Since the starting date of business shall be the date of commencing the supply of goods or services, it shall be deemed 2016, which is the date of approval for new building of the instant business establishment.

Since the starting date of business shall be the date of commencing the supply of goods or services, it shall be deemed 2016, which is the date of approval for new building of the instant business establishment.

Article 6 of the Enforcement Decree of the Value-Added Tax Act

2018Guhap54396 Revocation of Disposition of Imposing global income tax, etc.

송@@

000 director of the tax office

July 11, 2019

August 22, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Defendant’s global income tax amounting to KRW 114,896,660 (additional tax levied) for the Plaintiff on October 11, 2017, 2016

b) revoke the disposition of imposition.

1. Details of the disposition;

가. 원고, 이@@, 김@@(이하 '원고 등'이라 한다)은 2015. 10. 23. 사업장 소재지를@@시 @@구 @@동 @@@으로 하여 2015. 9. 8.부터 주택신축판매업을 하는 내용의사업자등록을 하였다(원고 지분: 27%). 원고 등은 2015. 9. 8. 건축주를 이@@으로 하여 @@시 @@구 @@동 @@@ 지상에 도시형생활주택 12세대, 오피스텔 6호의 집합건물인 삼익@@@@ D동 및 도시형생활주택 12세대, 오피스텔 4호의 집합건물인 삼익@@@@로 E동(이하 통틀어 '이 사건 건물'이라 한다)을 신축하는 내용의 건축허가를 받아 이 사건 건물을 완공하여 2016. 7. 25. 사용승인을 받았고, 2016년에 이 사건 건물 내의 도시형생활주택 및 오피스텔을 분양하였다(이하 '이 사건 사업'이라 한다). 원고 등은 2016. 12. 23. **세무서장에게 이 사건 사업을 2016. 11. 30. 폐업하였다는 내용의 폐업신고를 하였다.

B. When filing a return on comprehensive income tax for 2016, the Plaintiff calculated the amount of income of the instant business by deducting the amount of income of the instant business from the said amount of income, on the ground that the amount of income of the instant business was KRW 1,640,250,000, and the amount of income of the instant business in 2015, which was the previous taxable period, was less than KRW 36,000,000, which is the standard amount of income for the construction business prescribed in Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 28637, Feb. 13, 2018; hereinafter “former Enforcement Decree of the Income Tax Act”), which is subject to the application of the simplified expense rate, on the grounds that it falls under Article 7(1)1(g) of the former Restriction of Special Taxation Act (amended by Act No. 1527, Dec. 19, 2017; hereinafter “former Special Taxation”).

C. On October 11, 2017, the Defendant: (a) deemed that the instant business income amount exceeds KRW 1,640,250,000, which is the amount for construction business under Articles 143(4)1 and 208(5)2(b) of the former Enforcement Decree of the Income Tax Act; (b) calculated the amount of the instant business income by deducting the amount applied by the standard expense rate from the said income amount; (c) deeming that the instant business does not fall under a construction business to which the special tax reduction or exemption applies; (d) deeming that the instant business does not fall under a construction business to which the special tax reduction or exemption applies; and (e) excluded the Plaintiff from the application of the special tax reduction or exemption for small or medium enterprises; and (e) corrected and notified the amount of tax (including additional tax) to the Plaintiff on October 2016 (hereinafter “instant disposition”).

[Ground of recognition] Each entry of Gap evidence Nos. 3, 7, Eul evidence Nos. 1, 2, and 4 (including paper numbers), the whole pleadings

Purport

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) Illegal application of standard expense rate

원고가 2015년에 이 사건 사업에 관하여 사업자등록을 하고 이 사건 건물의 신축에 관한 건축허가를 받아 착공을 하는 등 실질적인 사업활동을 개시하였고, 기존 건물을철거하고 건축 부지를 조성하는 과정에서 수목을 굴취하고 고철을 획득하여 그 수목을2015. 10. 주식회사 @@조경에 대금 500,000원에, 그 고철을 주식회사 **에 대금400,000원에 각각 판매하여 수입을 얻은 점 등을 고려하면, 원고는 2015년에 이 사건사업을 개시하고 900,000원의 수입을 얻은 것이므로, 이 사건 사업에 따른 원고의2016년 귀속 사업소득을 산정함에 있어서는 직전 과세기간인 2015년의 수입금액이 건설업에 관한 기준수입금액인 36,000,000원에 미달하는 경우에 해당하여 구 소득세법시행령 제143조 제4항 제2호 나목에 따라 단순경비율이 적용되어야 한다. 따라서 기준경비율을 적용하여 이루어진 이 사건 처분은 위법하다.

