Whether exemption from additional tax on the taxation on transfer of listed stocks by large shareholders is granted

The instant disposition is lawful, since there is no ground to acknowledge that there was a legitimate reason to exempt the Plaintiff from the penalty tax on the non-return and non-payment of the transfer income tax of this case.

2017Guhap51563 Revocation of Disposition of Imposing capital gains tax

AA

BB Director of the Tax Office

July 6, 2017

July 20, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax of KRW 0,000,000 for the Plaintiff on October 00, 2015 and penalty tax of KRW 000,000 for the failure to report and penalty tax of KRW 00,000 for the failure to report shall be revoked, respectively.

1. Details of the disposition;

A. The Plaintiff sold 00,000 shares of ○○○○ Co., Ltd. (hereinafter referred to as “○○○○○”) held on April 4, 2008 and the 7th of the same month (hereinafter referred to as “instant shares”) for KRW 0 billion, but did not report the transfer income tax accordingly.

B. The director of the Seoul Regional Tax Office conducted a tax investigation on the Plaintiff from October 00 to October 00 of the same year, and as of the end of 2007 business year immediately before the Plaintiff transferred the instant shares, the Plaintiff did not report to the Plaintiff on the ground that Article 94(1)3 (a) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22038 of Feb. 18, 2010) (amended by Presidential Decree No. 22038 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038 of Feb. 18, 2010) and other related Plaintiff’s three villages AA, A, P, P, ○○, B, and C, ○○○ (hereinafter “A, etc.”) owned by his/her relative, and that the Plaintiff did not report and pay the instant shares to the Plaintiff under Article 20(1)3 (a) (hereinafter “former Enforcement Decree of the Income Tax Act”).

C. On November 4, 2015, the Defendant decided and notified the Plaintiff of KRW 0,00,000,000,000,000 for the income tax for the year 2008, including the additional tax for the failure to report, and the additional tax for the failure to report, and the additional tax for the failure to pay, KRW 00,000,000 for the Plaintiff (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on October 0, 2016, but was dismissed on October 0, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 through 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Considering the fact that it was impossible for the Plaintiff to grasp the status of holding shares of AA, etc. since there was a property dispute with AA, etc. in around 2005, there was no institutional device or method to ascertain the status of holding shares of AA, etc., unlike the fact that the Plaintiff did not have any other institutional device or method to ascertain the status of holding shares of AA, etc. on March 31, 2016, the amendment of Article 157 of the Enforcement Decree of the Income Tax Act was made on March 31, 2016 and the scope of relatives deemed to be other shareholders has been reduced, the Plaintiff has a justifiable reason for failing to report and pay capital gains tax

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) TTPP Co., Ltd. (hereinafter referred to as “TT”) was incorporated into ○○○ Group in 1978, merged with or around March 2000, and changed its trade name to ○○○○○ on or around March 2006, and the Plaintiff’s attached PPP and 3rd villages of the Plaintiff’s subsidiaries received the shares of TT in the course of merger with TPP, and the Plaintiff received the shares of TPP from TPP in 2000.

2) As of the end of the business year immediately preceding the date of the transfer of the instant shares, the status of holding ○○○○○○○ shares of the Plaintiff and AA as of the end of the business year immediately preceding the date is as listed below.

3) The registration of ownership transfer was completed in the Republic of Korea (the National Intelligence Service) on October 0, 2005 on the ground that the Plaintiff owned jointly with EE and W, ○○-si ○○○○○-6 Forest land 4,371 square meters due to the gift made on October 0, 2005, and the registration of ownership transfer was completed in the future on October 0, 2005 on the land of 1-4,960 square meters in ○○-dong ○○○-dong ○○○-dong 34,960 square meters due to the sale made on October 0, 2005 (hereinafter referred to as “each land of this case”).

4) On October 00, 1996, the Plaintiff resided in the United States and returned to Korea on or around October 2001.

