[Case Number] Trial 2014 middle 5155 ( December 31, 2014)

[Attachment] [Type of Decision] Re-Investigation

[Determination Appellant did not err in making a false entry of a business operator's number without purchasing recycled waste resources from a local government or school, and received an input tax deduction of value added tax, but because the ratio of necessary expenses is merely 00% and it is difficult to view the total amount of the issues as the content of the disposition agency's investigation. In the case of wholesale and retail business of recycled waste, it seems difficult for the agency to receive the invoice in reality because of the nature of the business, it is difficult for the agency to receive the waste resources from an individual. The manual preparation set presented by the claimant includes the name and amount, etc. as of the date, ○○ among the customers who are claiming as the actual customer, submitted the confirmation source that there was the fact of transaction with the claimant along with the certificate of personal seal impression, and according to the balance statement by transaction party submitted by the claimant at the time of the request for a trial on this case, it appears that the disposition agency purchased the waste waste resources from many people, based on the books and financial evidence presented by the claimant, etc., and included it in the necessary expenses and correct the tax base and

[Related Acts and subordinate statutes] Article 108 of the Restriction of Special Taxation Act / Income Tax Act

The imposition of the aggregate of the value-added tax for the taxable period from the first to the second period of the year 2009 on September 5, 2014 by the head of the OOOO tax office and the imposition of the aggregate of the global income tax for the period from the portion belonging to the year 2009 to the period belonging to the year 2013 by the head of the OOO tax office on September 15, 2014.

1. Reassessment of whether the claimant has actually purchased recycled waste resources, etc. from anOO, etc. (attached Form 3) claimed by the claimant, and according to the result, the tax base and tax amount shall be corrected;

2. The remaining requests for adjudication are dismissed;

1. Summary of disposition;

A. The claimant, under the trade name of OO, purchased recycled resources from OO won (hereinafter “index”) during the period of the value-added tax period from the first to the second period from 2009 to 2013, and filed a value-added tax return after deducting the input tax amount from the output tax amount pursuant to Article 108 of the Restriction of Special Taxation Act, which is a special provision on input tax deduction.

B. As a result of the audit conducted by the Board of Audit and Inspection, the director of the office of audit and inspection conducted a false entry into the business number of the government offices, such as the Gu office, the community service center, and the school from 2009 to 2013, and received an unfair input tax credit for the key amount, and notified each of the correction and notification of the total value-added tax for the taxable period from 1st to 2013 (attached Table 1) and notified the head of the office of audit and inspection of the office of audit and inspection, respectively, of the total amount of the global income tax for the period from 209 to 2013 from 2013 to the global income tax for the period from 2013.

C. The claimant appealed and filed an appeal on October 15, 2014.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

In fact, the claimant did not receive a receipt because he did not request personal information as an individual or a person with bad credit standing who has not most of the purchasing places for business registration due to the characteristics of the type of business;

b) require cash or transfers in the name of another person at the purchase office to be submitted as shown in the statement of the receipt of financial transactions and the statement of the balance for each customer, which has made cash or account transfers;

In the event that the purchase tax base is calculated by adding tax invoices and waste resources to the total sales tax base as shown below, the purchase ratio is higher than the average profit ratio of the same type of business, at an average of 75%;

The fact that a small amount of transaction that is difficult to grasp personal information at the time of filing a value added tax is inevitably stated in the local government (resident center and Gu office) and school for the purpose of obtaining constructive input tax deduction for recycled waste resources and that it can be presumed that the actual purchase is not the processed transaction amount, but the processed transaction amount;

If you deny the issues of local governments and schools, the percentage of the total sales OOO is very low to 34%, and there is a reflect that there was a real purchase naturally;

Where a person liable to pay tax has kept and recorded books pursuant to tax-related Acts, the agency shall conduct an investigation and decision on the relevant tax base based on the books and evidential materials related thereto; however, it is unreasonable for the agency to impose tax on the basis that the applicant has failed to submit such books due to lack of sulfur at the time of investigation, which violates the principle of substantial taxation

(b) Opinions of disposition agencies;

