to Article 60 or Article 66 or 69 shall apply.

When the tax base of corporate tax is determined or corrected, the amount included in the calculation of earnings shall be disposed of to the person to whom it belongs, as prescribed by Presidential Decree, such as bonus, dividends, other outflow and internal reservation.

Article 106 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 23589, Feb. 2, 2012) (Disposition of Income)

(1) The amount included in the calculation of earnings under Article 67 of the Act shall be disposed of in accordance with the provisions of the following subparagraphs. The same shall also apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, it shall be disposed of as dividends, bonuses from the disposition of profits, other income, or other outflow from the company under the following items according to the person to whom it reverts: Provided, That it is unclear to whom it reverts: Provided, That it shall be deemed to have been reverted to the representative (where an executive who is not a minority shareholder, etc. and persons with a special relationship under Article 43 (8) holds 30/100 or more of the total number of issued stocks or total investment amount of the relevant corporation and actually controls the operation of the corporation, he/she shall be deemed the representative, and where there are two or more representatives, de facto

(a) Where the person of accrual is a stockholder, etc. (not including stockholders who are executives or employees), the dividends of the person of accrual;

(b) If the person to whom it belongs is an officer or employee, the bonus to the person to whom it reverts;

(c) Where the person to whom it belongs is a corporation or an individual operating the business, other outflow from the company: Provided, That it shall be limited to where the distributed profit constitutes the income for each business year of a domestic corporation or a domestic business place of a foreign corporation under the provisions of Article 94 of the Act or the business income of a resident or a non-resident under

(d) Other income of the person to whom the income belongs, in cases where the person to whom the income accrues falls.

2. The amount included in gross income shall be deemed retained earnings, if not leaked outside of the company.