Seocho 2010west 1707 (Law No. 29, 2010)

It is legitimate to calculate capital gains without reporting forest land owned by a corporation as land for non-business use, and deducting sales expenses and management expenses.

Unless the Ordinance of the Ministry of Finance and Economy deems that forest land is not a non-business land, and in light of the purport of the law, it shall be recognized as land for non-business use unless it is recognized as land related to the business of the corporation. In calculating the transfer difference of forest land, the sales expenses and management expenses shall not be deducted as necessary expenses

2010Guhap47909 Revocation of Disposition of Imposing corporate tax

○○ Co., Ltd.

○ Head of tax office

April 28, 2011

May 19, 2011

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s imposition of corporate tax of KRW 621,050,640 for the year 2007 against the Plaintiff on September 1, 2009 and corporate tax of KRW 480,256,480 for the year 2008 shall be revoked.

1. Details of the disposition;

A. The plaintiff is engaged in real estate sales business, sales agency business, etc., and from April 2007 to April 2008

12. Up to ○○○○-gun, Gyeonggi-do, ○○○○-gun, ○○○-do, and other forests and fields 90,134 square meters (hereinafter “the instant forest”) acquired and transferred in installments over 59 times in 2007 and 49 times in 2008, and thereafter filed a corporate tax base and tax return. After calculating the net income amount calculated by subtracting sales cost and sales expenses, etc. from the sales of each year in 2007 and 2008, the amount of capital gains was calculated through the tax adjustment on insurance premiums, and the amount of tax calculated by multiplying the insurance premium by 30/10 was added to the corporate tax amount, and was reported and paid to the Defendant.

B. From April 15, 2009 to July 6, 2009, the Seoul Regional Tax Office conducted a consolidated investigation of corporate tax in 2007 and 2008 with respect to the Plaintiff, and notified the Defendant to the effect that the amount of capital gains should be calculated by deeming the same as the land for non-business under Article 55-2 (2) 2 of the former Corporate Tax Act (amended by Act No. 8852 of Feb. 29, 2008; hereinafter referred to as the “former Corporate Tax Act”) in calculating the amount of capital gains for the forest of this case, by deeming it as the land for non-business use under Article 5-2 (2) 2 of the former Corporate Tax Act (amended by Act No. 885

C. Accordingly, on September 1, 2009, the Defendant corrected and notified the Plaintiff of KRW 621,050,640 and corporate tax of KRW 480,256,480 for the year 2008 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on April 20, 2010, but was dismissed on September 29, 2010.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 5 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Whether the forest of this case is land for non-business use

Article 55-2 (2) 2 (c) of the former Corporate Tax Act stipulates that "the forests and fields directly related to the corporation's business are one of the cases not deemed the land for non-business use" and delegates the specific contents to the Presidential Decree. Based on this, Article 92-6 (4) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007; hereinafter referred to as the "former Enforcement Decree of Corporate Tax Act") only only several special areas under subparagraphs 1 through 6, and subparagraph 7 of Article 92-6 (4) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) stipulates that "the forests and fields prescribed by Ordinance of the Ministry of Finance and Economy, which

In full view of the provisions of the above statutes, the scope of forest land excluded from the land for non-business use cannot be determined. Thus, it cannot be determined that the forest land of this case is the land for non-business use, and the plaintiff acquired the forest land of this case as a corporation with the main purpose of real estate sales business, which is not the form of fixed assets, and transferred it after being acquired as the goods for sale purpose other than the form of fixed assets.

(2) Whether the necessary expenses (sales expenses and management expenses) are deducted

Even if the forest of this case is deemed land for non-business use, the "book value" under Article 55-2 (6) of the former Corporate Tax Act should be interpreted to include sales expenses and management expenses directly paid to transfer the forest of this case as necessary expenses. Thus, in calculating the transfer difference in the forest of this case, the above sales expenses and management expenses should be deducted in calculating the transfer difference in the forest of this case. If such interpretation is not made, in the case of the Plaintiff corporation that runs real estate sales business, the total transfer expenses are relatively heavy compared to the Income Tax Act recognized as necessary expenses, and in the case of the Plaintiff corporation that runs real estate sales business, the corporate tax to be additionally paid for the transfer income of land, etc. substantially exceeds the net income amount, thereby violating the principle of property rights, the principle of substantial taxation, and the principle of tax equality. Moreover, as the Corporate Tax Act was amended on May 21, 2009, Article 55-2 (8) newly established to the effect that Article 55-2 (8) is not applicable to the income accruing from the acquisition and transfer of non-business land.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether each forest of this case can be viewed as non-business land

