Cho-2014-Divisions-5841 ( October 22, 2015)

Where the net value of stocks cannot be calculated, the evaluation shall be made by applying objective and reasonable methods among other supplementary methods prepared by the Inheritance Tax and Gift Tax Act.

In cases where the net value of shares cannot be calculated under Article 56(1)1 or 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, it can be assessed by applying the objective and reasonable method among the supplementary assessment methods prepared by the Inheritance Tax and Gift Tax Act, such as the method under Article 54(4) of the Enforcement Decree of the said Inheritance Tax and Gift Tax Act, so that

The method of calculating net profits and losses for the last three years per share under Article 56(1) of the Enforcement Decree of the Inheritance Tax and

2015Guhap21835 Revocation of Disposition of Imposition of Gift Tax

OO

O Head of tax office

September 17, 2015

October 15, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 000 on October 6, 2014 against the Plaintiff was revoked.

1. Details of the disposition;

A. On July 3, 2012, the Plaintiff acquired 000 non-listed shares of BBB (hereinafter “BB”) from AA to KRW 000,00 per share (hereinafter “instant shares”) and did not file a report on the tax base of gift tax with the Defendant.

B. After planning and inspection such as reduction of non-listed stocks, the director of the regional tax office notified the Defendant of the taxation data that it is subject to gift tax on the gift profits from transfer at low price with respect to the transaction of the instant stocks acquired by the Plaintiff. In accordance with Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24358, Feb. 15, 2013; hereinafter referred to as the “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”), the Defendant assessed the net profit value per share of 000 won calculated as indicated below, and the net asset value of 00 won per share of 3:200 won, which is assessed as the weighted average of 00 won per share of 00 won (amended by Act No. 11609, Jan. 1, 2013; hereinafter referred to as “former Inheritance Tax and Gift Tax Act”) and Article 35 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 10000 won -1000 won per share).

C. On October 27, 2014, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but the said appeal was dismissed on January 22, 2015.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 5, Eul evidence 1 (including paper numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In view of the fact that BBB paid 000 common shares from the date of commencing the business year in which the third year before the evaluation base date falls to the evaluation base date to July 23, 2010, and that the trends of changes in the annual net income of BB in the net income of BB have been significantly high in the year 2011 due to the temporary and incidental reasons for the temporary and incidental reasons that the low-price imports from China, i.e., e., inter-s., inter-s. from China, the appraised value per share of the instant shares under the latter part of Article 56(1) and Article 56(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act should be assessed as the average value of the estimated net profit per share.

Thus, the plaintiff does not have a duty to report the gift tax on the acquisition of shares of this case. Therefore, in applying the latter part of Article 56 (1) and Article 56 (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, Article 56 (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, which provides the " duty to report the tax base"

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) BB is a corporation that is engaged in agriculture, livestock, fishery products export and import, and distribution business. The major purchaser accounts for approximately 50% of the total purchase amount due to the CCC limited corporation located in China, and net income is sensitive to exchange rate fluctuations.

2) BBB conducted capital increase of KRW 000 on July 23, 2010 (i.e., common share 000 x face value of KRW 0000 per share). Accordingly, capital increase of KRW 000 and total number of issued stocks became 000.

3) The changes in net income for the net income in comparison with the sales amount of BB are as listed in Table 1 below, and the changes in sales cost and gross sales profit ratio are as listed in Table 2 below, and the exchange rate fluctuations in the composition are as listed in Table 3 below.

1) Details of changes in net income during the current term in comparison with BB sales (2008-2012 unit: 00 million won)

Table 2) BBBB Sales Cost and Contents of Changes in gross sales profit ratio (2008-2012) (unit: million won)

Table 3) Exchange rate fluctuations (2008 to 2012) (unit: won per one bill)

4) Meanwhile, from 2008 to 2012, the net income of BB was not increased due to profits other than business profits, such as capital surplus and other capital items of BBB from capital increase due to capital increase from 2008 to 2012.

[Grounds for recognition] The entry of Gap evidence No. 2 and the purport of the whole argument

D. Determination

1) Article 56(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621, Feb. 22, 2008) provides that the weighted average amount of net profit and loss for the preceding three years per share of unlisted stocks shall be an weighted average amount of net profit and loss for the preceding three years per share as stipulated in subparagraph 1 (hereinafter referred to as "value of subparagraph 1"), but where the relevant corporation determines that it is unreasonable to follow the value under subparagraph 1 due to a temporary contingency, such as an abnormal increase in the amount of net profit and loss for the preceding three years, the value under subparagraph 2 of the same paragraph (hereinafter referred to as "value under subparagraph 2") may be deemed as an "value under subparagraph 2". Furthermore, Article 17-3(1)1 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 20621, Apr. 30, 2008) provides that where it is unreasonable to calculate the amount of net profit and loss per share for the preceding three years.