[Ground of recognition] Facts without dispute, Gap evidence 2, 3, Eul evidence 2 to 5, part of UU testimony, the purport of the whole pleadings

D. Determination

1) In order to facilitate the exercise of taxation rights and the realization of tax claims, penalty taxes under the tax law is an administrative sanction imposed as prescribed by the individual tax law in cases where a taxpayer violates various obligations, such as reporting and payment, without justifiable grounds, and the taxpayer’s intention and negligence is not considered. On the other hand, it is unreasonable for a taxpayer to be deemed not aware of his/her obligations, and it is unreasonable for him/her to expect the fulfillment of his/her obligations to do so, unless there are justifiable grounds to believe that it is unreasonable for him/her to do so (see, e.g., Supreme Court Decision 2010Du16622, Apr. 28, 201).

2) Comprehensively taking account of the following circumstances acknowledged by the Plaintiff’s respective descriptions as evidence Nos. 2 and 3, and Eul’s evidence Nos. 2 and 2 through 5, and the purport of the entire testimony and pleading by UU, the evidence submitted by the Plaintiff alone cannot be deemed as having justifiable grounds for not being attributable to the Plaintiff’s failure to report and pay capital gains tax in relation to the sale of the instant shares, and there is no other evidence to acknowledge this otherwise. Thus, the Plaintiff’s assertion is without merit.

① Considering the fact that the market value of the instant shares held by the Plaintiff exceeded KRW 0 billion at the time of transfer, and that actual transfer value reaches KRW 0 billion, and that KK acquired shares of TT in the process of mergers with TT on March 2000, and that the Plaintiff donated shares of TT from PP in 2000 and held shares of TT with AA in addition to AA in order to verify the application of the instant legal provisions and the instant Enforcement Decree, the Plaintiff seems to have attempted to find out the current status of shares owned by his relatives and other specially related persons. However, the Plaintiff does not seem to have made such attempt.

(2) It is difficult to say that it is difficult to expect the Plaintiff to report and pay capital gains tax by ascertaining the current status of ○○○○○○○ stockholding by blood relatives within the fourth degree of relationship with the Plaintiff solely on the grounds that no institutional system has been established to grasp the current status of shares held by others in the Income Tax Act, etc.

③ Although there appears to have been a dispute between the Plaintiff and the Plaintiff during the process of transferring the ownership of each of the instant lands to the Republic of Korea in 2005, such circumstance and evidence submitted by the Plaintiff alone are difficult to deem that the Plaintiff terminated contact with AA from around 2005. Even if the Plaintiff did not contact with AA from around 2005, the Plaintiff and AA et al. held ○○○○ shares since before 2005, and the Plaintiff supplied products produced from the dialogue that it was established from around 2003 to AA et al. to AB companies (RR companies) operated by AA et al., and the volume of transactions reduced, but it appears that the transaction relationship was maintained even after 2005, and there is no evidence to deem that the Plaintiff attempted to identify the status of ownership ownership of the Plaintiff through AA et al.

④ On March 31, 2016, the Plaintiff amended Article 157 of the Enforcement Decree of the Income Tax Act by Presidential Decree No. 27074 to exclude his/her lineal ascendant and descendant, spouse, natural father and descendant, and relative other than his/her spouse and lineal descendant who was adopted by another person as his/her father and descendant, from the subject of stock ownership ratio or total market value addition. This result from reflective view that it is harsh to determine the requirements of a major shareholder including all relatives in the third degree or higher relationship. Thus, the Plaintiff asserts to the purport that the determination of justifiable cause related to the disposition of this case should be treated differently from other additional taxes. However, the legal provision of this case and the Enforcement Decree of the Income Tax Act provide that the taxation requirements and effects of this case and the provisions of the Enforcement Decree of the Income Tax Act can not be deemed invalid as violating Article 10 of the Constitution, and the amended provisions of Article 154(1) of the Enforcement Decree of the Income Tax Act and Article 15(1)5(4) of the Addenda of the Income Tax Act cannot be deemed to have been amended before the enforcement date of the above.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.