Whether the tax authority’s intent of non-taxation must be expressed explicitly or implicitly in the establishment of non-taxation practice

The practice of national tax administration accepted generally by taxpayers pursuant to Article 18(2) of the former Framework Act on National Taxes (amended by Act No. 3746 of Aug. 7, 1984) can be acknowledged in cases where the state of non-taxation continues for a long time, and it can be seen as an implied declaration of intention by the tax authority that it does not be subject to taxation.

Article 18 of the former Framework Act on National Taxes (amended by Act No. 3746 of Aug. 7, 1984)

Supreme Court Decision 81Nu266 Decided December 26, 1984

Attorney Jeon-gu et al., Counsel for the defendant-appellant

The director of the tax office

Seoul High Court Decision 84Gu351 delivered on June 13, 1985

The judgment below is reversed and the case is remanded to Seoul High Court.

1. The grounds of appeal are examined (to the extent of supplement in case of submission of the supplementary appellate brief after the expiry of the submission period).

According to the reasoning of the judgment of the court below, the plaintiff is a corporation operating marine transportation services on January 1, 1980, and the plaintiff has entered into a contract with Sish Shipping Co., Ltd. and its domestic shipping agencies with the plaintiff directly received income accruing from the operation of ships belonging to the above two companies. According to Article 59 (5) of the Corporate Tax Act, if the plaintiff is a domestic agent of a foreign corporation operating ships or aircraft going to foreign countries and does not fall under the provisions of Article 56 (3) of the Act, the court below should withhold corporate tax as provided in paragraph (1) of the same Article on the ground that it did not specify that the plaintiff's intention to impose corporate tax on the non-taxable ships or aircraft for the purpose of non-taxation on the non-taxable ships or between the Government of the Republic of Korea and the Government of the Republic of Korea for non-taxable and non-taxable ships, and thus, it cannot be seen that the plaintiff would be exempt from corporate tax on the non-taxable ships or non-taxable ships of the Republic of Korea for the reason that it did not belong to the non-taxable ships or non-taxable ships.

However, under Article 18(2) of the former Framework Act on National Taxes (amended by Act No. 3746, Aug. 7, 1984; Article 18(3) of the current Act), if the state of non-taxation continues for a long time, it may be recognized as an implied expression of intention by the tax authorities that it does not constitute taxation on such matter (see Supreme Court Decision 81Nu266, Dec. 26, 1984). According to the records, the Government of the Republic of Korea, and the Government of the Republic of Korea, and the Government of the Republic of Korea, and the Government of the Republic of Korea, under the principle of reciprocity, provide that "the Government of the Republic of Korea shall be exempt from income tax, corporate tax and corporate tax which can be imposed on the revenue of the vessel or aircraft registered with the Republic of Korea from the residents of the Republic of Korea or the corporation of the Republic of Korea, and the Government of the Republic of Korea, among the ships which were registered with the Republic of Korea's 197 governing the above taxation of the vessel.

2. Furthermore, according to the records, the defendant litigation performer asserts that there is no interest in seeking confirmation of invalidity since he paid the corporate tax already imposed on the part of the disposition imposing the plaintiff seeking confirmation of invalidity at the court below. However, the court below did not make any determination on this issue. The court below should make a review on this issue and determine whether there is a interest in confirmation.

3. Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Young-ju (Presiding Justice)