The revision of the purchase and sale price of shares constitutes a ground for subsequent revision.

The reason why the portion of the purchase price was revised is that the situation that was inherent at the time of the initial contract was realized and the sale price was changed due to a justifiable reason for business, and the reason that the contract was cancelled due to an unavoidable reason that occurred after the formation of the contract is determined should be determined.

Request for correction, etc. under Article 45-2 of the Framework Act

2016Guhap9591. Revocation, etc. of a disposition rejecting a request for rectification

The United States of America

The head of the East High Tax Office

April 11, 2017

May 30, 2017

1. The disposition that the Defendant dismissed the claim for rectification of the transfer income tax reverted to the year 2010 that the Plaintiff rendered on November 30, 2015 shall be revoked.

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

Cheong-gu Office

Order.1)

1. Details of the disposition;

A. On September 10, 2010, the Plaintiff decided to transfer 9,600 shares of the instant company (hereinafter referred to as “instant shares”) to BB global group limited companies (hereinafter referred to as “B group”) as the representative director and shareholder of BB Korea Co., Ltd. (hereinafter referred to as the “instant company”) on September 10, 201, while indicating that the purchase price does not exceed US$ 1,050,000 (hereinafter referred to as “US”). The specific amount of payment is to be determined in proportion to the amount of profit prior to the tax year 2011 and 2012 of the instant company (hereinafter referred to as “instant sales contract”).

B. On November 30, 2010, the Plaintiff reported and paid 360,364,000 capital gains tax on the purchase price of USD 1,050,00 (20,000,000,000 as of exchange rate of KRW 1,146.39 at that time) which is the maximum limit of the purchase price under the instant sales contract to the Defendant.

C. The Plaintiff and BB Group are the instant company two times after the conclusion of the instant sales contract.

The Plaintiff changed the purchase price in a manner that changes the base year of the pre-tax revenues and the terms and conditions of payment. On November 11, 2015, the Plaintiff claimed the Defendant to change the tax base of capital gains tax in accordance with the changed purchase price.

D. On November 30, 2015, the Defendant: (a) on November 30, 2015, filed an application for rectification by the Plaintiff; (b) the statutory

1) On April 4, 2017, the Plaintiff amended the purport of “a disposition rejecting a claim for correction of the capital gains tax for the year 2010 that the Defendant rendered to the Plaintiff on November 30, 2015, to the extent that the Plaintiff seeks refund of KRW 102,74,704, which was made against the Plaintiff on November 30, 2015,” but the Plaintiff filed a claim for correction within the scope of seeking revocation of the portion exceeding the legitimate tax amount, and rendered a disposition rejecting the entire claim by the Defendant. As such, the Plaintiff is

From May 31, 2011, the Plaintiff dismissed the Plaintiff’s request for correction on the ground that the period of ordinary request for correction stipulated in Article 45-2(1) of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014) has elapsed three years (hereinafter “instant disposition”).

E. On June 27, 2016, the Plaintiff dissatisfied with the instant disposition and filed a request for examination with the Commissioner of the National Tax Service. However, the Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on August 30, 2016.

[Ground of recognition] Unsatisfy, entry of Gap evidence 1 through 17 (including each number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

1) The plaintiff's assertion

The purpose of amending the instant sales contract is to partially cancel the sales price, and thus, Article 45-2(2)5 of the former Framework Act on National Taxes (amended by Act No. 13552, Dec. 15, 2015; hereinafter the same) and Article 25-2 subparag. 2 and subparag. 4 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 27883, Feb. 7, 2017; hereinafter the same) constitutes grounds for post-explosion correction under Article 25-2 subparag. 2 and subparag. 4 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No.

2) The defendant's assertion

Article 25-2 subparags. 2 and 4 of the Enforcement Decree of the former Framework Act on National Taxes does not include “explosion of agreement” as well as “explosion of a later request for correction as prescribed under Article 25-2 subparag. 2 and 4 of the former Enforcement Decree of the Framework Act on National Taxes,” and the Plaintiff’s change of the purchase price with the callmon group in order to receive the payment of the purchase price objectively cannot be deemed as an inevitable reason as stipulated in Article 25-2 subparag. 2 of the former Enforcement Decree of the Framework Act on National Taxes because it is difficult to recognize the validity of the contract as it is because it is difficult to view that the change of the purchase price with the callmon group constitutes an inevitable reason.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

1) At the time of entering into the instant sales contract, the portion relating to the price is as follows, and the Plaintiff on September 2010.

