early 2010 Heavy2314 ( October 14, 2011)

In the event that both tax credits subject to minimum tax and minimum tax exemption are simultaneously applied, the tax reduction or exemption is first applied.

Where tax credits for research and human resources development expenses, to which the minimum tax provision of Article 132 of the former Restriction of Special Taxation Act applies, and foreign investment tax reduction or exemption is concurrently applied, the order of application shall be that the foreign investment reduction or exemption first applies prior to the tax credit for research and human resources development expenses pursuant to Article 59

2011Guhap415 Revocation of Disposition of Imposing Corporate Tax

AAAAAA Korea Semiconductor, Inc.

Deputy Director of the Tax Office

March 22, 2012

April 5, 2012

1. The Defendant’s imposition disposition of KRW 000 and KRW 000 of corporate tax for the business year of 2004 against the Plaintiff on March 22, 2010, respectively, of KRW 200 and KRW 000 of corporate tax for the business year of 2005 shall be revoked.

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

It is like the order (It is clear that '00 million won' is a clerical error in the corporate tax for 2004 business year entered in the written complaint).

1. Details of the disposition;

A. On December 28, 1998, the Plaintiff was a foreign-invested enterprise established by BBBBB, a U.S. corporation, by investing 100% of its income. At the time of March 11, 1999, the Plaintiff was determined by the Minister of Finance and Economy pursuant to Article 9(1) and (2) of the former Foreign Investment Promotion Act (amended by Act No. 5982 of May 24, 199) as of March 1, 199 as the corporate tax on income arising from Twitter, Multilater, Aar, AroIC manufacture business (hereinafter “instant reduction business”) for seven years from the taxable year in which the first income accrues from the relevant business, and for three years thereafter, the Plaintiff was subject to tax reduction and exemption under Article 9(1) and (2) of the former Foreign Investment Promotion Act (amended by Act No. 5982 of May 24, 199 and Article 9(1) and (3) of the former Special Taxation Act (amended by Act No. 2013738 of May 19).

B. When the Plaintiff reported and paid each corporate tax for the business year 2002, the business year 2004, and the business year 2005, it applied the tax credit for research and human resources development expenses after first deducting from the calculated tax amount as follows.

C. On March 22, 2010, the Defendant calculated the tax amount as follows by first applying the tax credit for research and human resources development expenses to which the minimum tax is applied, and issued the instant disposition to correct and notify the Plaintiff of KRW 000 of the corporate tax for the business year 2004 (including KRW 000 of the additional tax on evidential documents and the additional tax on negligent tax returns) and KRW 000 of the corporate tax for the business year 2005 (including additional tax on negligent tax returns).

D. On June 17, 2010, the Plaintiff filed an appeal with the Tax Tribunal. On June 14, 2011, the Tax Tribunal accepted only the portion of KRW 000 of the corporate tax for the business year 2004 and rejected the remainder of the appeal. According to the above decision, the Defendant’s corporate tax for the business year 2004 after deducting KRW 00 from the corporate tax for the business year 2004 was corrected to KRW 000.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1-1, 2, and 3, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

(1) Plaintiff

Except as otherwise expressly provided, where tax reduction and tax credit are applied at the same time (the Plaintiff asserts that Article 132(1) of the former Restriction of Special Taxation does not correspond to “the separate Do Regulations”) pursuant to Article 59(1) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same shall apply) (i) shall be applied in the order of tax reduction and exemption, and (ii) tax credit. The Defendant seeks revocation of the instant disposition, as described in the purport of the claim, as it is unlawful that the Defendant applied otherwise in the order of tax reduction and exemption (the scope of seeking revocation by the Plaintiff is the portion of corporate tax for 2004 business year excluding the portion of the additional tax for negligent return among the instant dispositions, and corporate tax for 005 business year