Article 39(2) of the Value-Added Tax Act provides that input tax shall not be deducted if a supplier of a tax invoice is different from the fact. In order to obtain the deduction of input tax under Article 108 of the Restriction of Special Taxation Act, the registration number (in cases of an individual, his/her resident registration number) and name, and the name of his/her representative (in cases of an individual, his/her personal resident registration number) and acquisition value, etc. shall be entered in the return of input tax under Article 110(5) of the Enforcement Decree of the Restriction of Special Taxation Act, and in cases where the above matters are not entered or the transaction details are different from the fact, the disposition agency's investigation confirms that the return of input tax amount

The Director of the Agency for the Confirmation of Transactions and the Director of the Account may prepare for objection after the completion of an investigation other than the data made at the time of transaction or investigation and trust it as the data made at will, and it is difficult to view it as the substantive evidence for legitimate purchase because there are many errors in the aggregate and resident numbers. Furthermore, even if the fact of transaction is verified by the evidence submitted by the claimant, it is not stated in the applicant's business registration number (or resident registration number) and name and representative's name in the report on input tax for recycled waste resources, etc. submitted by the claimant at the time of filing

The claimant asserts that the purchase price ratio is less than 34% in the case of deducting the unfair deduction amount from the reported purchase price, and that there was an actual purchase by considering the fact that the purchase price ratio is similar to the nationwide average, but the added value ratio by the actual purchase by the sources of transaction confirmation and the head of each account is not based on the side cost ratio depending on the technical ability, business ability, and cost reduction method of each business operator who actually runs an actual business nationwide, and it cannot be viewed as the basis for extra expense in the difference depending on the method of cost reduction. In light of the fact that the applicant for transaction confirmation and the head of each account is difficult to regard the materials voluntarily prepared for objection and made by himself at the time of transaction investigation as legitimate evidence such as the discovery of error in the name, resident number, monthly aggregate

3. Hearing and determination

A. Key issue

The propriety of the disposition imposing the value-added tax and the comprehensive income tax by falsely stating the details of the report on the purchase tax amount for recycled waste resources.

(b) Related Acts and subordinate statutes: To state in attached Form 2;

C. Facts and determination

(1) Examining the report on the completion of the tax offense investigation prepared by the investigating official ( July 2014), the following contents are revealed.

(A) Among the items of the purchase tax invoice for the report on deduction of waste resources for recycling resources, it appears that the local government (Gu office, resident center) and the school have deducted the constructive purchase tax for the processed waste resources without real purchase.

(B) Most of the sales are normal transactions, and the processed purchases of recycled waste resources consisting of most of the purchases are 36% and 56% of the total purchase. The ratio of processing expenses is high, and the actual amount of income in the account book is determined by estimation because it is difficult to calculate the actual amount of income. The claimant has estimated the estimated income by estimation, which is more excessive than the estimated income subject to the estimation of standard expense rate or the significant ratio of major expenses to the simple expense rate (2.8 times and 3 times).

(2) The evidence presented by the claimant is as follows.

(A) If the claimant asserts that there was an actual transaction and presented a balance statement by transaction partner (see attached Form 3), it appears that the 2009 purchase of OO Won from OO and 93 other than OO.

(B) Examining the source of confirmation of the fact of transaction (see, e.g., August 26, 2014), a certificate of seal impression is attached to the fact that the OO confirms the fact of transaction with the claimant.

(C) From 2009 to 2013, the name, amount, etc. of each date are written.

(D) Examining the financial evidence, such as the statement of transactions by account, it appears that the small amount of money was transferred to many people, such as OO, by telephone, etc.

(e) Other accounts have been presented.

(3) We examine the above facts and relevant laws and regulations comprehensively.

(A) The claimant asserts that the value-added tax is inappropriate on the ground that most of the purchasers request personal information as individuals or bad credit holders, but they did not receive a receipt by refusing transactions, and there was real purchase facts such as the details of financial transaction input tax and the balance statement by transaction partner. However, Article 110(5) of the Enforcement Decree of the Restriction of Special Taxation Act stipulates that when applying the special case for input tax deduction of value-added tax on recycled waste resources, etc., the supplier's registration number (in case of individuals, their resident registration number) and name and the name of their representative (in case of individuals, their personal names), or the transaction details are not recorded or different from the fact, the purchaser is not entitled to deduct the input tax, and the claimant receives the input tax deduction of value-added tax by making a false entry of the local government (Gu office, resident license, and resident license) and the business operator's number without purchase of the recycled waste resources.

