Whether it constitutes a false tax invoice

As long as sales are viewed as a normal transaction, all buying transactions cannot be deemed as a processing transaction, and it is acceptable to the assertion that the payment of goods was made through a partial payment in accordance with the commercial practice, and the evidence presented in light of the fact that the statement at the time of a customs investigation and the fact relevance of the payment of goods are different from the fact that no additional investigation was made, cannot be deemed as constituting a false tax

Article 16 of the Value-Added Tax Act

2017Guhap79448 Disposition of Disposition of Imposing Value-Added Tax, etc.

AA

FF Head of FF Tax Office

on October 14, 2019

on October 16, 2019

1. The defendant against the plaintiff:

(a) each disposition of imposition of value-added tax for the second term portion of 208 on January 5, 2016 (including additional tax), value-added tax for the second term portion of 2009 (including additional tax), value-added tax for 14,728,020 (including additional tax), value-added tax for the first term portion of 2010, value-added tax for 15,205,400 (including additional tax), value-added tax for the second term portion of 2010 (including additional tax), value-added tax for 25,276,650 (including additional tax), value-added tax for the first term portion of 2012, value-added tax for 6,309,910 (including additional tax);

B. On March 3, 2016, imposition of KRW 3,182,720, 720, 3,385, 180, 180, 5, 720, and 1,60, 200, 2010, 3,385, 180, and 5,805, 720, and 201, 201, 201, 1,60,080, respectively, for the illegal underreporting of value-added tax for the first period of the value-added tax for the year 209;

(c) each imposition of global income tax of KRW 2,733,653 (including additional taxes) as of March 3, 2016 and global income tax of KRW 44,247,916 (including additional taxes) as of March 3, 2016;

(d) Each disposition of imposition of KRW 1,512,00,000, the additional tax on non-taxation for global income tax for the year 2009, the additional tax on non-taxation for global income tax for the year 2010, the additional tax on non-taxation for global income tax for the year 2010, and the additional tax on non-taxation for global income tax for the year 2012 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff is a businessman who engages in wholesale and export-import business in the trade name of 'B comprehensive commercial company' at the 1stm Seoul V-GuCC.

B. The Plaintiff received purchase tax invoices of KRW 355,698,904 (hereinafter “instant tax invoice”) in total from N trade, Jtech, MM, KK, KS, SS, and W Trading (hereinafter “the instant purchaser”). Based on this, the Plaintiff reported and paid value-added tax and general income tax for the pertinent taxable period.

C. On January 5, 2016 and March 3, 2016, the Defendant: (a) considered the instant tax invoice as a false tax invoice prepared for processing or nominal transaction; and (b) did not deduct the relevant input tax amount; (c) did not include necessary expenses for business income in the necessary expenses; and (d) notified the Plaintiff of the rectification and rectification of value-added tax and the comprehensive income tax as indicated below.

(unit: Won; hereinafter the same shall apply)

Sub-Items :

Taxation Period

non-deduction

Purchase Tax Amount

Date of Disposition

Correction and Notification Tax Amount

Jinay

Value-added Tax

208

2nd class

635,500

January 5, 2006

1,245,130

Additional dues, etc.

209

2nd class

7,956,792

January 5, 2016

14,728,020

Additional dues, etc.

March 3, 2016

3,182,720

Amount of charges for unfair underreporting;

2010

1.

8,462,961

January 5, 2016

15,205,400

Additional dues, etc.

March 3, 2016

3,385,180

Unfair Underreporting Additional Tax

Amount of charges

2010

2nd class

14,514,300

January 5, 2016

25,276,650

Additional dues, etc.

March 3, 2016

5,805,720

Amount of charges for unfair underreporting;

2012

1.

4,000,200

January 5, 2016

6,309,910

Additional dues, etc.

March 3, 2016

1,600,080

Amount of charges for unfair underreporting;

Total

35,569,753

76,738,810

Global Income Tax

209

March 3, 2016

49,368,750

Additional dues, etc.

2010

149,051,820

Additional dues, etc.

2012

21,088,110

Additional dues, etc.

Consolidateds

219,508,680

D. On April 6, 2016, the Plaintiff appealed and requested a trial on April 6, 2016. On June 22, 2017, the Tax Tribunal rendered a decision that the Plaintiff’s transfer of KRW 282,174,630 to the bank account of OO, OO, andOO from June 22, 2009 to the purchase cost due to real transaction, and that the said amount shall be included in the necessary expenses for the business income belonging to the pertinent year, thereby correcting the global income tax base and tax amount, and dismissing the remainder of the appeal.

