Research and development expenses re-entrusted shall be subject to tax credit regardless of whether the re-entrusted corporation has a dedicated department

If an enterprise entrusted with research and development expenses entrusted by the enterprise re-entrusted it to a third party, it is reasonable to view it as eligible for tax credit regardless of whether it has a dedicated department of the re-entrusted enterprise.

2012Guhap32550 Revocation of Disposition of Imposing corporate tax

AAA life insurance company

Head of Yeongdeungpo Tax Office

April 30, 2013

June 14, 2013

1. The Defendant’s disposition of imposing corporate tax of KRW 000 on April 1, 2007 to the Plaintiff on May 11, 201, and the disposition of imposing corporate tax of KRW 000 on March 31, 2008 and from April 1, 2009 to March 31, 2010 shall be revoked.

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

The order is as follows (the May 11, 2010 seems to be a clerical error in the text of May 11, 201).

1. Details of the disposition;

A. The Plaintiff, as a domestic corporation operating an insurance business, entrusted the construction of a computer system, such as the establishment of a new system from April 1, 2006 to March 31, 2007, and the business year from March 1, 2007 to March 31, 2008, and the business year from April 1, 2008 to March 31, 2009 (hereinafter referred to as the "period of taxation") with a department exclusively in charge of research and development in the business year of March 31, 209, and paid 00 won in total as tax credit for the above research and development expenses by deducting the corporate tax credit for the business year from the previous tax credit for the business year of April 208 (amended by Act No. 20065, Apr. 27, 2009).

C. Since then, on the premise that the money paid by the Plaintiff was for research and development purposes, the expenses re-entrusted by the trustee to a third party among them are not eligible for tax credit, and each of them imposed upon the Plaintiff on May 11, 201, corporate tax of 2008, corporate tax of 000, corporate tax of 2009, corporate tax of 2009, and corporate tax of 000 for the business year of 2010 (2007, 2008, 2009) and corporate tax of 200 for the business year of 2007.

D. On December 7, 2011, the Plaintiff filed an appeal with the Tax Tribunal. On June 28, 2012, the Tax Tribunal decided to the effect that the amount re-entrusted to a third party holding a dedicated department among the expenses re-entrusted to a third party on the premise that the money paid by the Plaintiff is for research and development purposes, the tax credit should be applied to the amount re-entrusted to the company holding the dedicated department, and the amount corresponding thereto should be re-exporteded to rectify the tax

E. On August 2, 2012, the Defendant: (a) ex officio reduced the total amount of KRW 000 ( KRW 0000 for the business year of 2008, KRW 000 for the business year of 2009, and KRW 0000 for the business year of 2010 for the corporate tax originally imposed upon a business entity that has been re-entrusted to a business entity that has a dedicated department upon the above decision (the remainder of the corporate tax to be reverted to each business year of the first year shall be the same as the entry in the purport of the claim, and this part of the disposition of taxation shall be hereinafter referred to

[Ground of Recognition] The facts without dispute, Gap evidence Nos. 1 through 5, and Eul evidence Nos. 1 and the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) Plaintiff

If research and development services have been entrusted to an enterprise holding a department exclusively in charge of research and development, regardless of whether it has a department exclusively in charge of re-entrusted and re-entrusted enterprises, and the cost for entrustment is subject to tax credit under Article 10 (1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of December 26, 2008)

(2) Defendant

(A) First of all, it was not revealed whether the costs incurred in the consignment of research and development services alleged by the Plaintiff were used for research and development activities. Furthermore, in order to constitute an interpretation of Article 9(5) of the Restriction of Special Taxation Act, newness and non-obviousness, which is the requirement of patent, should be recognized, and it cannot be deemed that the construction of an item in computer,

(B) Next, the Restriction of Special Taxation Act separates the entrustment and re-entrustment. In light of Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008), Article 9(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), and Article 9(2) [Attachment 6] subparagraph 1(b) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 1, 2009), the former Enforcement Decree of the Restriction of Special Taxation (amended by Presidential Decree No. 23590 of Feb. 2, 2012), which applies to this case, only "re-entrustment" is not subject to tax credit, and the expenses of research and development under sub-entrustment are not subject to tax credit, but at least those of the Seoul High Court (Seoul High Court).

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether research constitutes research and development

Article 9 (5) of the Restriction of Special Taxation Act provides that research and development is an activity to achieve scientific or technical development and to develop a new service and service delivery system. As seen in the above disposition circumstances, it is difficult to regard the service entrusted by the Plaintiff as a research and development since it establishes a systematic and comprehensive system to realize large financial and insurance business, to improve the core business and service, and to achieve the optimal and efficient operation of information and communications technology 1, and it is difficult to regard it as a research and development. Meanwhile, although research and development does not aim at acquiring a patent, it cannot be interpreted that the term "newness" or "newness", which is the requirement of the patent, should not be interpreted as having been equipped for a research and development purpose, as alleged by the Defendant.

(2) Whether it is not subject to tax credit if re-entrusted

In light of the principle of no taxation without law, or the requirement for tax exemption or reduction of tax laws, and the interpretation of tax laws is not allowed to be interpreted extensively or analogically without any justifiable reason (see Supreme Court Decision 2002Du6781, May 27, 2004). Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008), and [Attachment 6] subparagraph 1(b) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009) provides that the Defendant’s dedicated department is not entitled to tax credit, and it is difficult to interpret that the Defendant’s dedicated department is subject to tax credit 20,000 or more than that of the Defendant’s dedicated department with which it has been entrusted with research and development, and it is difficult to 20,000 another dedicated department with which it has been entrusted.

(3) Sub-determination

Therefore, the instant disposition is unlawful as it violates the tax law as well as the state of tax law.

3. Conclusion

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