Whether special rural development tax is not levied on the portion exceeding 500 million won out of the corporate tax base under Article 5 (1) 3 of the Act on Special Rural Development Tax in addition to the special rural development tax for the abated or exempted special rural development tax in cases where corporate tax, etc. is reduced or exempted on gains from transfer of factories

Article 3 subparag. 1 and 2, Article 4 subparag. 12, and Article 5(1)1 and 3 of the Act on Special Rural Development Tax, Article 4(6)1 and Article 4(7) of the former Enforcement Decree of the Act on Special Rural Development Tax (amended by Presidential Decree No. 14868, Dec. 30, 1995); Article 42(1) and (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 4666, Dec. 31, 1993); Article 43(1) of the former Regulation of Tax Reduction and Exemption Act; Article 16(7) of the Addenda of the same Act provides that the special tax reduction and exemption should not be imposed on a corporation whose tax reduction and exemption exceeds the specific tax reduction and exemption provided for in Article 5(7) of the same Act, and Article 16(7) of the same Act provides that the special tax exemption and exemption provided for in Article 5(1)7(7) of the same Act shall not be imposed on a specific tax reduction or exemption and exemption.

Article 3 subparag. 1 and 2, Article 4 subparag. 12, Article 5(1)1 and 3 of the Act on Special Rural Development Tax, Article 4(6)1 and Article 4(7) of the former Enforcement Decree of the Act on Special Rural Development Tax (amended by Presidential Decree No. 14868 of Dec. 30, 1995), Article 42(1) and (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993), Article 16(7) of the Addenda (see current Article 43(1)), Article 42(1) and (2) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993)

Supreme Court Decision 97Nu5572 delivered on October 24, 1997 (Gong1997Ha, 3689) Supreme Court Decision 97Nu1587 delivered on December 26, 1997 (Gong1998Sang, 438)

Korea Key Tonnage Co., Ltd. (Law Firm Ampoon, Attorneys Seo-won et al., Counsel for the plaintiff-appellant)

Head of Pyeongtaek Tax Office

Seoul High Court Decision 97Gu12145 delivered on October 16, 1997

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

Article 3 of the Act on Special Rural Development Tax (hereinafter referred to as the "Special Agricultural and Fishing Villages Tax") provides that with respect to taxpayers subject to special agricultural taxes, persons subject to reduction or exemption of income tax, corporate tax, etc. under the Regulation of Tax Reduction and Exemption Act (hereinafter referred to as the "Special Agricultural and Fishing Villages Act"), among persons liable to pay corporate tax under subparagraph 1, corporations whose tax base exceeds 500 million won among persons liable to pay special agricultural taxes under subparagraph 2, Article 5 (1) provides that the amount of reduction or exemption of income tax, corporate tax, etc. subject to reduction or exemption under subparagraph 1, subparagraph 3, the amount exceeding 50 million won among the tax base amount of corporate tax on income for each business year under subparagraph 3, and Article 4 subparagraph 12, subparagraph 3 of the Act provides that "the special agricultural income tax should be exempted for the purpose of securing national competitiveness, such as the formation of technology and human resources of low-income persons, public services, etc., or for the efficient operation of the national economy, such special agricultural income tax reduction or exemption under Article 14 of the Act.

On the other hand, Article 42(1) and (2) of the former Enforcement Decree of the Act prior to the amendment by Act No. 4666 of Dec. 31, 1993 provides that a domestic corporation operating a business with factory facilities in a large city and transfers the factory site and buildings to relocate the factory to provincial areas shall be exempted from the corporate tax, capital gains tax, or special surtax. Article 43(1) of the former Special Act provides that the tax amount equivalent to 50/100 of capital gains tax or special surtax shall be reduced or exempted, and Article 16(7) of the Addenda provides that where a domestic person operating a business with a large city factory facilities in a large city transfers the factory to a local area by December 31, 1995, the former provisions of Article 42 shall apply to the reduction or exemption of capital gains tax, etc.

In full view of the contents of the relevant laws and regulations, Article 4(7) of the Decree provides that the reduction or exemption under Article 16(7) of the Addenda of the above Enforcement Decree shall be exempt from the agricultural special tax only with respect to the reduction or exemption under Article 4(6)1 of the Decree, even in the case of the reduction or exemption under Article 16(7) of the Addenda of the above Enforcement Decree. Thus, the provision on the non-taxation of the agricultural special tax under Article 5(1)1 of the Agricultural Special Tax Act, which imposes on the premise of a certain reduction or exemption of tax (see, e.g., Supreme Court Decisions 97Nu5572, Oct. 24, 197; 97Nu1587, Dec. 26, 197). Thus, regardless of the tax reduction or exemption, the provision on the non-taxation of the agricultural special tax under Article 5(1)3 of the Agricultural Special Tax Act, which imposes on a corporation exceeding 500 million won, shall not be deemed non-taxation under Article 4(7).

In the same purport, the court below is just in holding that the transfer margin of the real estate of this case shall not be deducted from the tax base amount of the tax base for the calculation of the tax base for the agricultural special tax under Article 5 (1) 3 of the Agricultural Special Tax Act, and there is no error of law such as misunderstanding of legal principles or lack of reasons. There is

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

Justices Lee Yong-hun (Presiding Justice)