E. Accordingly, on July 4, 2017, the Defendant notified the Plaintiff of the reduction and exemption of the global income tax as indicated in the following table (hereinafter referred to as “instant disposition” in total, including the remaining portion of the initial corrective disposition of the value-added tax and global income tax revoked due to the above reduction and the imposition of additional tax on global income tax in accordance with the inclusion of some necessary expenses.

Sub-Items :

Reversion

Year

Original Correction

Reduction Correction

Amount reduced;

Parts remaining after the reduction is revoked due to reduction

Additional tax for lack of evidence

Global Income Tax

209

49,368,750

4,245,653

45,123,097

2,733,653

1,512,000

2010

149,051,820

47,475,916

101,575,904

44,247,916

3,228,000

2012

21,088,110

800,029

20,288,081

1

800,028

Consolidateds

219,508,680

52,521,598

166,987,082

46,981,570

5,540,028

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons, and thus should be revoked.

1) As the Plaintiff received the instant tax invoice from the instant purchaser, the instant tax invoice does not constitute “tax invoice entered differently from the fact.” Even if not, the Plaintiff did not know that the instant tax invoice was nominal, and was not negligent in not knowing that it was nominal, and thus, the relevant input tax amount may be deducted.

2) Since the Plaintiff’s receipt of the instant tax invoice does not constitute fraud or other unlawful act, the Defendant’s application of the exclusion period for imposition of ten years and imposition of the penalty tax for unfair underreporting is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The Plaintiff’s sales and purchase tax base of value-added tax from the second to the first half of 2008 are as listed below.

Taxation

Period

Sales Tax Base

Purchase Tax Base

Other Transactions

Transactions with the Purchase Agency of this case

Purchase Agency

Business Operator

Value of Supply

Total

208

2. 2

338,944,814

193,820,429

Ntrade

OO

6,355,404

6,355,404

209

2. 2

497,212,600

20,662,860

Jtek

OO

79,568,000

79,568,000

2010

1 1

304,106,00

121,578,962

Jtek

OO

14,630,000

84,630,000

KK

OO

21,880,000

M

OO

28,860,000

SS

OO

19,260,000

20102

627,751,500

39,335,389

KK

OO

50,000,500

145,143,500

SS

OO

95,143,000

2012

1 1

1,075,025,200

808,729,500

W

Ray Trading

OO

40,002,000

40,002,000

2) The supply value and value-added tax of the instant tax invoice, the Plaintiff’s account transfer amount to the purchaser of the instant tax invoice, and the deposit money on the deposit slip issued by the purchaser of the instant case are as follows. The details of the Plaintiff’s withdrawal of cash from the business bank account during the taxable period of the instant disposition are the same as the date and amount set out in the said deposit slip.

Purchase Agency

Business Operator

Proceeds from supply

(Supply Amount + Value-Added Tax Amount)

Amount of account transfer;

Amount stated in the deposit slip;

Ntrade

OO

6,990,944

-

-

Jtek

OO

103,617,800

75,600,000

28,000,000

M

OO

31,746,000

-

31,650,000

KK

OO

79,068,550

46,200,000

32,800,000

SS

OO

125,843,300

15,200,000

10,600,000

W

Ray Trading

OO

4,002,200

45,174,630

-

Consolidateds

391,268,794

282,174,630

(72.12%)

103,050,000

(26.34%)

3) On June 5, 2013, SS was investigated at H customs offices on suspicion of violating the Customs Act and stated the following as follows.

○ Operation of DDR, Inc., Inc., a freight forwarder, had been directly engaged in import declarations in the name of PDR operator and made customs clearance for some small-scale import cargoes.

○ The above PS, WT, UU, MM, Jtech, TTB Man, KK, and V trade are both their family members or the employees of DD personal persons.

It is well known that local logistics companies in China and actual domestic importers do not properly report the price of goods to customs offices, and if they report the true price of goods, it is not necessary to request customs clearance agent.

With respect to 385 copies of the import declaration of the above Pucom (from June 24, 2000 to May 30, 200, 5,479) it is reasonable for Pucom to make a false import declaration as if it directly imports goods from China.

After receiving import tax invoices from the customs collector upon the import declaration, the customs collector issued a tax invoice as if there was sales transaction to the actual domestic importers designated by the local logistics company in China.