(B) However, the disposition agency's opinion that it is difficult to recognize the facts of transaction and the head of the account ledger, etc. submitted by the claimant as the data submitted at the time of request for a trial. However, since 2009 to 2013, the total amount of revenue from 2009 to 2013 is 47% of the necessary expenses and it is difficult to regard the total amount as the processing purchase as the item of the disposition agency's investigation. In the case of the wholesale and retail business, there are frequent cases where waste resources are purchased from an individual (non-business operator) due to the nature of the disposition agency's business. In such a case, it is difficult to readily conclude the issue amount as the processing purchase in light of the fact that the actual transaction partner of the constructive purchase (including

In addition, it is reasonable to revise the tax base and tax amount of global income tax in light of the fact that the claimant purchases waste resources from many people during the period from 2009 to 2013 according to the balance statement by transaction partner (attached Form 3 transaction statement) which shows that the fact that the transaction has been made with the claimant, 10 persons such as OO, etc. among the transaction partners who the claimant claims as the actual transaction partner, submitted the confirmation source that the transaction has been made with the claimant along with the certificate of personal seal impression, and the financial evidence is transferred to many people, such as OO, etc. by telephone, and the fact that the claimant purchases waste resources from many people during the period from 2009 to 2013.

4. Conclusion

This case shall be decided as ordered in accordance with Article 81 and Article 65 (1) 2 and 3 of the Framework Act on National Taxes because the petition for a trial has some reasons.

Relevant Acts and subordinate statutes

(1) Framework Act on National Taxes

Article 14 [Real Taxation] (2) The provisions concerning the calculation of tax base in tax-related Acts shall apply according to the substance, notwithstanding the name or form of income, profit, property, act or transaction.

Article 16 (Base Taxation) (1) If a person liable for tax payment keeps and enters a book under tax-related Acts, the investigation and determination of the tax base of the national tax concerned shall be based on the book kept and entered and related documentary evidence.

(2) In examining and determining national taxes under paragraph (1), if the contents of the entry are different from facts or are omitted from the entry, only such part may be determined in accordance with the facts examined by the Government.

(3) When the Government examines and determines any fact different from the contents of entry or omission in the entry under paragraph (2), the fact examined and ground for determination by the Government shall be stated additionally in the determination note.

(2) Value-Added Tax Act

Article 17 (Payable Tax Amount) (2) The following input tax amounts shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, excluding the input tax amount in such

1-2. An input tax amount, where the tax invoice under Article 16 (1), (2), (4) and (5) is not delivered, or all or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as "necessary entry items") are not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in cases prescribed by Presidential Decree shall be excluded;

(3) Enforcement Decree of the Value-Added Tax Act

Article 60 (Scope of Purchasing Tax Amount) (1) "Cases prescribed by Presidential Decree" in the proviso to Article 17 (2) 1 of the Act means any of the following cases:

1. Where the list of the total tax invoices issued under Article 16 of the Act, or the receipt statement of credit card sales slip, etc. under Article 32-2 (1) of the Act (including tapes or diskettes processed by electronic accounting organizations; hereinafter referred to as "statement of receipt of credit card sales slip, etc.") is submitted along with the revised return of tax base pursuant to Article 25 (1) of the Enforcement Decree of the Framework Act on National Taxes

1-2. Where a correction agency provided for in Article 70 revises by submitting a list of total tax invoices by customer, credit card sales slip, etc. issued under Article 16 of the Act along with a written request for correction pursuant to Article 25-3 of the Enforcement Decree of the Framework Act on National Taxes

1-3. Where the head of competent tax office determines by submitting a list of the total tax invoices by customer, credit card sales slip, etc. issued under Article 16 of the Act along with the return of tax base after the due date of tax return under Article 25-4

1-4. Where the details of transactions are verified by the tax invoice delivered, in cases where the registration number or supply value of the aggregate tax invoice by customer, of the tax invoice by customer, received under Article 16 of the Act, is mistakenly entered differently from the fact