Therefore, barring any special circumstance, the net profit and loss value per share cannot be calculated on the basis of the value under subparagraph 1, and even in cases where the value under subparagraph 2 is not applicable because the value under subparagraph 2 was not calculated or the value under subparagraph 2 is not applicable, it would be unreasonable to apply the value under subparagraph 1. In such cases, it may be assessed by applying an objective and reasonable method among the supplementary assessment methods prepared under Article 54(4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, which allows only net asset value to be assessed (see, e.g., Supreme Court Decision 2010Du26988, Apr. 26, 2012).

2) Examining the instant case in light of the foregoing legal doctrine, the standard date for appraisal of the instant shares is July 3, 2012, which is the date of acquisition of the instant shares, and the fact that there was capital increase with respect to 0000 shares during the period from July 3, 2009, which was from July 3, 2009, to December 24, 2012, the base date for appraisal, which was from July 24, 2012, during the period from July 23, 2012, which was from July 24, 2012, cannot be calculated on the basis of the value under subparagraph 1, barring any special circumstance.

Meanwhile, even if a taxpayer determined that the amount of gift tax is zero won, the determination on whether the amount of gift tax falls short of the tax base is made by the tax authority in China, and Articles 68(1), (2), and 4(1) of the former Inheritance Tax and Gift Tax Act are liable to pay gift tax pursuant to the Inheritance Tax and Gift Tax Act, and accordingly, a donee is required to report the gift tax base to the head of the tax office having jurisdiction over the place of tax payment within three months from the last day of the month to which the date of donation belongs, along with documents proving the type, quantity, appraised value, various deductions, etc. of donated property necessary for calculating the tax base of gift tax, and therefore, the duty to report the gift tax base is prescribed as a general duty. Thus, even in the case of a taxpayer holding that the amount of gift tax is

Since the Plaintiff did not report the value of subparagraph 2 within the deadline for filing a tax base return of gift tax, it does not constitute “where the return is filed by the deadline for filing a tax base return of gift tax” under Article 56(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, the value of the instant shares based on the value of subparagraph 2 cannot be calculated. In such a case, it shall be assessed by applying the objective and reasonable method among other supplementary methods prepared in accordance with the above legal principles. Considering the following circumstances revealed by comprehensively considering the overall purport of the pleadings in each of the above facts of recognition and evidence Nos. 6, 7, 8, 2, 3, and 4, including the number of increased stocks, the calculated net value of the instant shares based on the weighted average ratio of No. 3:2, and the net asset value per share, which is calculated by the Defendant’s calculation of the value of the instant shares as KRW 000,000,000, such other premise

① The proviso of Article 56(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that, in calculating the value under subparagraph 1, where there is a fact that the capital increase or the capital increase has been made within three years before the base date of appraisal for the business year which includes the date of the increase or decrease of the capital, the total number of issued and outstanding stocks as of the end of each business year before the increase or decrease of the capital shall be calculated as prescribed by the Ordinance of the Ministry of Finance and Economy. According to delegation of the Enforcement Decree, Article 17-3(5) of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 267, Feb. 28, 2012) provides that the number of issued and outstanding stocks as of the end of each business year before the increase or decrease of the capital shall be calculated by multiplying the number of issued and outstanding stocks as of the end of each business year immediately before the increase or decrease of the capital by "number of issued and outstanding stocks as of the end of each business year immediately before the increase."

② Under Article 56(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act and Article 17-3(5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, when calculating the net value of income by applying Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, where the relevant corporation has increased or decreased its capital within three years before the base date of appraisal, separate calculation method of the total number of issued and outstanding shares as of the end of each business year before the increase or decrease of its capital shall be as mentioned above. Article 56(5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides a separate calculation method to reflect the effects of the increase or decrease of capital for consideration in calculating the net value of capital for consideration and the effects of the increase in capital for consideration in light of the systematic interpretation of the above statutes and the form of the provisions thereof. The defendant can calculate the net value under Article 56(5) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

③ Meanwhile, the assessment statement per share based on the presumed profits presented by the Plaintiff (Evidence A7 and 8) does not estimate the profits for two years after the assessment base date, but rather establishes the balance calculated by subtracting the corporate tax, etc. from the net income before deducting the corporate tax, etc. from the net income before deducting the corporate tax, etc. from the net income before deducting the net income on the settlement of accounts for 2013 as the estimated profits for each business year. As such, the calculation date of the estimated profits per share and the preparation date of the assessment statement do not belong to the relevant tax base return date, if the net profits are calculated based on the presumed profits presented by the Plaintiff, they are contrary to Article 56(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax

④ Furthermore, the term “temporary and preferential cases” under the former part of Article 56(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act refers to the abnormal increase and decrease of profit and loss from the business, which is unrelated to the business of the company, suspension of business of the company, and falling short of the period of main business of the company. However, in China, the reason for increase of net income for the business year of 2010 and 2011 claimed by the Plaintiff is not only related to the major business of BBBB, but also to the sales cost as part of ordinary business activities, and exchange rate-related matters are also referenced in the establishment of business plan in corporate management, but it cannot be viewed as a temporary and preferential case in that they are reflected in the normal business process.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.