It should be regarded as a resident of a country with a large portion of income, property, and number of days of stay in Korea.

Considering the stay, holding assets, business management, plaintiff's other countries, and domestic income in relation to the other countries of the plaintiff and the plaintiff's family, it is difficult to see that the plaintiff has a domicile in Korea under the Income Tax Act, and it cannot be deemed that the plaintiff had a domicile for more than one year. Thus, the plaintiff cannot

2016Guhap51719 global income and revocation of such disposition

IsaA

BB Director of the Tax Office

November 2, 2016

January 11, 2017

1. The imposition disposition of global income tax on the Plaintiff for the year 2007 through the year 2013 shall be revoked in entirety.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 00,00,000 (including additional taxes), global income tax of KRW 00,000,000 (including additional taxes), global income tax of KRW 00,000 for the year 2008, global income tax of KRW 000,000 for the year 2009 (including additional taxes), global income tax of KRW 000,000 for the year 2010, global income tax of KRW 000,000 for the year 2010 (including additional taxes), global income tax of KRW 00,000 for the year 201, global income tax of KRW 00,000 for the year 2012 (including additional taxes), and global income tax of KRW 00,000 for the year 2013.

1. Details of the disposition;

A. In around 1996, the Plaintiff established a Aa, a corporation in the Republic of Indonesia (hereinafter referred to as "Indonesia"), which produces clothing products, and serves as the largest shareholder of Aa (95%) and is working as the representative director, and BB, which is a corporation in Indonesia in around 201. On the other hand, the Plaintiff is working as the largest shareholder of Cc (80%) and is working as the representative director of Cc (80%) by establishing CC, a domestic corporation, around April 2005.

B. From 2007 to 2013, the Plaintiff reported and paid income tax in Indonesia on earned income received from Aa from 2013. Meanwhile, cc paid wages to the Plaintiff from 2007 to 2012, withheld and paid labor income tax, and the Plaintiff reported and paid comprehensive income tax for earned income and dividend income received from cc in 2013.

C. The Defendant deemed the Plaintiff as a resident of Korea from 2007 to 2013 and deducted the amount of tax paid by the Plaintiff in Indonesia after adding the Plaintiff’s earned income and dividend income accrued in Korea and the Plaintiff’s earned income accrued in Indonesia during that period. On March 11, 2015, the Defendant imposed a global income tax of KRW 00,000 (including additional taxes), global income tax of KRW 00,000,000 for the year 2008 (including additional taxes), global income tax of KRW 00,000 for the year 209 (including additional taxes), global income tax of KRW 00,000 for the year 2010 (including additional taxes), global income tax of KRW 00,000 for the year 201, global income tax of KRW 000 for the year 200 for the year 200,000 for global income tax (including additional taxes), and each of the tax imposed on KRW 300,0000 (including additional taxes).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 3, 5, 6, 7, 25, 51, 52, Eul evidence Nos. 1 through 7, 9, 14, 16, 17, 26, 28 (including the relevant numbers), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff was an Indonesia resident from 2007 to 2013, the instant disposition imposed on the sum of the earned income of Indonesia and domestic source income, the instant disposition should be revoked.

B. Determination

1) Legal principles

(1) According to Article 1(1) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009); Article 1-2(1) and Article 2(1) of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter referred to as “resident who has a domicile in the Republic of Korea or has one year or more”; and Article 1-2(2) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 2135, Dec. 23, 2014; hereinafter referred to as “the former Enforcement Decree of the Income Tax Act”) provides that if a person has no residential address in Korea for a long time and has no residential capacity in Korea, he/she shall be deemed to have a duty to pay his/her income tax on his/her own income under the Income Tax Act (hereinafter referred to as “the former Enforcement Decree of the Income Tax Act”) to which his/her family has no residential address in Korea for at least two years after his/her temporary domicile in Korea.

2) Each of the following facts may be found either in dispute between the parties or in full view of Gap’s statements and images, the witness’s testimony and the whole purport of oral arguments, and the following facts: Gap’s statements and images, and Eul’s statements and images, and the witness’s statements and arguments.

