Whether a shareholder's right is actually exercised is not a requirement for establishing secondary tax liability of an oligopolistic shareholder.

The exercise of rights to shares by 51% or more does not necessarily require that the actual exercise of shareholders' rights should be carried out, and it is sufficient that the exercise of shareholders' rights to shares held as of the date on which each corporation's tax liability is established is in a position to exercise

Article 39 (Secondary Liability to Pay Taxes by Investor)

Enforcement Decree of the Framework Act on National Taxes Article 20 (Scope of Relatives and Specially Related Persons)

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

The Defendant revoked each taxation of KRW 16,976,030, KRW 2005, KRW 54,170, KRW 320, KRW 13,660, KRW 630, KRW 13,630, and KRW 6,790, KRW 390, KRW 21,668, KRW 110, and corporate tax of KRW 5,464,240, KRW 240 in 2005, which was imposed by the Defendant against Plaintiff GaO on July 14, 2006.

1. Details of the disposition;

A. The OO Co., Ltd. operating a drug wholesale and retail business (hereinafter “Non-Party Company”) defaulted on KRW 169,613,980 in total, including the value-added tax for the second and second years in 2005 and the corporate tax for the year 2005 (hereinafter “instant delinquent national tax”).

B. The statement of changes in stocks, etc. submitted by the non-party company upon filing a corporate tax return in 2005 stated that the non-party company owns 26,000 shares (50%) among the 52,00 shares issued by the non-party company, the plaintiff company owns 10,40 shares (20%) and 15,60 shares (30%).

C. On July 14, 2006, the Defendant: (a) decided and notified the Plaintiffs as the secondary taxpayer on July 14, 2006 as to each item of taxation in the separate sheet as to each item of taxation in the corresponding list on the grounds that the Plaintiff, a related party, and the Plaintiff Company owned 70% of the shares of Nonparty Company as of the date of establishment of each of the instant tax liability; and (b) determined and notified the Plaintiffs to pay the non-party company’s delinquent taxes according to their respective shares shares ratio (hereinafter “instant disposition”).

D. The plaintiffs appealed and filed an appeal on December 14, 2006, but the National Tax Tribunal dismissed the plaintiffs' appeal on June 18, 2007.

[Ground of recognition] Facts without dispute, Gap evidence 1, Eul evidence 1-1-9, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

(1) Although it was true that Plaintiff Extraordinary acquired the company from its own funds, only the Plaintiffs owned the shares formally. Nonparty Company was exclusively engaged in the management of the Nonparty Company’s shares, and the Plaintiffs did not participate in the shareholders’ general meeting of the Nonparty Company or receive dividends from the Nonparty Company, and thus, did not exercise a substantial right to the Nonparty Company’s shares.

(2) Since the Plaintiff Company transferred 20% of the shares of the Nonparty Company to the Switzerland on February 2005, as retirement allowance, and lost its status as a shareholder, the Plaintiffs did not have 51/10 of the total shares owned at the time of the establishment of each of the Nonparty Company’s respective tax liability and did not constitute a taxation shareholder.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) On November 15, 1999, Plaintiff PO established a Plaintiff Company, which runs a business of manufacturing, selling, etc. medical information software, and has owned 117,100 shares (61.63%) out of 190,00 shares issued until now.

(2) On May 10, 2004, the plaintiffs and POO acquired the entire shares of the non-party company (52,000 shares) from PO, PO, and POO in total at KRW 10,000,000. The down payment of KRW 1,000,000 on the date of the contract, the balance of KRW 9,000,000 shall be paid on the 28th of the same month, and the 26,000 shares of the above shares shall be paid by Plaintiff PO, 10,000, and the 15,600 shares shall be transferred by the Plaintiff Company, and POO, respectively (hereinafter the contract in this case).

(3) Officers registered in the register of the non-party company from April 23, 2004 until July 25, 2006 in the non-party company’s cessation date are as follows.

Name

Positions and Positions

Jinay

GaO

Directors

GaO Doz. Doz.

Park △△△

Directors

Ministry of Government Administration and Home Affairs

Do-ri, Do-

Auditor

Punishment of MaO

westO

Representative Director;

(4) Around December 31, 2004, the Plaintiff entered into the instant contract for the purpose of utilizing the distribution network of the Nonparty Company in accordance with the proposal of the OO to acquire the non-party company, which had the permission for the wholesale business of the Plaintiff 200,000 won of the acquisition price, and paid all the KRW 10,000 of the acquisition price.

(5) On the other hand, since February 5, 2001, the POO worked as a director in charge of business in the Plaintiff Company from February 5, 2001, concurrently served as the representative director of the Nonparty Company after the conclusion of the instant contract, but retired from the Plaintiff Company on early February 2005.

[Ground of recognition] Facts without dispute, Gap evidence 2 through 4, Eul evidence 10, Eul evidence 10, 2-1, 2, and 3, witness's testimony and the purport of the whole pleadings

D. Determination

(1) Whether the Plaintiffs constitute an oligopolistic shareholder under Article 39(1)2(a) of the Act

(A) Determination of whether a person is an oligopolistic shareholder under Article 39(1)2 of the Act shall be based on whether the person is a member of a group of stocks owned by the majority. Specifically, even if there is no fact involved in the management of the company, it cannot be determined that the person is not an oligopolistic shareholder. If the tax authority establishes the fact of ownership by means of a list of stockholders, a statement of movement of stocks, corporate register, etc., or data such as corporate register. However, even if the person appears to be a single shareholder in light of the above data, if there are circumstances, such that the person is stolen the name of the shareholder or is registered in a name other than the name of the de facto shareholder, it cannot be deemed as a shareholder only in such name, and the nominal shareholder who asserts that he is not a shareholder must prove that the person is not a shareholder (see Supreme Court Decision 2003Du1615, Jul. 9, 2004). In addition, the exercise of rights to shares by 51% or more as referred to in the above subparagraph (a) does not necessarily require the actual exercise of shareholders' rights.

(B) As to the instant case, considering all the circumstances revealed in the pleadings, including the fact that: (a) the Plaintiffs acquired the shares of the non-party company in return for the Plaintiff’s total share of the acquisition price of the instant contract; (b) the Plaintiff’s director was listed in the non-party company; (c) the executives of the non-party company, including the representative director, appear to have been appointed by the Plaintiff’s office; and (d) the fact that even if the PO or KimO appointed by the PO exclusively operated the non-party company as alleged by the Plaintiffs, it would have no particular impact on the Plaintiffs’ exercise of control over the non-party company; and (b) as of June 30, 2005 and December 31, 2005, the date on which the obligation to pay delinquent national tax of this case was established, the Plaintiffs owned 70% of the total shares of the non-party company and were in a special relationship under Article 39(2) of the Act and Article 20 subparag. 11 of the Enforcement Decree of the Act, and were practically exercising the rights to the shares of the non-party company.

(2) On the other hand, as to the claim that the Plaintiff Company transferred 20% of the shares of the non-party company to the SO on February 2005 and had already lost its status as a shareholder, the date of the actual contract between the non-party company and the Plaintiff and the non-party company entered into between the Plaintiff Company and the date of May 2006, but it is difficult to believe that the date of preparation was the witness's witness who entered the non-party company's retroactively on December 31, 2004, and it is insufficient to recognize it only by the descriptions of the evidence No. 5-1, No. 2, and No. 6, and there is no other evidence to acknowledge it, and the above assertion is without merit.

(3) Therefore, the instant disposition that the Defendant deemed the Plaintiffs to be an oligopolistic stockholder under Article 39(1)2(a) of the Act is lawful.

3. Conclusion

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