(A) Article 55-2 (1) 3 of the former Corporate Tax Act stipulates that the tax amount calculated by multiplying the transfer income of land, etc. by 30/10 shall be paid as the corporate tax on capital gains from transfer. Article 55-2 (2) of the former Corporate Tax Act stipulates that "land falling under "non-business land" shall be listed as the corporate tax on capital gains from transfer, and subparagraph 2 of the same Article exceptionally stipulates "forest land" as one of "non-business land" in principle, excluding the land listed under each item in subparagraph 1 and subparagraph 3 (hereinafter "farmland"). However, among the forests excluded from the non-business land, the above subparagraph 2 (c) is one of the forests excluded from the land for non-business use, its use, holding period, area, etc., which is prescribed by the Presidential Decree, considering the location of the land owner, etc., and therefore, Article 92-6 (1) 4 through 6 of the former Enforcement Decree of the Corporate Tax Act does not correspond to the land for non-business use."

(B) The purport of Article 55-2 (1) 3 of the former Corporate Tax Act (amended by Act No. 55-2 (1) is to strengthen the corporate tax on capital gains from the transfer of land for non-business use of a corporation. The purpose of Article 55-2 (1) 3 of the former Corporate Tax Act is to stabilize the real estate market and recover speculative profits by suppressing the demand for real estate speculation through the excessive use of land for the purpose of property increase, as it is to strengthen the taxation on land for non-business use of a corporation. Unlike the case of farmland or stock farm land, Article 55 (2) 2 of the former Corporate Tax Act is different from the case of farmland or stock farm land in principle, it is deemed that land for non-business use is included in the land for non-business use in principle, and it is evident that it is a business without speculative purpose in light of the nature of the acquiring entity, the acquiring entity, or the degree of land for non-business use.

In full view of the legislative intent, regulatory structure, etc. of the relevant Acts and subordinate statutes, the scope of "land for non-business" subject to transfer as one of the special taxation cases on capital gains from the corporation's land is determined by Article 5-2 (2) of the former Corporate Tax Act, and therefore, forest land is, in principle, non-business land pursuant to Article 5-2 (2) 2 of the same Act. However, forest land is excluded from land for non-business under Article 92-6 (4) of the Enforcement Decree of the same Act and Article 92-6 (4) of the Enforcement Decree of the same Act, which was enacted pursuant to subparagraph 7 of the same Act. However, Article 55-2 of the same Act and Article 92-6 (4) of the same Decree set forth the scope of exclusion from land for non-business, which is excluded from land for non-business in light of the above purport of the above Act, and they are merely delegated to the administrative laws and regulations, and the Ordinance of the Ministry of Finance and Economy did not enact such regulations.

As to this case, since the Plaintiff acquired the forest of this case as a profit-making corporation for the purpose of real estate sale, there is no data on the situation that the Plaintiff must acquire the forest of this case for the purpose of running its business. Thus, the forest of this case shall be deemed the forest of this case as the land for non-business use under the main sentence of Article 5-2 (2) 2 of the former Corporate Tax Act, barring any special circumstance, and it shall not be deemed that the forest of this case is directly related to the business of the Plaintiff corporation under Article 92-6 (

Therefore, the plaintiff's above assertion is without merit.

(2) Whether the necessary expenses are deducted

In light of the principle of no taxation without law, or the requirements for non-taxation or tax reduction and exemption, the tax law is interpreted as the legal text, barring special circumstances, and it is allowed to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decision 2007Du9884, Oct. 26, 2007).

Article 55-2 (6) of the former Corporate Tax Act provides that capital gains from transfer of land, etc. shall be calculated by deducting the book value at the time of transfer from the transfer amount of land, etc. In this context, "book value" means the tax book value (excluding the depreciation reserve from the acquisition value) in its language and text. Unless there is a separate provision that the necessary expenses should be deducted from the necessary expenses, such as Article 95 (1) of the Income Tax Act, it shall not be deemed that the necessary expenses should be automatically deducted from the capital gains, and the necessary expenses shall not be deducted from the gross profit when calculating the net income of a corporation and already reflected in the calculation of the corporate tax for each business year.

Furthermore, Article 55-2(6) of the former Corporate Tax Act prohibiting the deduction of expenses related to the transfer of land for non-business use as seen above from the deduction of speculative gains on land owned by a corporation to restrain speculative demand on land and the stabilization of the real estate market. In light of the fact that the above provision is intended to restrain speculative demand on land by recovering speculative gains on land for non-business use owned by the corporation, it cannot be deemed that the above provision violates the principle of property rights guarantee and excessive prohibition, or it does not violate the substance over form principle, and the principle of tax equality. Furthermore, even if a provision was newly established temporarily excluding the corporate tax and the corporation tax on capital gains on non-business use as a result of the amendment of the Corporate Tax Act, such amendment

Therefore, the plaintiff's above assertion is without merit.

3. Conclusion

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