The Plaintiff received notification from the Defendant to confirm that the Plaintiff was subject to the application of the simple expense rate with respect to the return of global income tax for the year 2016, and reported by applying the simple expense rate at the time of filing the global income tax return for the year 2016, thereby violating the principle of good faith and thus is unlawful.

2) Violation of exclusion from special tax reduction and exemption for small and medium enterprises

Article 7(1)1 (g) of the former Restriction of Special Taxation Act provides for reduction and exemption of income tax on a company that runs a construction business among small and medium enterprises. Since the Plaintiff directly lent a construction business license to the new construction of the instant building, the Plaintiff’s instant business falls under the construction business under Article 7(1)1 (g) of the former Restriction of Special Taxation Act. Therefore, the instant disposition that excluded the application of the said reduction and exemption provision is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether standard expense rate is legitimate

A) Whether standard expense rate is applicable

According to the proviso of Article 80 (3) of the former Income Tax Act (amended by Act No. 15225, Dec. 19, 2017; hereinafter referred to as the "former Income Tax Act"), Articles 143 (3) and (4), and 208 (5) of the former Enforcement Decree of the Income Tax Act, when the amount of income is estimated or revised, the amount of income shall be determined or revised by deducting the amount calculated by multiplying the amount of income by the standard expense rate (in case of the person subject to double-entry bookkeeping, the amount calculated by multiplying the amount of income by 1/2 of the standard expense rate), etc. from the amount of income, but in case of the person subject to the application of simple expense rate, the amount of income shall be determined or revised by deducting the amount calculated by multiplying the amount of income by the simple expense rate from the amount of income, and in case of the construction business (including the business of developing and supplying residential buildings), the amount of income in the relevant taxable period falls short of 150,000,00 won,00 won.

In this case, taking into account the following circumstances, the Plaintiff’s instant business was commenced in 2016 in which the sale of urban residential housing and officetels in the instant building was conducted, and its income in 2016 is 1,640,250,000 won or more. Thus, the Plaintiff may not be deemed to be subject to the application of simple expense rate because the Plaintiff, in relation to the instant business, has commenced a new business in the relevant taxable period, in the relevant taxable period under Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (Article 143(4)1 of the former Enforcement Decree of the Income Tax Act) or Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act (Article 143(4).

① The Housing Construction and Sales Business Act is included in real estate sales business due to its nature as a business that newly constructs and sells a building (see, e.g., Supreme Court Decision 2008Du21768, Jul. 22, 2010). The commencement of a business of the Housing Construction and Sales Business Act ought to be substantially determined based on the time when preparation for a business is completed and the business is performed or is able to perform the original business purpose (see, e.g., Supreme Court Decision 94Nu15905, Dec. 8, 195). Meanwhile, whether a business income under the Income Tax Act is a business income under the Income Tax Act ought to be determined according to social norms, taking into account the existence of the profit-making purpose of the business, the degree of continuity and reflectness that can be seen as business activities in light of the size, frequency, mode, etc. of the business (see, e., Supreme Court Decision 9

In 2015, the Plaintiff’s business registration as to the instant business and obtained a construction permit as to the construction of the instant building, or obtained a revenue from the sale of by-products, such as scrap metal, cannot be deemed to have been objectively equipped with the objective substance of the business by completing the business preparation of the Housing Construction and Sales Business having the characteristics of real estate sales business, making it possible for the Plaintiff to carry out the business, or continuing and repeated business activities for the purpose of the Housing Construction and Sales Business, and there is no reason to deem that the Plaintiff’s intent to carry on the Housing Construction and Sales Business for the purpose of profit-making was objectively rare before the sale of urban-type residential housing and officetels in the instant building was carried out. Therefore, it is reasonable to deem that the Plaintiff’s instant business was commenced in 2016 when the sale of urban-type residential housing and officetels in the instant building was carried out.

