Whether the amount of non-reported damage suffered by a life insurer is subject to the appropriation of liability reserve as deductible expenses.

If the liability reserve of a corporation operating an insurance business is appropriated as deductible expenses pursuant to the Corporate Tax Act, it shall be included in deductible expenses in calculating the income amount, but it shall be deemed reasonable to include the amount of non-life insurance and personal or non-reported loss in deductible expenses in the calculation of the income amount.

Article 30 of the Corporate Tax Act

Article 57 of the Enforcement Decree of Corporate Tax Act

1. The disposition imposing corporate tax for the business year 2004 listed in the separate sheet against the Defendants’ Plaintiffs shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiffs are insurance companies engaged in life insurance business, which are life insurance business, as revised on July 16, 2004, consider the amount equivalent to 3% of risk premiums for one year prior to the balance sheet as non-reported amount of loss for issuance, and set aside the same amount as below (hereinafter referred to as the amount of the issue in this case) as reserve funds for the business year 2004 pursuant to Article 30 of the Corporate Tax Act and Article 57 (1) 2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) based on the same amount as prescribed in Article 4-3-2 (1) 2 of the Enforcement Decree of the Insurance Supervision Business (hereinafter referred to as the "Enforcement Decree of this case") as the liability reserve for the business year 2004, and reported the corporate tax base by including the same amount in deductible expenses for the business year 204.

B. From October 11, 2006 to December 1, 2006, the Board of Audit and Inspection requested the Seoul Regional Tax Office to audit the Seoul Regional Tax Office, and to correct under the proviso of Article 57(1) of the Enforcement Decree of the Corporate Tax Act, on the ground that “In the case of a life insurance company, the amount of non-reported loss, which is an estimated amount, was not included in the calculation of losses and under-reported corporate tax by some life insurance companies included in the calculation of losses caused by non-reported loss amount.”

C. The Defendants, upon the request of the Board of Audit and Inspection, excluded the issues of this case accumulated as liability reserve by the Plaintiffs from deductible expenses and imposed corporate tax for 2004 business year as shown in the separate sheet (hereinafter each of the dispositions of this case).

D. The Plaintiffs, who were dissatisfied with each of the dispositions of this case, filed a petition with the National Tax Tribunal for a trial, but was dismissed on December 20, 2007.

[Reasons for Recognition] Facts without dispute, Gap 1, 2 evidence, Eul 1-6 evidence (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiffs' assertion

Under Article 30 of the Corporate Tax Act and Article 57 of the Enforcement Decree of the Corporate Tax Act, the key issue amount of this case is ① the case where the plaintiffs appropriated the amount of losses not reported as the reserve fund for the business year 2004 as the deductible expenses under Article 30(1) of the Corporate Tax Act, and ② the case where the amount of losses not reported has been appropriated as the deductible expenses under Article 30(1) of the Corporate Tax Act and other Acts, ② the case where the insurance money which has occurred as of the end of the pertinent business year but has yet to be paid yet has not been determined. ③ In the case of the insurance which is the proviso of the provisions of this case, the meaning of the "amount of losses not reported under the insurance contract shall be the insurance money under the insurance contract." The meaning of the "amount of losses not reported as the liability reserve of the plaintiffs should not be limited to the deductible expenses of the life insurance company operating the life insurance business which has already been accumulated as the liability reserve, and the key amount accumulated as the liability reserve of the plaintiffs in the business year 2004.

B. Relevant provisions

Article 30 of the Corporate Tax Act

Article 57 of the Enforcement Decree of Corporate Tax Act

C. Determination

(1) The key issue of the instant case is whether the amount of non-reported damage suffered by life companies, such as the Plaintiffs, is included in the calculation of losses even in the corporate tax for the business year 2004 prior to the amendment by Presidential Decree No. 19891 on February 28, 2007, which was amended by Presidential Decree No. 19891, and the proviso of Article 57(1)

(2) Under the principle of no taxation without law, tax laws and regulations shall be interpreted in accordance with the language and text of the law, unless there are special circumstances, and it shall not be permitted to expand or analogically interpret the above 20-year insurance without reasonable grounds (see, e.g., Supreme Court Decision 2003Du431, Aug. 19, 200). ① Article 30(1) of the Corporate Tax Act provides that if an insurance company operates an insurance business as deductible expenses under the provisions of the Insurance Business Act and other Acts, it shall be included in deductible expenses within the scope of the amount calculated under the conditions as prescribed by the Presidential Decree, and it shall not be included in deductible expenses in the calculation of deductible expenses for the pertinent business year. ② Unlike non-life insurance, it shall be deemed that the amount of insurance proceeds that the company has already sold can be included in deductible expenses in the calculation of deductible expenses for the pertinent business year.

(3) Therefore, each of the instant dispositions, based on the premise that the amount of losses not reported during the business year 2004 is not subject to the inclusion of corporate tax in deductible expenses, is illegal, inasmuch as the revision of the regulations on the performance of insurance business delegated by the Insurance Business Act, etc. was made to enable non-reported damage in life insurance to be appropriated as liability reserve. In the case of the 2004 business year, the amount of non-reported damage in life insurance operated by the life insurance company may be appropriated as deductible expenses within the scope of insurance money under the insurance contract.

3. Conclusion

Therefore, each of the claims of this case is justified, and it is so decided as per Disposition by the assent of all.