Since ○○○-a-comer made a false import declaration to a customs office using the same kind of goods as the owner of various kinds of goods at the time re-combined as one item and made an import declaration, it is impossible to classify them into a daily one by domestic actual importer at this time. There is no separate data that can do so.

There is no fact that he remitted the price of goods to China using ○ Puercom. He was only transported, and the price of goods was settled separately between the domestic importer and the Chinese exporter, and there is no fact that he was involved in this part.

4) Based on the results of such an investigation, the Commissioner of the Korea Customs Service determined that the importer issued false sales tax invoices to the actual importer, after having received false import tax invoices, for the purpose of omitting the actual purchase of domestic importers and evading customs duties, etc. on the imported cargo which the importer arranges.

[Ground of recognition] Facts without dispute, Gap evidence 2, 5 through 10, Eul evidence 5, the purport of the whole pleadings

D. Determination

1) Relevant legal principles

The burden of proving that a tax invoice received in the course of a specific transaction constitutes an "tax invoice entered differently from the fact" under the main sentence of Article 17(2)2 of the former Value-Added Tax Act (amended by Act No. 11608, Jan. 1, 2013; hereinafter the same shall apply) where input tax deduction is denied on the ground that it is a nominal transaction without actual delivery or transfer of goods (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008). Furthermore, in the administrative litigation seeking revocation of taxation on the ground of illegality of taxation, the burden of proving the legality of taxation and the existence of taxation requirements lies on the tax authority, so the burden of proving necessary expenses that constitute the basis of the determination of taxable income is in principle borne by the tax authority. However, it is easy for the tax authority to prove that a tax invoice on some of the expenses reported by the taxpayer was prepared without falsity and whether it constitutes an actual expense, and it is necessary for the other party to pay taxes to the extent of 160.

2) Specific determination

In light of the following circumstances, i.e., ① the Plaintiff’s annual sales revenue of KRW 10, 200, 200, 200, 200, 200, 2000, 200, 200,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,000,000,000,00,000,00,00,00,00,00,00,00,00.

3. Conclusion

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

Relevant statutes

/ former Value-Added Tax Act (Amended by Act No. 11608, Jan. 1, 2013)

Article 16 (Tax Invoice)

(1) Where an entrepreneur registered as a person liable for tax payment supplies goods or services, he/she shall issue an invoice stating the following matters (hereinafter referred to as "tax invoice") to the person who receives the supply, as prescribed by Presidential Decree, at the time specified in Article 9 (where Presidential Decree prescribes otherwise, referring to the time specified otherwise by Presidential Decree). In such cases, a tax invoice may be revised and issued, as prescribed by Presidential Decree, if any ground prescribed by Presidential Decree, such as error

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Date of preparation;

5. Matters prescribed by Presidential Decree, other than those under subparagraphs 1 through 4.

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the "paid tax amount") shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the "in-house tax amount") from the tax amount on the goods and services supplied by him/her (hereinafter referred to as the "the output tax amount"): Provided, That in cases of an input tax amount exceeding

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

1. An input tax amount where a list of total tax invoices by customer is not submitted under Article 20 (1) and (2), or an input tax amount on the portion not entered or differently entered from the fact, where the whole or part of the registration numbers or supply values by transaction parties is not entered or differently entered from the fact, from among the entries on the list of total tax invoices by customer submitted: Provided, That the input tax amount in such cases as prescribed by Presidential Decree

2. An input tax amount, in cases where a tax invoice under Article 16 (1), (2), (4) and (5) is not issued, or where the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as "necessary matters to be entered") are not entered or entered differently from the fact on the issued tax invoice: Provided, That the input tax amount in cases prescribed by Presidential Decree shall be excluded;

/ Income Tax Act

Article 27 (Calculation of Necessary Expenses of Business Income)

(1) The amount to be included in necessary expenses when calculating the business income shall be the sum of expenses corresponding to the total amount of income in the relevant taxable period, which is generally accepted.

【Enforcement Decree of the Income Tax Act

Article 55 (Calculation of Necessary Expenses of Business Income)

(1) Except as otherwise provided for in the Act and this Decree, necessary expenses corresponding to the total amount of business income in each taxable period shall be as follows:

1. Purchase price (excluding a purchase reduction or a purchase discount) of the raw materials for the commodities or products sold and the incidental expenses thereto. In this case, the original purchase price and incidental expenses thereto shall be applicable, if the relevant business operator has consumed such ones for a business use, as have been purchased for other purposes;