② The Plaintiff asserts to the effect that the starting point of the instant business cannot be recognized under the Income Tax Act, based on Article 6 of the Enforcement Decree of the Value-Added Tax Act.

However, Article 168 of the former Income Tax Act provides that a business operator who has registered his/her business pursuant to the Value-Added Tax Act shall be deemed to have registered his/her business pursuant to the Income Tax Act, and Article 8 of the Value-Added Tax Act shall apply mutatis mutandis to the time and procedure of application for business registration. Article 8 of the Value-Added Tax Act provides that "the starting date of business" is the same as "the starting date of business under Article 5 (2) of the Value-Added Tax Act". Article 6 of the former Enforcement Decree of the Value-Added Tax Act provides that "the starting date of business shall be the date of supplying goods or services other than manufacturing business and mining business". Thus, Article 6 of the former Enforcement Decree of the Value-Added Tax Act provides for the definition of the starting date of business in accordance with the above provision of the Income Tax Act shall apply mutatis mutandis to a new business operator, and Article 168 (1) of the former Enforcement Decree of the Income Tax Act (see Article 168 (1) of the Income Tax Act and Article 14 (2) of the former Enforcement Decree of the Value-Added Tax Act).

B) Whether the principle of good faith is violated

In general, in tax law relations, in order to apply the principle of trust and good faith to tax authorities’ acts, tax authorities should have expressed public opinion that is the subject of trust to taxpayers (see, e.g., Supreme Court Decision 90Nu9575, Sept. 13, 1991). The evidence evidence No. 11 is insufficient to recognize that the Defendant, in calculating the amount of income accrued from the instant business in relation to the global income tax return reverted to the Plaintiff in 2016, issued a public statement of opinion that falls under the subject of simple expense in calculating the amount of income accrued from the instant business, and there is no other evidence to acknowledge it, and thus, the Defendant’s instant disposition by applying standard expense cannot be deemed as

2) Whether exclusion from special tax reduction or exemption is legitimate

According to Articles 2(3), 7(1)1(g) and 7(2)2(b) of the former Restriction of Special Taxation Act, with respect to a company running a construction business among small and medium enterprises, the amount equivalent to the tax amount calculated by multiplying the income tax on the income accrued from the relevant place of business by 20/100 until the taxable year ending on or before December 31, 2017, shall be reduced or exempted, but the classification of the relevant type of business shall, in principle, comply with the Korean Standard Industrial Classification

In the case of the former Korean Standard Industrial Classification (amended by Presidential Decree No. 2017-13, Jan. 13, 2017), "Building Construction Business (Classification Code 411)" refers to industrial activities that build, extend, rebuild, or rebuild a building by a contractor or a comprehensive constructor; "Housing Construction Business (Classification Code 4111)" refers to industrial activities that build residential buildings, such as single, apartment houses, and apartment houses, and "Housing Development and Supply Business (Classification Code 68121)" refers to industrial activities that build and sell residential buildings by entering into a contract for construction of the entire building without directly performing construction activities, and "non-residential building development and supply business (Classification Code 68122)" refers to industrial activities that build and sell non-residential buildings by entering into a contract for construction of the entire building in a lump sum without performing construction activities.

In this case, considering the following circumstances acknowledged by the statement in Eul evidence No. 2 and the purport of the entire pleadings, namely, the building ledger of the building of the building of this case is not the plaintiff but the plaintiff, and there is no data to recognize that the plaintiff was directly constructing the building of this case by lending a construction business license, as alleged by the plaintiff, the plaintiff's business of this case is deemed to fall under "the development and supply business of residential buildings" or "the development and supply business of non-residential buildings" under the former Korean Standard Industrial Classification, and it is difficult to view it to fall under "construction business" subject to special tax reduction or exemption under the former Restriction of Special Taxation Act. Further, the special tax reduction or exemption system for small or medium enterprises under the former Restriction of Special Taxation Act is to support the improvement of financial structure and investment of small or medium enterprises so that it can be smoothly implemented by reducing income tax and corporate tax to protect and foster domestic small and medium enterprises with weak competitiveness, and in light of the fact that it is a special taxation system under the premise that the amount of tax reduced or exempted should be used for the purpose prescribed by the former Act, at least 160.

Therefore, the Plaintiff’s instant project does not fall under Article 7(1)1 (g) of the former Restriction of Special Taxation Act.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.