A. The meaning of Article 15(10) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3196 of Dec. 28, 1979) and the meaning of Article 27-2(2) of the Enforcement Decree of the same Act and the method of calculating the exempted income

(b) Where a corporation which operates a tax-free business and a taxable business concurrently accounts for separate accounts by including allowance for bad debts only for the taxable business, whether it shall be deemed as common deductible expenses for the taxable business and the

A. The purpose of Article 15(10) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3196 of Dec. 28, 1979) and Article 27-2(2) of the Enforcement Decree of the same Act is not to exempt from corporate tax or income tax corresponding to the amount of interest, fees, or tax base corresponding to the amount of tax base, and it is reasonable to view that a foreign bank's domestic branch is exempted from corporate tax or income tax corresponding to the income accruing from such business. Therefore, in calculating the income that the foreign bank's domestic branch will be exempted from corporate tax or income tax corresponding to the income accrued from such business, it shall be calculated by deducting the interest paid on the foreign currency funds used for such loan from the interest paid on foreign currency loans with the maturity of not less than three years and the necessary expenses such as the interest paid on the foreign currency funds used for such loan, from the amount of interest paid on foreign currency loans used for the loan for three years or more, in deducting the interest paid, the amount corresponding to the interest paid on foreign currency loans for three

B. If a corporation concurrently operates a tax-free business and a taxable business, without establishing the bad debt allowance account for the tax-free business portion, appropriates the bad debt allowance for the taxable portion, and separate accounts for the bad debt allowance limited to the taxable portion, it shall be treated as losses separate from the taxable portion, and it shall not be deemed as common losses for the taxable business and the tax-free business.

A. Article 15(10) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3196 of Dec. 28, 1979); Article 14 of the Corporate Tax Act; Article 27-2(2) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act

A. Supreme Court Decision 81Nu215 delivered on May 29, 1984, Supreme Court Decision 81Nu241 delivered on December 14, 1982, Supreme Court Decision 84Nu351 delivered on March 24, 1987

Paris National Bank, Inc., Counsel for the defendant-at-law, limited number of Korea

The director of the tax office

Seoul High Court Decision 81Gu41 delivered on February 20, 1987

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 15(10) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 3196, Dec. 28, 1979); Article 27-2(2) of the Enforcement Decree of the same Act provides that the interest and commission which a domestic branch of a foreign bank loans with foreign currency redemption period of three years or more shall be exempted from income tax or corporate tax. It is reasonable to view that it does not mean that the domestic branch of the foreign bank grants corporate loans with foreign currency redemption period of three years or more, and that it shall be exempted from corporate tax or income tax equivalent to the tax base of such foreign currency loans. Thus, in calculating income to be exempted from foreign currency loans as above, it shall be calculated by deducting the interest paid on foreign currency loans used for such loans from the foreign currency loans and necessary expenses such as the total amount of interest paid on foreign currency loans used for such loans from the domestic branch of the foreign bank for 19 years or more, and that it shall be deemed that the foreign currency loan funds used for such foreign currency loans should be included in the calculation for 18 years or more.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yellow-ray (Presiding Justice)