Additional 46015-1521 (Law No. 6.30)

Addition

Value-added tax is levied on real estate for rental business operators who engage in real estate rental business that is supplied by auction.

The value-added tax is imposed under Article 6 (1) of the Value-Added Tax Act and Article 14 (1) 4 of the Enforcement Decree of the same Act, and the value-added tax on the supply of the relevant real estate is the actual transaction value (in the case of an inquiry of return, the quoted price) of the building under Article 48-2 (4) of the Enforcement Decree of the same Act: Provided, That in the case where the real estate rental business is substantially discontinued prior to the time of supply for goods under Article 9 of the same Act and Article 21 of the Enforcement Decree of the same Act, the value-added tax is imposed under Article 6 (4) of the same Act and the tax base for the supply of the relevant real estate for rental business is the

Article 6 of the Value-Added Tax Act

1. A summary of the contents of inquiry;

(Factual Relations 1)

- A private business chain tourist hotel will transfer the building and land to another person by auction by the court, and a new owner (successful bidder) will continue to engage in the business (tourist hotel business).

(Definition 1)

-the value-added tax on the portion of the building shall be imposed and collected at the competent tax office on the total amount of the auction bid price, and questions are doubtful (2,341 million won in the book for the portion of the building and 3,275 million won in the auction bid price for the portion of the building);

(Factual Relations 2)

- In the case of deemed supply of depreciation assets, the market price of the relevant asset should be calculated in accordance with Article 49(1) of the Enforcement Decree (Calculation of Tax Base for Self-Supply, etc.) for the depreciable assets of the building or structure.

(Definition 2)

- 10 percent of the acquisition value on the account books calculated by calculating the period of taxation for the transitional period of the party enterpriser (9 percent of the transitional period from July 1995 to June 200), shall not be additionally imposed.

2. Materials on the contents of questioning;

(a) related tax laws and regulations (law, enforcement decree, enforcement rule, basic rules);

Article 6 of the Value-Added Tax Act (Supply of Goods)

Article 48-2 of the Enforcement Decree of the Value-Added Tax Act)

(b) Similar cases.

○ Additional 46015-487, 2003.06

The value-added tax shall be levied under Article 6 (1) of the Value-Added Tax Act and Article 14 (1) 4 of the Enforcement Decree of the same Act in case where the depreciable assets related to the business of the enterpriser are sold by auction, because the contents of the inquiries are unclear: Provided, That in case where the business is substantially discontinued prior to the time of supply for the goods under Article 9 of the same Act and Article 21 of the Enforcement Decree of the same Act, the relevant depreciable assets shall be subject to the value-added tax under Article 6 (4) of the Value-Added Tax Act, but in case of

○ Additional 46015-4742, November 20, 199

In the auction of the price assessed separately by the certified public appraisal corporation under the Act on the Public Notice of Land Prices and the Evaluation of Land, etc., the price of the property which is the debtor may be considered as the actual transaction price stipulated in the main sentence of Article 48-2 (4) of the Enforcement Decree of the Value of the Building Act in case where the property is sold by auction with the price which is reduced to a certain ratio due to a failed appraisal price.