The meaning of "goods or services supplied to a nonresident or foreign corporation having no domestic place of business in Korea" under Article 26 (1) 1 of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 10981, Dec. 31, 1982).

Article 26 (1) 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 10981, Dec. 31, 1982) provides that "goods or services supplied to a nonresident or foreign corporation having no domestic place of business in the Republic of Korea" shall be new into that of goods or services supplied without going through a domestic place of business through a direct transaction with a nonresident or foreign corporation. Thus, even a nonresident or foreign corporation having a domestic place of business shall apply the zero-rate tax rate, such as goods or services supplied to a nonresident or foreign corporation having no domestic place of business in the Republic of Korea without going through a direct transaction with such nonresident or foreign corporation.

Article 26 (1) of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 10981 of December 31, 1982)

Supreme Court Decision 84Nu517 Decided February 26, 1985 84Nu529 Decided March 26, 1985

Attorney Jeon Byung-chul et al., Counsel for the defendant-appellant

The director of the tax office

Seoul High Court Decision 83Gu1182 delivered on May 21, 1985

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. As to ground of appeal No. 2

According to the reasoning of the judgment below, the decision of the court below is just and there are no errors in the misapprehension of the rules of evidence in the misapprehension of the legal principles against the rules of evidence, which affected the conclusion of the judgment, in case where the plaintiff supplied the above services under a direct contract with the head office of a foreign corporation for each taxable period from the first quarter of 1978 to the first quarter of 1982, while providing a foreign corporation with services for issuing a certificate of sale of goods and collecting fees in Korean currency through a foreign exchange bank, and the plaintiff filed a final return of value-added tax for each taxable period from the first quarter of 1978 to the first quarter of 1982.

The theory of lawsuit is based on any evidence of the plaintiff's presentation that there is no evidence to deem that the plaintiff had made a direct transaction without going through a foreign corporation and its domestic place of business, or that the tax authority bears the burden of proving it. Therefore, the issue of whether a foreign corporation traded by the plaintiff has a domestic place of business in Korea and whether the plaintiff has traded with a foreign corporation through a domestic place of business in Korea is clear that the defendant's burden of proof falls under the burden of proof.

2. As to the first ground for appeal:

Article 26 (1) 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 10981, Dec. 31, 1982) which was in force at the time of the commencement date of the tax payment of the Value-Added Tax in this case "goods or services supplied to non-residents or foreign corporations having no domestic place of business in the Republic of Korea" means goods or services supplied without going through a domestic place of business through a direct transaction with non-residents or foreign corporations in the Republic of Korea. Thus, even a non-resident or foreign corporation having a domestic place of business has a domestic place of business, the zero-rate tax rate is applied to such goods or services as are supplied to non-residents or foreign corporations having no domestic place of business without going through such domestic place of business (see, e.g., Supreme Court Decisions 84Nu517, Mar. 26, 1985; 84Nu529, Mar. 26, 1985).

Therefore, the decision of the court below that the disposition of this case by the defendant that excluded the application of the zero tax rate and imposed the value-added tax on the grounds that the plaintiff provided services to a foreign corporation through a direct transaction with a foreign corporation is a domestic business place is just and there is no error in the misapprehension of legal principles as alleged in the arguments

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-dong (Presiding Justice)