The judgment below

The part concerning the imposition of corporate tax for the business year 2006 through 2009 shall be reversed, and this shall apply.

The grounds of appeal are examined.

1. As to the imposition of corporate tax for the business year 2006 to 2009

A. According to Articles 19(1) and 20 subparag. 1 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same), the amount appropriated as losses from the disposal of profits shall not be included in the calculation of losses in principle. Article 26 subparag. 1 of the Enforcement Decree of the Corporate Tax Act provides that personnel expenses shall not be included in the calculation of losses for the purpose of calculating the income amount of a domestic corporation for each business year, and Article 43(1) of the Enforcement Decree of the Corporate Tax Act provides that “the bonus paid by a corporation to its officers or employees by the disposal of profits shall not be included in the calculation of losses.”

Remuneration paid by a corporation to its executives in consideration of the performance of duties shall be included in deductible expenses in principle as expenses paid by the corporation for the performance of its duties.

However, in light of the language and text of the above provisions and the legislative intent of Article 26 of the former Corporate Tax Act and Article 43 of the Enforcement Decree of the Corporate Tax Act to prevent an unfair reduction of corporate income, even if a corporation paid remuneration to an executive officer who is a controlling shareholder (including an executive officer in a special relationship with the former), the said remuneration shall be externally distributed profits reserved to the corporation mainly rather than a normal price for the performance of duties of the executive officer, in consideration of all the circumstances such as the portion and size of the corporation’s operating income, whether there exists a significant gap in the remuneration for other executives in the pertinent corporation or in the same industry, possibility of continuous and continuous payment, trends in the increase or decrease of remuneration, relationship with the corporation’s operating income change, whether to pay dividends to other shareholders, and subjective intent to unfairly reduce corporate income.