Early High Court Decision 2009Du0087 ( November 22, 2010)

The reason for the cancellation of registration of a foreign-invested enterprise is only the case where a foreign investor applies for the cancellation of registration.

In the Restriction of Special Taxation Act, the grounds for the cancellation of registration of a foreign-invested enterprise are limited to "where a foreign investor applies for the cancellation of registration", so it can not be deemed that the case where the Minister of Commerce, Industry and Energy applies for the cancellation of registration and cancels it ex officio.

2011Guhap2027 Revocation of Disposition of Corporate Tax, etc.

AAAtech Co., Ltd.

The director of the tax office

June 14, 2012

July 5, 2012

1. The Defendant’s disposition of 00 won of corporate tax for the year 2008 against the Plaintiff on December 2, 2008 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

(a) Details of the establishment and tax reduction;

On November 19, 2002, GGGG techrogy Group Co., Ltd., and LGGGGGGG (hereinafter referred to as “GGG”) entered into a contract to take over 000 won from HH semiconductor Co., Ltd. HH and I-L CD division divided from HH and I-L CD division, and made an investment of 100% of shares (USD 000 dollars, total face value of shares, etc.) and established the Plaintiff on November 29, 2002 pursuant to Article 21(1) of the Foreign Investment Promotion Act (hereinafter referred to as “Foreign Investment Promotion Act”) and established the Plaintiff on December 25, 2002, on the grounds that the Plaintiff’s business satisfies the standards for tax reduction and exemption under Article 21(1) of the Restriction of Special Taxation Act (hereinafter referred to as “Special Taxation Act”) and Article 21-21(2) of the Enforcement Decree of the Restriction of Special Taxation Act.

B. Corporate Spare Procedures against the plaintiff

However, the Plaintiff suffered liquidity difficulties from the beginning of the year 2006, and eventually, on September 10, 2006, and on September 29, 2006, the Seoul Central District Court rendered rehabilitation orders from the Seoul Central District Court to 2006Kahap11, and the corporate rehabilitation proceedings against the Plaintiff were initiated against the Plaintiff. The above court approved the 100% free retirement of the shares with the GGG and the creditors’ existing claims against the creditors, on the ground that the responsibility for the insolvent management that led to the commencement of the rehabilitation proceedings on May 31, 2007 was against the GGG, and approved the sacrifice plan for the contents of the debt-equity swap of the creditors’ existing claims against the Plaintiff, which was in progress in the above rehabilitation proceedings. On May 3, 2008, the consortiums, which was the Plaintiff’s shares at 94.730% of the Plaintiff’s shares in the company’s company, concluded the rehabilitation proceedings against the Plaintiff.

C. Cancellation of registration of the Plaintiff-invested company

On April 15, 2008, the plaintiff applied for the cancellation of registration of foreign-capital invested companies to the President of the Korea Foreign Exchange Bank entrusted with foreign investment registration by the Minister of Commerce, Industry and Energy, and on the same day, the President of the Korea Foreign Exchange Bank cancelled the registration of the plaintiff's foreign-capital invested company

(d) The defendant's reduced or exempted trend;

On December 2, 2008, the defendant estimated 000 won in total, including 2000 won in corporate tax year 2003, 000 won in corporate tax year 2004, total 000 won in tax year 2004, and interest 000 won in interest thereon, on the ground that the registration of the plaintiff's foreign-capital invested company was cancelled (hereinafter "the wife head of this case").

(e) Procedures for appeal;

On December 31, 2008, the appeal was filed with the Tax Tribunal on December 31, 2008, and on November 22, 2010

And the appeal was dismissed.

[Reasons for Recognition] Facts without multi-family, Gap evidence to 9, and evidence to 5 to 11, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Whether the instant disposition based on subparagraph 1 of Article 121-5 of the Restriction of Special Taxation Act is legitimate

(1) The parties' assertion

(A) Summary of the Plaintiff’s assertion

Article 121-5 (1) 1 of the Restriction of Special Taxation Act provides that "where registration is cancelled under the provisions of Article 21 (3) of the Foreign Investment Act" as one of the grounds for tax abatement or exemption and additional collection for foreign investment, and where a foreign-capital invested company’s registration is cancelled ex officio because the foreign-capital invested company’s share is wholly extinguished as a result of compulsory retirement in accordance with the rehabilitation plan under the law in accordance with the principle of no taxation without law and strict interpretation, it is not a ground for cancellation of registration of foreign-capital invested company under Article 2

(B) The defendant's argument

A foreign-capital invested company that is presumed to have been reduced or exempted pursuant to Article 121-5 (1) 1 of the Restriction of Special Taxation Act is a case where the Minister of Commerce, Industry and Energy cancels its registration under Article 21 (3) of the Foreign Investment Act, and there is no reason to deal differently with the case where foreign investors cancel their registration at the request of the Minister of Commerce, Industry and Energy or the Minister of Commerce, Industry and Energy cancels their registration ex officio or upon the request of foreign investors or ex officio by the Minister of Commerce, Industry and Energy, and the Minister of Commerce, Industry and Energy has cancelled their registration, and all of these applications are subject to additional collection where the Minister cancels their registration ex officio or upon the request of foreign investors or the Minister of Commerce, Industry and Energy has cancelled their registration. This application for cancellation of registration is merely cooperation and without cooperation to secure the execution of the registration with foreign investors, and the agent may also apply for the cancellation of registration. Article 21 (3) of the Foreign Investment Act is the only basis for the cancellation of registration covering ex officio and application.