2) In the instant case:

A) The Plaintiff and Plaintiff’s family members are staying in Indonesia and Korea

year 2007 2008 2009 2010 2011 2012 2013

Korea 331 334 306 291 354 329 328

Indones 26 27 57 60 3 29 29

Category 2010 201 2012 2013

Korean Number of Days (days) 257 8 29 29 189

① Around April 1989, the Plaintiff moved to Indonesia with his family members, and has been residing in the housing provided by J and Aaa, a joint venture company of H and Indonesia, J and JA. The Plaintiff obtained a long-term stay permit for foreigners in Indonesia in 2005, and has been renewed every five years thereafter.

② Lee c and Lee d, the Plaintiff’s wife, graduated from Indonesia at elementary, middle, and high schools.

③ AC returned to Korea on December 200 and had ** University at its own, and completed studies, and married around May 2014.

④ AD returned from January 2003 to * University graduate and military service. AD returned to Indonesia on January 201, while living together with the Plaintiff and served as a staff member of Aa from July 2013, 201, and established and operated the JJ (hereinafter referred to as the “JJ”) around August 2013.

⑤ The Plaintiff’s wife BB returned to Korea around December 2002 and returned to Indonesia on October 6, 2014, and is living together with the Plaintiff until now.

(6) The number of days of stay in Korea and Indonesia from BB to 2007 shall be as follows:

7. The number of days of stay in each country from 2010 to 2013 of Cc shall be as follows:

Ratio (%) 702822

Overseas number of days (day) 108 357 336 336 6,020

Ratio (%) 3098929278

(8) The number of days of stay in Korea and Indonesia from 2009 to 2013 are as follows:

Year Indonesia Domestic Period of Sojourn

20932144365

20103926365

201134916365

20123125365

201330956365

Total 16301951825

B) The Plaintiff’s family members in Indonesia and domestic assets

① 원고는 2002년경 서울 송파구 **동 20-4 @@아파트 동 ***호의 소유권을 취득하였고, 2013년 말을 기준으로 국내 금융기관에 예금 등 금융자산으로 28,623,124원을 예치하였다. 또한 원고는 CCC 주식의 80%를 소유하고 있다.

② As of the end of 2013, the Plaintiff owned approximately KRW 100,000 financial assets in Indonesia. In addition, the Plaintiff owns 95% of the Aa stocks.

③ 원고의 처 BBB은 2009. 1. 6. 서울 송파구 **동 **-* OO아파트 *동 ***호의 소유권을 취득하였다. 또한 BBB은 2009. 3. 9. ##리조트 ***리체의 회원권을 취득하였고, 생명보험계약 여러 개를 체결한 후 보험료로 9억 5,200만 원을 납입하여 보험금채권을 취득하였다.

C) The Plaintiff’s conduct of business in Indonesia and Korea

The sales of annual Indonesia (aa) the number of Korean (ccc) personnel (name), the area of the building (land size) (00 million won).

approximately 20094,00 approximately 74,500 586 18 529 172

approximately 6,000 approximately 74,500 599 18 529 237

approximately 74,500 approximately 919 19 529 383

2012 approximately 80,800 886 20 677 304

2013 approximately 80,800 9,500 916 22 6773

Total 3,906 1,569

① cc, established by the Plaintiff and worked as the representative director, was produced and sold at the factory of the headquarters after the Plaintiff was awarded an order through the cccccc and domestic ○ fiber, etc., and produced finished products after being entrusted with processing to the cooperation factory of Vietnam after being awarded an order by directly handling the cc and ○○ Textiles, etc., and operated the business by manufacturing and delivering finished products at the factory of the headquarters after being entrusted with processing from the cc and ○○ Textiles, etc.

② As a part of the expansion of the East Asian area project, the Plaintiff established cccccccccccccccccccccccs in Korea around April 15, 2005 in order to receive clothing receipt from the transfer of ccccccccccccccccccccccics from the transfer of ccccccccccs to purchase finished products and supply them to aa, or purchase raw materials and sell them to

③ At around 2011, the Plaintiff established bb as required for the business of Aa, and bb was processed by receiving clothing processing orders from other companies, such as Aa and Cc.

