National Tax Exclusion Period

The exclusion period of imposition is ten years where a sales contract is concluded again with a second buyer while maintaining the status of the rights and obligations of the sales contract or the buyer while the price has not been settled, and the transfer registration is made directly with the second buyer in the future.

Article 26-2 of the National Tax Basic Act

2016Gudan100425 Revocation of Disposition of Imposing capital gains tax

AA

The Director of Budget Office

April 18, 2017

May 25, 2017

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of capital gains tax of KRW 123,247,00 on April 21, 2015 by the defendant of the Gu office against the plaintiff on April 21, 2015 shall be revoked.

1. Details of the disposition;

A. A on September 4, 2003, aa sold in lots amounting to KRW 142,30,000,000, Seo-gu, Seo-gu, Seocheon-gu, Seocheon-si (hereinafter “the instant land”) and completed the registration of ownership transfer on July 1, 2004.

B. On July 1, 2004, the Defendant acquired the instant land from Aa to KRW 158,00,000,000, and transferred it to BB on July 5, 2004 without being registered, and on April 21, 2015, decided and notified the Plaintiff of KRW 202,473,250, capital gains tax for the year 2004.

C. On June 8, 2015, the Plaintiff dissatisfied with the disposition of imposition of capital gains tax, and filed an appeal with the Tax Tribunal on June 8, 2015, and on March 2, 2016, the Tax Tribunal rendered a decision that “The Defendant imposed capital gains tax of KRW 202,473,250 on the Plaintiff on April 21, 2015, which was imposed on the Plaintiff on the Plaintiff on April 21, 2015, to rectify the tax base and tax amount according to the result, and to dismiss the remainder of the appeal.”

D. After re-audit according to the above decision, the Defendant issued a notice of reduction of capital gains tax for 2004 as KRW 123,247,000 by taking the transfer value of March 30, 2016 as KRW 281,247,00 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1, 4, Eul evidence 1 and 10, the purport of the whole pleadings

1. Indication of real estate - Location: Sincheon-si, Chungcheongnam-si, Chungcheongnam-do;

2. Sales amount: 290,500,000 won.

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) The Plaintiff purchased the instant land in KRW 85,380,00 and sold KRW 115,380,000,000, and thus, the instant disposition that held capital gains amounting to KRW 123,247,000, while the capital gains amounting to KRW 30,000, is unlawful against the substance over form.

2) The Defendant imposed a disposition on the premise that the exclusion period for imposition of capital gains tax is ten years as stipulated in Article 26-2(1)1 of the Framework Act on National Taxes, but the Plaintiff did not file a tax base return, and the Plaintiff did not file a tax base return simply. As such, the exclusion period for imposition of seven years as stipulated in Article 26-2(1)2 of the above Act shall apply. Accordingly, the instant disposition is null and void after the exclusion period for imposition of seven years expires.

B. Determination

1) Facts of recognition

A) A on September 4, 2003, aa sold the instant land in lots at KRW 142,30,000 and sold it to the Plaintiff on March 10, 2004, prior to the due date for the remainder payment.

B) On May 3, 2004, the Plaintiff entered into a sales contract with BB with respect to the instant land (However, the value that the Plaintiff actually transferred to BB is KRW 281,247,00) as follows.

- down payment: 30,000,000 won (payment and receipt at the time of a contract);

- Part payments: 160,500,000 won (Payments 28, 2004)

- Balance: 100,000,000 won (Payments 2, 2004)

* Special Terms and Conditions

1. 25,00,000 won out of the down payment shall be the deposit key on May 4, 2004.

2. After transferring the final ownership, the seller shall bear the transfer income tax.

3. The balance of the Business Development Institute, among the remainder 100 million won, shall be calculated by accompanying the seller’s highest net income, and the remainder shall be the registered amount of Aa in wartime.

C) BBB paid the down payment and intermediate payment to the Plaintiff at the Plaintiff’s request, and the balance to Kim Young-soo. Aa pays the remainder of the instant land sold from Boan City as the remainder received from BB, and completed the registration of ownership transfer on July 1, 2004, and completed the registration of ownership transfer on July 5, 2004.

D) A on July 12, 2004, when filing a preliminary return of transfer income tax on the transfer of the instant land, the Defendant reported the acquisition value of KRW 142,190,000, and the transfer value of KRW 158,000 to KRW 158,00. E) The Defendant conducted an investigation of transfer income tax on the Plaintiff during the period from March 26, 2015 to April 13, 2015. The Plaintiff did not have prepared a sales contract on the instant land with B, and the sales contract submitted to the Defendant by BB to the Defendant was forged.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 4, Eul evidence 1 to 10, the purport of the whole pleadings

2) Determination

A) The fact that the Plaintiff purchased the instant land from A to 158,00,000 won and sold it to BB to 281,247,000 won is as above. In this process, the Plaintiff’s assertion is without merit (the Plaintiff asserted that the sales contract with BB was forged on May 3, 2004), but there was no evidence to deem that the said document was forged. Thus, the Plaintiff’s assertion is without merit.

B) As to the Do and argument of exclusion period of imposition

Article 26-2(1) of the former Framework Act on National Taxes (amended by Act No. 8830 of Dec. 31, 2007) extends the exclusion period for taxation to 10 years from the date on which a taxpayer is entitled to impose the national tax, in cases where a taxpayer evades a national tax, obtains a refund or deduction by fraudulent or other unlawful means (Article 26-2(1) of the former Framework Act). The legislative purport of the above provision is to extend the exclusion period for the right to impose national tax to 5 years, in principle, in cases where there is such unlawful acts as making it difficult for the tax authority to detect the fact of imposing the national tax, or making it difficult for him/her to find a false fact, and thereby it is difficult for him/her to exercise the exclusion period for imposition of the national tax. Accordingly, the "Fraud or other unlawful act" under Article 26-2(1)1 of the former Framework Act on National Taxes means any fraudulent act that makes it impossible or considerably difficult to impose and collect taxes, or any other active act that is not accompanied by a report under tax law (see 2161.

Examining the above facts in light of the legal principles as seen earlier, the Plaintiff entered into a sales contract for the instant land again with BB while maintaining the rights and obligations relationship under the sales contract or the status of the purchaser in the absence of the settlement of the price to Aa, and entered into a sales contract for the instant land again with BB with BB, as the seller, participated in preparing a sales contract for the transfer to AA as the buyer, and even if a balance is paid to BB due to the remainder of the balance received from BB, a transfer registration for the acquisition was possible, but a final buyer was allowed to complete a transfer registration without completing the transfer registration for the Plaintiff’s transfer of ownership in the future, and even if considerable amount of transfer gains accrued, a buyer, who is the final buyer, bBB, without filing a preliminary return or final return for transfer income tax, and thus, the Plaintiff committed an act to impose and collect the deadline for return.

Ultimately, since the disposition of this case is subject to the exclusion period for imposition of ten years, the plaintiff's assertion that the exclusion period for imposition of transfer income tax for 2004 has already lapsed at the time of the disposition of this case is without merit.

3. Conclusion

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