(2) Relevant statutes

Attached-related Acts and subordinate statutes shall conflict with each other.

(3) Determination

(A) The grounds for the cancellation of the instant registration

According to Article 21(3) of the Foreign Investment Act, where a foreign investor ceases to engage in business or has failed to carry out business activities for more than two years (paragraph 1), and where a foreign investor or a foreign investor fails to comply with an order to view and take other necessary measures under Article 28(5) (paragraph 3). Where a foreign investor transfers or leases his registration certificate to another person (paragraph 5) and where a foreign investor makes a registration with a foreign-invested enterprise under Article 21(3) of the Enforcement Decree of the Foreign Investment Act (Article 6), the Minister of Commerce, Industry and Energy may cancel the registration of the foreign-invested enterprise, and Article 28 of the Enforcement Decree of the Foreign Investment Act provides that the foreign investor is entitled to apply for the cancellation of registration under Article 21(3)4 of the Foreign Investment Act, and that the foreign investor is entitled to apply for the cancellation of registration under Article 21(3)1 through 3 of the Foreign Investment Act or Article 30(2) of the Enforcement Decree of the Foreign Investment Act.

(B) Principle of no taxation without law

The principle of no taxation without law, or interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law unless there are special circumstances, and it shall not be permitted to expand or analogically interpret them without reasonable grounds (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003). In a case where the amount of tax already reduced or exempted after the reduction of or exemption from the tax for the reason that it satisfies the requirements for reduction or exemption from the tax is later presumed to have a greater impact on the status of the party than imposing tax for the reason that it falls under the requirements for taxation, and as such, it shall not be said that the Minister of Commerce, Industry and Energy should not attempt to make a combined interpretation exceeding the scope of interpretation of the law on the sole ground of the name or purpose of taxation, and that Article 121-5(1)1 of the Restriction of Special Taxation Act includes a case where the Minister of Commerce, Industry and Energy revokes the registration pursuant to the provisions of Article 21(3) of the Foreign Investment Act, and Article 21 of the Restriction of the Special Taxation Act ex officio or ex officio.

(C) Sub-decisions

Therefore, even though the cancellation of the registration of this case is not based on Article 21(3) of the Foreign Investment Act, it is illegal to estimate the amount of the Shephers for foreign investment in accordance with Article 121-5(1)1 of the Restriction of Special Taxation Act.

(b) Whether there exists a reason for disposition based on Article 121-5 (1) 2 of the Restriction of Special Taxation Act;

(1) The parties' assertion

The defendant asserts that, through the relevant criminal judgment, the total price is applied to the addition and modification of the grounds for the disposition on taxation, and that the investment purpose of GGGG was found to be the purpose of technology leakage through corporate M&A that does not conform with the purpose of tax reduction and exemption under the Restriction of Special Taxation Act, and that "where the criteria for tax reduction and exemption under the main sentence of Article 121-2 (1) are not satisfied" under Article 121-5 (1) 2 of the Restriction of Special Taxation Act, and therefore, the plaintiff can be presumed tax reduction and exemption for the plaintiff under the same provision. Accordingly, when changing the basis clause of the presumption of tax reduction and exemption under the Restriction of Special Taxation Act like the defendant's assertion, the business year of the estimated corporate tax is not allowed. After the investment of GGGGG, the plaintiff has strengthened international competitiveness through continuous new technology development and investment, and even if part of the domestic technology has been leaked by GGGGG, the purpose of strengthening the international competitiveness of the domestic industry is not denied.

(2) Determination

Since the subject matter of a taxation revocation lawsuit is the objective of the legitimate tax base and tax amount in the disposition on each taxable unit divided by tax item and taxable period, the tax authorities may submit new data that can support the legitimacy of the stable tax base and tax amount in the disposition in question, or exchange and change the reason within the scope that the unity of the disposition is maintained, and it shall not necessarily be possible to determine the legality of the disposition by only the data at the time of the disposition or to claim only the reasons for the disposition (see Supreme Court Decision 97Nu456 delivered on December 26, 1997, etc., Supreme Court Decision 97Nu456 delivered on December 26, 1997, etc.). However, inasmuch as the subject matter of the taxation revocation lawsuit is the subject matter of the taxation reduction and exemption under Article 121-5 (1) 2 of the Restriction of Special Taxation Act, "the case where a foreign investment fails to meet the criteria for tax reduction and exemption under the provisions of this paragraph," and the defendant's assertion that an investment did not meet the requirements for tax reduction and exemption under Article 12G paragraph (1).

3. Conclusion

Then, the plaintiff's claim of this case is justified and it is decided as per Disposition by admitting it.