2. Where an entrepreneur submits a tax invoice issued pursuant to Article 16 of the Act or a credit card sales slip, etc. issued pursuant to Article 32-2 (3) of the Act to the Government through a confirmation by a correction agency prescribed in Article 70 in making a correction under Article 21 of the

(4) Restriction of Special Taxation Act

Article 108 (Special Cases of Deduction of Value-Added Tax for Recycled Waste Resources, etc.) (1) Where an entrepreneur who collects recycled waste resources and used goods for recycling purposes acquires any recycled waste resources and used goods from the State, local governments or other persons prescribed by Presidential Decree, and manufactures, processes, or supplies them, not later than December 31, 2009, an amount calculated by multiplying the acquired value of the recycled waste resources by 6/100, and an amount calculated by multiplying the acquired value of the used goods by 10/110 may be deducted, as his input tax amount, from his output tax amount under Article 17 (1) of the Value

(2) In applying the provisions of paragraph (1), where an entrepreneur who collects the recycled waste resources applies special cases concerning deduction of the input tax amount of value-added tax on the recycled waste resources, an input tax amount calculated within the limit of the amount calculated by subtracting the purchase value of the recycled waste resources (excluding the purchase value of fixed assets for business use by the relevant entrepreneur) that he/she has purchased after having received a tax invoice from the amount calculated by multiplying the tax base of value-added tax on the recycled waste resources supplied by the relevant entrepreneur for the relevant taxable period by 80/10 (90/100 shall apply to the recycled waste resources acquired not later than December 31, 2007) for the assessment basis of value-added tax on the recycled waste resources supplied by the relevant entrepreneur at the time of final return of value-added tax, may be deducted from his/her output tax amount. In such cases, where there is

(3) In applying the provisions of paragraphs (1) and (2), the scope of business operators collecting recycled waste resources and used goods, scope of recycled waste resources and used goods, method of input tax deduction, and other necessary matters shall be prescribed by the Presidential Decree.

(5) Enforcement Decree of the Restriction of Special Taxation Act

(1) A person who intends to obtain input tax deduction for recycled waste resources, etc. under Article 110 of the Act shall submit (including submission via national tax information and communications networks) a report on input tax for recycled waste resources, etc. as prescribed by Ordinance of the Ministry of Strategy and Finance at the time of filing a report under Article 18 or 19 of the Value-Added Tax Act along with a list of accounts for individual suppliers or receipts under Article 163 of the Income Tax Act or Article 121 of the Corporate Tax Act. In this case, where any of the following matters is not stated in the report on input tax for recycled waste resources, etc., or the details

1. Registration number (resident registration number in case of an individual) and name of the supplier, and name of the representative (in case of an individual, his name);

2. Acquisition value:

(6) Article 60 (1) of the Enforcement Decree of the Value-Added Tax Act shall apply mutatis mutandis to the deduction of input tax amount under paragraph (5).

(6) Income Tax Act

Article 80 (Determination and Correction) (3) Where the head of a regional tax office or the head of a regional tax office having jurisdiction over the place for tax payment determines or revises the tax base and amount of tax in the relevant taxable period pursuant to paragraphs (1) and (2), he/she shall determine or correct the amount based on the account books and other evidentiary documents: Provided, That where it is impossible to calculate the amount of income by using account books or other evidentiary

(7) Enforcement Decree of the Income Tax Act

Article 143 (Determination and Revision by Estimation) (1) "Grounds prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means any of the following cases:

1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;

2. Where the contents of the entry are obviously false in light of the scale of facilities, number of employees, raw materials, market prices, various charges, etc. of commodities or products.

3. Where the contents of the bookkeeping are obviously false considering the quantity of raw materials used, electric power used and other operational conditions.

(2) Where the tax base is estimated, determined and revised under the proviso to Article 80 (3) of the Act, the amount of tax base shall be calculated by making personal deduction and special deduction under Articles 50 through 52 of the Act from the income amount assessed under paragraph (3).