10. AB Group received USD 374,958,71 ($ 443,733,487 at the time of exchange rate) equivalent to 40% of the total purchase amount.

The sales value of the shares of this case is USD 1,750,00, and the remaining amount after deducting the total amount of debts at the present point shall be 60%, but the total sales amount shall not exceed USD 1,050,000 (1.1.).

2) The Plaintiff and BB Group did not have much profits before the 2011 of the instant company. The Plaintiff and BB Group were 2011.

12. 7.2. The 30% payment date and the payment date and amount in accordance with the terms and conditions of payment, each of which are to be paid in a lump sum, were changed as follows:

4) According to the revised contents of the instant sales contract, the Plaintiff is a BB Group.

(z) On March 23, 2015, USD 338,538 ($181,410,652) was received respectively as of March 28, 2016 (the amount calculated by applying USD 440,457).

[Ground of recognition] Unsatisfy, entry of Gap evidence 1 through 10, 17, the purport of the whole pleadings

D. Whether a change in the purchase price constitutes grounds for subsequent correction

1) Article 45-2(2) of the former Framework Act on National Taxes (amended by the statutory due date of return)

If any of the following grounds arises, a person may request the determination or correction within two months from the date he/she becomes aware of the occurrence of such cause, regardless of the period prescribed in paragraph (1), and the "if the cause prescribed by Presidential Decree, which is similar to subparagraphs 1 through 4 of the same paragraph, takes place after the statutory due date of return of the national tax, takes place after the statutory due date of return of the national tax," is stipulated. In addition, Article 25-2 of the former Enforcement Decree of the Framework Act on National Taxes provides that "if a contract related to the effect of transaction, act, etc., which served as the basis for calculating the tax base and the amount of tax, is terminated or cancelled due to the exercise of the right of rescission, or due to unavoidable reasons that occur after the formation of the relevant contract," and 4.

According to the language and text of the above Act, the exercise of the right of rescission, whether the right of rescission is the right of statutory rescission, or

In the event that the contract is terminated, it shall be recognized as a ground for future correction: Provided, That if the nature of the rescission of the agreement is recognized as a ground for future correction even if it can be seen as a new contract between the parties after the lapse of a long period from the time the contract is concluded, it shall be interpreted that the termination of the agreement stipulates as a ground for future correction only when there is an inevitable reason that arises after the contract is concluded.

2) The ex post facto request for correction system causes certain reasons after the establishment of the tax liability.

In the event that a change occurs in the basis of calculation of tax base and tax amount, thereby enabling taxpayers to file a request for reduction of their rights by proving the relevant fact. The principle of determination of rights, which is the principle of determining the timing of attribution of income under the Income Tax Act, is based on the time when a right that is not the time when income is determined and at an interval between the time when income is realized and the time when income is realized, so that income in the pertinent taxable year is calculated based on the premise that it would be realized in the future. Such principle of determination of rights ought to be construed as having been carried out in advance on the premise that a right that is not realized in the pertinent taxable year is to be imposed on an uncertain income. Such principle of determination of rights ought to be construed as having the purpose of uniformly grasping income in accordance with Article 20 of the Framework Act on National Taxes (see, e.g., Supreme Court Decisions 200Du16281, Mar. 13, 198; 200Du1637, supra.).

3) We can find out the aforementioned facts and the whole purport of the evidence and the pleading prior to the aforementioned facts.

Comprehensively taking account of the following circumstances, the revision of the part concerning the purchase price in the instant sales contract constitutes a realization of the circumstances inherent at the time of the initial contract, and the change of the purchase price due to justifiable reasons for business, and constitutes “a cause similar to the cancellation of a contract due to unavoidable reasons that occurred after the formation of the relevant contract” under subparagraphs 2 and 4 of Article 25-2 of the former Enforcement Decree of the Framework Act on National Taxes, and thus, the grounds for the subsequent revision

① At the time of entering into the instant sales contract by the Plaintiff and BB Group, the total sales amount is 60% of the remainder which remains after deducting total debts from total sales value of shares in the instant case, and the company’s profits prior to the tax year 201,2012 are at least 1,000,000,000, the total sales amount is at least 60% of the sales amount.