(2) Defendant

A tax reduction or exemption is a tax reduction or exemption that is not subject to the minimum tax, and a tax credit for research and human resources development expenses is a tax reduction or exemption that is subject to the minimum tax, and the minimum tax credit under Article 132 (1) of the former Restriction of Special Taxation Act is a provision for calculating corporate tax by applying the "tax reduction or exemption to which the minimum tax is not applied to income for each business year of a domestic corporation, etc." before applying the "tax reduction or exemption to which the minimum tax is applied". Thus, it falls under a special provision under Article 59 of the former Corporate Tax Act, which prescribes the order of tax reduction or exemption, and thus, the defendant falls under the special provision of Article 132 of the former Corporate Tax Act, and thus

Korea is legitimate.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

The key issue of this case is the order of application in cases where the research and human resources development expenses tax deduction to which the minimum tax provision of Article 132 of the former Restriction of Special Taxation Act is applied and the foreign investment reduction and exemption not to which the above minimum tax provision is applied are applied simultaneously. In full view of the following circumstances, it is reasonable to view that the foreign investment reduction and exemption should first be applied prior to the tax credit for research and human resources development expenses pursuant to

(1) Foreign investment reduction or exemption constitutes a tax reduction or exemption on income for each business year under Article 59(1)1 of the former Corporate Tax Act, and a tax credit on research and human resources development expenses falls under a tax credit recognized for this month under Article 59(1)3 of the former Corporate Tax Act, and thus, foreign investment reduction or exemption should first be applied unless there is a separate provision on the order of application under the Corporate Tax Act and other Acts.

(2) Article 132(1) of the former Restriction of Special Taxation Act and Enforcement Decree of the same Act (Presidential Decree No. 19888, Feb. 28, 2007)

Article 126 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that in calculating corporate tax on income for each business year, remaining tax amount shall not be reduced or exempted if the remaining tax amount falls short of the minimum tax, and the corresponding part of the tax amount shall not be reduced or exempted. (1) Article 132 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act provides for the method of determining the applicable order of reduction or exemption from the minimum tax, and Article 132 (2) of the former Enforcement Decree of the Restriction of Special Taxation Act does not directly state the order of reduction or exemption from the minimum tax. (2) Article 132 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "in calculating corporate tax on income for each business year, the minimum tax is not subject to the Restriction of Special Taxation Act, and it is difficult to determine the order of reduction or exemption from the minimum tax in accordance with Article 126 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act."

(3) The defendant also prepares a form, such as the "tax base and the adjusted account statement of corporate tax" in attached Form 3 of Article 82 (1) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 497 of March 14, 2006), "Adjusted account statement of the tax base and the amount of tax" in attached Form 4 of Article 82 (1) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 497 of March 14, 2006), on the basis of the priority application of the "minimum tax reduction and exemption, etc.," but it is merely related to the form prescribed in Article 60 (2) 2 of the Corporate Tax Act and Article 97 (3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20619 of Feb. 22, 2008).

(4) Meanwhile, Article 132(3) of the current Restriction of Special Taxation Act (amended by Act No. 921, Jan. 1, 2010) provides that where the minimum tax is applied simultaneously with the reduction or exemption, etc. to which the minimum tax is applied, the reduction or exemption, etc. shall first be applied (in this case, the foregoing provision shall apply prior to the external investment reduction or exemption, to which the minimum tax is applicable), unlike the order of application under Article 59(1) of the former Corporate Tax Act. However, in light of the principle of no taxation without law under Article 59 of the Constitution, the foregoing provision cannot be deemed as a provision confirming the order of reduction or exemption as a matter of interpretation of Article 59(1) of the former Corporate Tax Act and Article 132(1) of the former Restriction of Special Taxation Act, so long as the foregoing provision newly established after each business year of the instant case cannot be applied to the instant disposition.

(d)Smallness;

Therefore, in calculating the Plaintiff’s corporate tax amount for the business year 2004 and each business year 2005, the Defendant’s instant disposition that first applied the tax credit for research and human resources development expenses prior to the tax reduction and exemption was unlawful

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition.