Western 46015-1024 (02.07)

Addition

Where a member telephone service provider, among key telecommunications business operators, operates a subscription telephone service business before August 31, 2001, value-added tax is exempted, but where telecommunications service is provided through a communications network and the price is paid, value-added tax is imposed.

In the case of E-Question, it is difficult to make a clear answer because the facts related to the transaction are somewhat unclear, but it is difficult to make a clear answer. However, the similar case of reference materials related to attached tax (Article 46015-11720, October 27, 2001) and (Additional 46015-556, October 27, 2001) are sent for reference to the business.** In the case of an interpellation 46015-1720, June 27, 2001, it is difficult to make a clear answer because the question is unclear, but if a person operating a key telecommunications business under Article 4(2) of the Telecommunications Business Act runs a key telecommunications business prior to August 31, 201, who is exempted from a subscription telephone business under the Telecommunications Business Act, the key telecommunications business operator is exempt from a taxation under subparagraph 16 of Article 16 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 1734, Dec. 29, 2000, 200).

[Taxation] Article 1 of the Value-Added Tax Act

1. A summary of the contents of inquiry;

In case where an entrepreneur manufactures and sells pre-paid cards (on handphones) that can use the ○○, ○○, ○○○, ○○ network, etc., whether value-added tax is levied or not.

2. Materials on the contents of questioning;

(a) relevant tax laws and regulations (law, Enforcement Decree, Enforcement Rule, and General Provisions);

○ Article 1 of the Value-Added Tax Act

(1) Value-added taxes shall be imposed on the following transactions:

1. Supply of goods or services; and

(2) The term "goods" in paragraph (1) means all tangible things and intangible things which have property value.

Article 1 of the Enforcement Decree of the Value-Added Tax Act

(1) corporeal articles referred to in Article 1 (2) of the Value-Added Tax Act (hereinafter referred to as the "Act") shall include commodities, products, raw materials, machinery, buildings and all other tangible articles.

(2) Intangible goods under Article 1 (2) of the Act shall include all tangible things other than tangible things having property value such as power, heat, and other natural power and rights which can be managed.

(b) Similar cases (judicial precedents, judicial precedents, review precedents, established rules, etc.);

○do 46015-11720, 201.27

In the case of your questioning, there is a concern for a clear answer because the contents of questioning are unclear, but in the case where a person operating a key telecommunications business under Article 4 (2) of the Telecommunications Business Act runs a subscription telephone business under the Telecommunications Business Act before August 31, 2001, the value-added tax is exempted pursuant to Article 106 (6) 18 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by the Presidential Decree No. 17034, Dec. 29, 2000); however, in the case where a person operating a key telecommunications business under Article 4 (2) of the Telecommunications Business Act runs a subscription telephone business under the Telecommunications Business Act on or before August

○ Additional 46015-556, 201.03.22

【Reasoning】

We are Internet companies operating Internetpphone services (hereinafter referred to as “B”), which provide consumers with electronic pre-paid cards, among their business goods, and approve communications fees to the Communications Company A (hereinafter referred to as “A”).

【Correspondence】

Where a business operator issues an electronic pre-paid card and provides it to a consumer and a mobile communications business operator causes an accident on his/her behalf, the value-added tax shall not be levied on the sales of the electronic pre-paid card to the consumer.