The amount of the purchase price was not fixed by determining the amount of the purchase price to be paid, and the Plaintiff was expected to change the purchase price later from the time of concluding the sale contract by reporting the trade price of USD 1,050,000, which is the maximum amount of the purchase price, premised on the premise that the total amount of the purchase price is zero and the conditions for the profit of the entire tax

② When the pre-sale profit of the instant company, which is the basis for calculating 60% of the purchase price, was different from the anticipated profit, the Plaintiff was not paid from the standpoint of the Plaintiff, and the BB group, as a major shareholder of the instant company, has a profit to make the Plaintiff, a representative director of the instant company, improve the profit structure of the instant company, and thus, there was a justifiable reason for business to change the criteria for calculating the purchase price, and it is difficult to deem that there was a different purpose of tax avoidance from the change in the criteria for

③ As such, it is difficult to deem that the Plaintiff and BB Group had an objective of tax avoidance, and part of the Plaintiff’s profits from the transfer of the instant shares was not ultimately realized;

Considering the purport, significance, function, and limitation of the later filing of a claim for correction, it is difficult to narrowly interpret the “reasons for unavoidable reasons” under Article 25-2 subparag. 2 or subparag. 4 of the former Enforcement Decree of the Framework Act on National Taxes, as alleged by the Defendant, solely on the ground that the Plaintiff’s tax return becomes final and conclusive, and the right to expectation for taxation of the State has been realized or there is a incentive to reduce taxes between the parties.

④ Even if a sales contract was concluded and the transfer price was fully paid, if the sales contract is assumed to have been rescinded due to disputes arising in connection with the performance of the sales contract, the said sales contract becomes retroactively null and void, and thus, a lawsuit for transfer to the seller is retroactively void.

There is no circumstance to view a disposition imposing capital gains tax on the premise that there was acquisition as unlawful (Supreme Court Decision 2014Du44076 Decided February 26, 2015).

E. Whether the Plaintiff’s request for correction was made within the period

1) Article 45-2(2) of the former Framework Act on National Taxes (amended by the statutory due date of return)

When a cause for future correction arises, a person may make a request for decision or correction within two months from the date on which he/she becomes aware of the occurrence of the cause, notwithstanding the period for ordinary request for correction under paragraph (1).

2) The purpose of the ex post facto request for correction lies in expanding the remedy of taxpayers by allowing taxpayers to prove the relevant fact when a certain subsequent change occurs on the basis of calculation of the tax base and the amount of tax after establishment of the tax liability (see, e.g., Supreme Court Decision 2009Du22379, Jul. 28, 201); rather than depending on whether a taxpayer’s right to request correction based on the occurrence of a subsequent cause is explicitly stipulated in the law, it is naturally recognized in light of the spirit of the Constitution guaranteeing no taxation without law and property rights; the Framework Act on National Taxes newly establishes a correction system based on the revised cause of Article 45-2 as stated in the above sound reasoning; thus, it appears that the period for filing a request for correction based on the subsequent cause under the Framework Act on National Taxes should be determined within 20 months after the date on which the relevant cause for filing a request for correction arises, rather than on the date on which the relevant cause for filing a request for correction arises under Article 20-1 of the former Framework Act on National Taxes can be determined.

3) According to the facts acknowledged earlier, the amount equivalent to 60% of the sales price under the instant sales contract was modified to be computed on the basis of the pre-sale profit in 2014 and 2015, and it is reasonable to deem that the Plaintiff recognized that the basis for calculating the tax base and the amount of the pre-sale profit of the instant company was definitely changed on December 31, 2015, when calculating the tax base and the amount of the pre-sale profit in 2015, and thus, the claim for correction filed at that time is lawful since it was filed within the period for filing

F. Sub-committee

The alteration of the price of the instant sales contract constitutes grounds for subsequent correction, and the Plaintiff’s request for correction was made within the period of filing the request for correction, and thus, the instant disposition on a different premise is unlawful.

3. Conclusion

Thus, the plaintiff's claim of this case seeking the cancellation of the disposition of this case is accepted as reasonable.