Review-department -2016-0088 ( October 17, 2016)

In case of tax evasion due to non-issuance of tax invoice, it constitutes fraud or other unlawful act.

The exclusion period of imposition for 10 years is applied to illegal acts, such as concealing and concealing income through active transaction manipulation.

Article 26-2 of the Framework Act on National Taxes (Period for Excluding Assessment of National Taxes)

Gwangju District Court 2017Guhap10166 revocation of imposition of value-added tax

Limited Company AA Construction

○ Head of tax office

June 29, 2017

August 17, 2017

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of KRW 109,981,650 on May 3, 2016 against the Plaintiff on KRW 109,981,650 on KRW 109,981,650 on KRW 2010, KRW 3,62,060 on KRW 20 on KRW 2010 on KRW 10,675,7540 on corporate tax for the business year 2010 is revoked

1. Basic facts

A. The plaintiff's status

원고는 2005. 3. 9. 설립되어 MM시 DDD로 17-2, 201호 (상동, 뉴팰리스)에서 철 근콘크리트 공사업 등을 하고 있는 회사이다. 박AA은 2010. 3. 15. 원고의 대표이사로 취임하였다.

B. Details of the instant disposition

From March 16, 2016 to March 25, 2016, the Defendant confirmed that the Plaintiff had omitted sales of charnel construction from the account in the name of an individual in the name of an individual in consideration of the Plaintiff’s act as seen above constituted “Fraud or other unlawful act” stipulated in Article 26-2(1)1 of the Framework Act on National Taxes, and thus, the Plaintiff imposed corporate tax on the Plaintiff on May 3, 2016, by applying the exclusion period for imposition of value-added tax as follows, on October 20, 2016, when the Plaintiff received a contract for storage and other construction work of charnel houses for KRW 18,30,00 for each of the construction cost (hereinafter “each of the instant construction”).

Value-added Tax: KRW 3,62,067 on February 2, 2010, KRW 109,981,652 on January 1, 201

Corporate tax: 10,675,757 won for the business year 2010

C. Plaintiff’s request for examination and dismissal decision

On July 4, 2016, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service. The Commissioner of the National Tax Service dismissed the Plaintiff’s request for examination on October 17, 2016, and the Plaintiff filed the instant lawsuit on January 11, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 4, the purport of the whole pleadings

2. The plaintiff's assertion

A. The instant disposition violates the principle of substantial taxation.

A person who actually performed each of the instant construction works is not the Plaintiff but the Plaintiff’s representative director ParkA. Therefore, the instant disposition that reverted sales related to each of the instant construction works to the Plaintiff is unlawful in violation of the principle of substantial taxation.

B. After the expiration of the exclusion period, the Defendant rendered the instant disposition.

Even if a person who actually performed the instant construction work is the Plaintiff, the Plaintiff constitutes a case where the Plaintiff does not report under tax law or makes a false report, and thus, the exclusion period for imposition of national taxes related to the instant construction work is five years. Therefore, the instant disposition was made after the exclusion period expires, and is unlawful.

3. Determination

(a) Related Acts and subordinate statutes;

It is as shown in the attached Form.

B. Whether the instant disposition violated the principle of substantial taxation

1) Article 14(1) of the Framework Act on National Taxes provides that “If the ownership of income, profit, property, act or transaction subject to taxation is nominal and there is a separate person to whom such income, profit, property, act or transaction is attributed, the person to whom such income, profit, act or transaction actually belongs shall be liable to pay taxes.” Therefore, if there is a separate person who substantially controls and manages the transaction, unlike the nominal person to whom such income, profit, property, act or transaction belongs, the nominal person to whom such income, profit, act or transaction belongs, shall not be the person to whom such income, profit, or appearance belongs,

2) However, in light of the following circumstances revealed through the respective descriptions of evidence Nos. 3, 5, and 6 and the purport of the entire pleadings, it is reasonable to deem that the Plaintiff performed each of the instant construction and the sales therefrom accrue to the Plaintiff. Accordingly, the Plaintiff’s assertion on a different premise is rejected.

A) The contract agreement for each of the instant construction works is written by the Plaintiff as the contractor of each of the instant construction works, and the Plaintiff’s corporate design is stamped (Evidence A 3).

B) As the former president of the instant text, Kim Tae-tae, who concluded each of the instant construction contracts on behalf of the Plaintiff during the instant text, was in charge of the Plaintiff’s representative Park Park-A in the field management of each of the instant construction works, and prepared a written confirmation that “The Plaintiff agreed to deposit the construction cost into the account under the name of Park Jong-A for the convenience of the entry and withdrawal of funds (Evidence 5).”

C) The Plaintiff’s assertion that ParkA, the representative director of the Plaintiff, contracted each of the instant construction works in a separate position from the Plaintiff, and performed them using the Plaintiff’s human and material resources is difficult to obtain.

C. Whether the instant disposition was made after the lapse of the exclusion period

1) Relevant legal principles

The legislative intent of Article 26-2(1) of the Framework Act on National Taxes is to extend the exclusion period of the national tax imposition right to 10 years, in principle, for the prompt determination of tax law relations, in the event that there is an unlawful act such as making it difficult for the tax authority to discover the taxation requirement of the national tax or making a false fact difficult, so it is difficult for the tax authority to expect the exercise of the imposition right due to the difficulty in finding that there is a tax evasion report. Therefore, "Fraud and other unlawful act" under Article 26-2(1)1 of the same Act refers to a deceptive act which makes it impossible or considerably difficult to impose and collect taxes, or other active act which makes it difficult to do so, and it does not constitute merely a fraudulent act which does not make a tax declaration impossible or makes a false report. However, in the event that the reason for active concealment is added, such as failure to file a tax return or making a false report, it may be deemed that it has been made impossible or considerably difficult to impose and collect taxes or make a false report (see, e.g., Supreme Court Decision 20136Du136136.