4. During the instant taxable period, Aa has carried on the business by owning facilities such as four clothing production factories and their site in Indonesia, and cc has leased offices in Korea and operated the business. The status of Aa and Ccc for five years is as follows:

(5) The ratio of the sales of the discretionary processing fees received from ccc in the sales of the discretionary processing fees of Aa from 2009 to 2013 is as follows:

6. The present status of the sales and processing costs paid to CC from 2009 to 2013 shall be as follows:

7 cc business teams prepared an advance statement at each time they receive an error, send it to Indonesia by international mail, and handle the work after obtaining approval from the plaintiff.

For a taxable year, Indonesia (aa) wage and salary income (cc) of Korea (cc), non-rate (%)

2007137,209 7058,800 30

2008205,007 6417,600 36

209362,139 75121,600 25

2010365,830 75121,216 25

2011260,980 65139,400 35

2012264,911 6918,065 31

2013262,250 67130,000 33

D) Plaintiff’s Indonesia and domestic income

During the taxable period of this case, the earned income earned by the Plaintiff and Indonesia in Korea are as follows:

3) Considering the following circumstances that can be seen by adding up the aforementioned facts and the purport of the entire arguments, the evidence submitted by the Defendant and the circumstances alleged by the Defendant alone cannot be deemed as having an address in Korea in 2007 to 2013, which is the taxable period of this case, and rather, there should be no address in Korea under the Income Tax Act.

In addition, since the plaintiff cannot be deemed to have established a residence in Korea for more than one year, the plaintiff cannot be deemed to be a resident under the Income Tax Act.

A) The Plaintiff’s wife BB stayed in the Republic of Korea from 2007 to 2013, a taxable period of this case, from 2013 to 2013, and for the same period bB, the Plaintiff’s wife BB stayed mainly in the Republic of Korea from 2007 to 2010, and the Plaintiff transferred their living expenses to 2010. However, the Plaintiff was staying in Indonesia on an annual average of 326 days from 2007 to 2013, and cC was staying in the Republic of Korea only on an annual average of 39 days from 2011 to 2013. In addition, cC was staying in the Republic of Korea with the Plaintiff. From 207 to 2013 to 2010 to 2013, it is difficult to view that the Plaintiff had a family living in Korea with his family.

B) The Plaintiff and the Plaintiff’s wife BB owned real estate, deposits, insurance claims, etc. in Korea, but in light of the form and characteristics of such assets, etc., it does not seem that the Plaintiff need to manage and dispose of assets while staying in Korea for more than one year from 2007 to 2013, which is the taxable period of this case.

C) In light of the following: (a) the establishment process and role of ccc as seen earlier; (b) the ratio of ccccccc’s order to sales of processing fees under Aa; (c) the size of its employees and assets; and (c) the Plaintiff’s decision-making process in relation to the operation of ccc, it is difficult to deem that the Plaintiff was necessary to reside in the Republic of Korea for more than one year from 2007 to 2013, the taxable

D) Considering the Plaintiff’s status and role as the representative director of Aaa, the characteristics of the business run by Aa, the size of assets held and employees belonging to Aa, and relative ratio compared with the size of earned income earned from Aa and the earned income earned from cccc, etc., it is reasonable to deem that the Plaintiff has an occupation ordinarily required to reside in Indonesia for more than one year from 2007 to 2013, which is the taxable period of this case. In fact, the Plaintiff has been staying in Indonesia for more than one year.

E) It appears that Indonesia did not implement the permanent sovereignty system. The Plaintiff obtained KITAP, which is a long-term foreigner stay permit in Indonesia, and has been renewed from 2007 to 2013 during the instant taxable period. In addition, the Plaintiff resided in Indonesia for the said period.

C. Sub-decision

Therefore, the Plaintiff constitutes an individual, i.e., a non-resident under the Income Tax Act, and thus, is not obligated to pay income tax in Korea from 2007 to 2013, which was acquired in Indonesia, not a domestic source income. Each of the dispositions of this case on different premise is unlawful and thus must be revoked.

3. Conclusion

The plaintiff's claim of this case is justified, and all of them are accepted, and the costs of lawsuit are assessed against the losing defendant. It is so decided as per Disposition.