(3) In cases of estimated determination or correction of income amount under the proviso to Article 80 (3) of the Act, it shall be done by the following methods: Provided, That subparagraph 1-2 shall apply only to persons subject to the application of simple expense rate:

1. The method of determining or revising, as the relevant amount of income (hereafter referred to as "standard amount of income" in this Article), the amount obtained by deducting the amount under the following items from the amount of income. In such cases, if the amount to be deducted exceeds the amount of income, the amount in excess shall be deemed non-existent: Provided, That where the standard amount of income is in excess of the amount calculated by multiplying the amount of income under subparagraph 1-2 by the ratio prescribed by Ordinance of the Ministry of Strategy and Finance, the amount calculated by multiplying such ratio may be determined as the amount of

(a) Purchase costs (excluding those for fixed assets for business: hereafter the same shall apply in this Article) and rent expenses on the fixed assets for business which are paid or payable by the documentary evidences;

(b) The amount paid or payable by the relevant documentary evidence as wages and retirement benefits for employees;

(c) The amount obtained by multiplying income by standard expense rate;

1-2. The method of determining or revising as income amount the amount obtained by deducting the amount obtained by multiplying the income amount by the simple expense rate;

1-3. The method of determining or correcting an amount calculated by multiplying the amount of business income under Article 73 (1) 4 of the Act (hereinafter referred to as "business income subject to the year-end tax settlement") by the income rate for business income subject to the year-end tax settlement under Article 201-3 (1) as such amount

2. When the standard or simple expense rate has not been determined or the account books or other documentary evidence has been destroyed or lost due to natural disasters or other force majeure, the method of determining or revising the income amount in consideration of the income amount of the other business operator of the same business type in which the account books or other documentary evidence are deemed to be the most correct: Provided, That when the account books, etc. have been destroyed or lost after the final return on tax base as prescribed in Article 70 of the Act, the income amount shall be determined or corrected according to the income rate

3. Other reasonable methods recognized by the Commissioner of the National Tax Service.

(4) The term "persons subject to the application of simple expense rates" in the proviso to the part other than the subparagraphs of paragraph (3) means business operators falling under any of the following subparagraphs:

1. A businessman who starts a business anew in the current taxable period; and

2. A businessman whose aggregate amount of income in the immediately preceding taxable period (including the amount of income increased by determination or revision) falls short of the amount in the following items:

(a) Agriculture, forestry, fishery, mining, wholesale and retail, real estate sales, and other businesses not falling under items (b) and (c): 60 million won;

(b) Manufacturing, lodging and restaurant business, electricity, gas, steam and water service business, sewage, waste disposal, raw material recycling and environment restoration business, construction business (including residential building development and supply business under Article 150-2 (3)), transportation business, publication, image, broadcast and communications and information service business, finance and insurance business: 36 million won;

(c) Real estate rental, specialized, scientific and technical services, business facility management and business support services, educational services, health and social welfare services, services related to art, sports and leisure, associations and organizations, repair and other personal services, and family-employed activities: 24 million won.

(5) Scope of purchase costs and rents for fixed assets for business under paragraph (3) 1 (a), and types of documentary evidence under items (a) and (b) shall be determined by the Commissioner of the National Tax Service

(6) In applying paragraph (4) 2, where any business type under items (a) through (c) of the same subparagraph is concurrently operated or two or more places of business are at least two, the amount of income calculated by applying mutatis mutandis Article 208

(7) Notwithstanding paragraph (4), a business operator falling under any of the following subparagraphs shall not be included in a person subject to the application of simple expense rate:

1. A business operator under Article 147-3;

2. A person who runs a business falling under Article 74 (2) 7 of the Enforcement Decree of the Value-Added Tax Act.

3. A business operator who is obligated to become a Cash Receipt merchant pursuant to Article 162-3 (1) of the Act, but fails to become a Cash Receipt merchant (limited to the relevant taxable period).

4. A business operator who violates Article 162-2 (2), 162-3 (3) or (4) of the Act in the relevant taxable period and is notified by the head of the competent tax office at least three times in the relevant taxable period pursuant to the latter part of Article 162-2 (4) or the latter part of Article 162-3 (6) of the Act and the total amount of such notification is at least one million won, or five times or more (limited to the relevant taxable period in which the date on

(8) When the amount of income of persons with allowances, reserve funds, etc. to be included in gross income under the Act or other Acts is determined or revised by estimation pursuant to the proviso to Article 80 (3) of the Act, the allowances, reserve funds, etc. to be included in gross income in the relevant taxable period shall be added