In such a case, whether the active intent of concealment was revealed shall be determined by comprehensively taking into account the following circumstances: (a) whether the basic book on revenue and sale was falsely prepared; (b) whether the method of determining the relevant tax was a tax return method; (c) whether the method of determining the relevant tax was a tax payment method; (d) whether the relevant tax was a tax return method; and (e) the developments leading up to a false declaration or a false declaration; (e) the degree different from the facts in the case of a false declaration; and (e) whether the relevant false declaration was submitted; and (e) whether the relevant document may be deemed unlawful by social norms in light of the function related to the calculation of the tax base (see, e.g.

2) Determination

In light of the following circumstances revealed through the entry of No. 6 evidence and the purport of the entire pleadings, it is reasonable to view that the Plaintiff, not merely did not report under tax law or make a false report, but was engaged in “Fraud or other unlawful act objectively revealed” with the intent to evade value-added tax and corporate tax. Therefore, the exclusion period of imposition of national taxes related to each construction of this case should be 10 years, and the Plaintiff’s order against the Plaintiff is rejected on a different premise.

A) The value-added tax and the corporate tax at issue in the instant case are the tax return method in which a taxpayer voluntarily filed a tax base and the amount of tax are fixed by filing a tax return, so insofar as a taxpayer does not voluntarily file a tax return, the tax authority is difficult to impose taxes on the taxpayer. The Plaintiff and Park ParkA did not at all file a tax return for each of the instant construction works.

B) The Plaintiff received each of the construction costs in this case from the Plaintiff’s account, not the corporate account, with the Plaintiff’s representative director’s account, and the transaction related to each of the instant construction works, using the said account, and was also prepared with a written confirmation of the fact of transaction that the Plaintiff received the payment from ParkA from the other party to the transaction related to each of the instant construction works (Evidence A6).

4. Conclusion

Therefore, since all of the plaintiff's claims are not correct, they are dismissed. It is so decided as per Disposition.

Related Acts and subordinate statutes

Terms and Conditions of Framework Act on National Taxes

Article 14 (Real Taxation)

(1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal, and a third person to whom such ownership belongs exists, tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

Article 26-2 (Period for Excluding Assessment of National Taxes)

(1) No national tax may be levied after the period prescribed in the following subparagraphs expires: Provided, That where a mutual agreement procedure is in progress in accordance with the treaty for the prevention of double taxation (hereinafter referred to as "tax treaty"), Article 25 of the Adjustment of International Taxes Act shall apply:

1. Where a taxpayer evades a national tax, or obtains a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree (hereinafter referred to as "illegal means"), it shall be for ten years from the date on which the national tax is assessable (internationally applicable);

If the national tax is evaded, refunded, or deducted due to an unlawful act committed in international trade under Article 2 (1) 1 of the Tax Adjustment Act (hereinafter referred to as "international trade"), it shall be for 15 years. In such cases, if the national tax refunded or deducted by an unlawful act is a corporate tax, it shall be for 10 years from the date on which the income tax or corporate tax on the amount disposed of under Article 67 of the Corporate Tax Act is assessable (for 15 years in cases of the income tax or corporate tax on the amount disposed of under Article 67 of the Corporate Tax Act after being refunded or deducted due to an unlawful act committed in international trade).

1-2. Where a taxpayer becomes liable to pay penalty tax under any of the following items due to unlawful means, it shall be for ten years from the date on which the relevant penalty tax is assessable:

(a) Article 81 (3) 4 of the Income Tax Act;

(b) Article 76 (9) 4 of the Corporate Tax Act;

(c) Article 60 (2) 2, (3) and (4) of the Value-Added Tax Act;

2. If a taxpayer fails to file a tax base return by the statutory due date of return, the copies of the relevant national tax;

7 years from the date of such failure;

3. The date on which a national tax is assessable, if the taxpayer does not fall under subparagraphs 1, 1-2 and 2;

For five years from the date of commencement

4. Notwithstanding subparagraphs 1, 1-2, 2 and 3, in cases of an inheritance tax or gift tax, it shall be for ten years from the date on which it is assessable: Provided, That it shall be 15 years from the date on which it is assessable, in any of the following cases:

(a) Where a taxpayer evades inheritance tax or gift tax, or receives a refund or deduction by unlawful means;

(b) Where a return is not filed under Articles 67 and 68 of the Inheritance Tax and Gift Tax Act;

(c) A person who files a return under Articles 67 and 68 of the Inheritance Tax and Gift Tax Act;

any false or omitted return, or any false or omitted return;

applicable)

4-2. Income tax under the latter part of Article 88 (1) of the Income Tax Act, along with the gift tax, according to an onerous donation;

In case of taxation, the period determined for the gift tax pursuant to subparagraph 4.

5. Where any loss carried forward is deducted pursuant to Article 45 (3) of the Income Tax Act, subparagraph 1 of Article 13, Article 76-13 (1) 1 or Article 91 (1) 1 of the Corporate Tax Act in the taxable period after the taxable period in which the period under subparagraphs 2 and 3 expires, the income tax or corporate tax in the taxable period in which such loss occurs shall, notwithstanding subparagraphs 2 and 3, be one year from the statutory deadline for return in the taxable period in which the loss carried forward is deducted