The case holding that the application for refund by retroactive deduction of losses is unlawful because it does not meet the substantive requirements.

In order to receive a refund by retroactive deduction of losses, since the substantive requirements such as corporate tax and corporate tax imposed in the immediately preceding business year should be met, and the procedural requirements for filing an application for refund by retroactive deduction of losses are all satisfied by the deadline for filing the tax base and tax amount of corporate tax for the relevant business year. Thus, in preparation for the case where a corporation which reported the tax base and tax amount of corporate tax for the immediately preceding business year as the Decree (0) is imposed on the corporate tax for the immediately preceding business year, the application for refund of corporate tax for the immediately preceding business year by retroactive deduction of losses in the immediately preceding business year is sought for refund of the corporate tax for the immediately preceding

Article 72(1) of the Corporate Tax Act

Supreme Court Decision 2000Da25590 Decided October 27, 2000 (Gong2000Ha, 2406) Supreme Court Decision 2001Du10721 Decided July 25, 2003 (Gong2003Ha, 1881)

Racom Co., Ltd. (Attorney Choi Jong-soo et al., Counsel for the plaintiff-appellant)

Head of Chungcheong Tax Office

April 1, 2005

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on January 17, 2002 shall be revoked.

1. Facts of recognition;

A. On December 13, 1995, the Plaintiff was established for the purpose of development, manufacture, marketing, and sale of the radio communication network. On March 31, 1999, the Plaintiff reported the tax base and tax amount to 0 won on the ground that the losses incurred in the amount of KRW 5,436,352,143 while filing a corporate tax return for the business year 1998 to the Defendant. On March 30, 2000 when the Defendant’s tax investigation was conducted, the Plaintiff submitted an application for refund of the tax base and tax amount to 94,074,480,468 won upon filing a corporate tax return for the business year 199, on the ground that the losses incurred in the amount of KRW 94,074,480,468 won for the business year, and the amount of the tax base and tax amount to be deducted to 94,074,480,468 won for the immediately previous business year, 1998, 364,3532,40

B. After that, on January 2, 2002, the Defendant calculated the corporate tax base for the business year 1998 to the Plaintiff on January 2, 2002 as KRW 38,188,239,420, and imposed corporate tax of KRW 18,260,950,920 (i.e., calculated tax amount of KRW 10,680,707,037 + penalty tax of KRW 7,580,243,883). On January 7, 2002, the Plaintiff appropriated the Defendant for the above calculated tax amount of KRW 10,680,707,037 from the retroactive deduction of deficit in the business year 1999, and submitted the tax base and amount of corporate tax for the business year 1998, which was first reported on March 31, 199 to the Plaintiff as KRW 38,188,239,420 won and 7,583383(d).

C. On January 17, 2002, the defendant issued a notice to the plaintiff on March 31, 2000, which was the end date of the return period of the corporate tax for the business year 1999, that the corporate tax amount for the business year 1998, which was not imposed as of March 31, 2000, is not subject to a request for correction because it was not subject to a request for correction because it was not subject to the refund of losses incurred in the business year 1999 (hereinafter referred to as the "disposition of this case"). Thereafter, the plaintiff filed a request for the rejection of this case with the Board of Audit and Inspection on April 17, 2002

D. Meanwhile, according to the Plaintiff’s filing of objection and the request for review, the Defendant ordered the amount of corporate tax for the business year 1998 to KRW 13,050,306,72 on June 11, 2002; KRW 15,265,603,370 on October 1, 2002; KRW 5,917,481,073 on December 31, 2004; the final corrected amount of corporate tax for the business year 1998 was KRW 482,906,827; and the Plaintiff had not paid corporate tax for the business year 1998.

[Reasons for Recognition] Evidence A 1-1, 2, Evidence A 2-1 to 3, Evidence B 1 to 8, Evidence B-9 to 12, each of the statements, and the purport of the whole pleadings

2. The parties' assertion

A. (1) Since there is no tax amount imposed as corporate tax for the business year immediately preceding 198 at the time of the Plaintiff’s application for refund of this case, the application for refund of this case is unlawful as it did not meet the substantive requirements for retroactive deduction of losses, and thus, no claim for correction is allowed. (2) Article 110(6) of the Enforcement Decree of the Corporate Tax Act requires that the corporate tax for the business year immediately preceding the business year should be changed after a refund decision was rendered based on retroactive deduction of losses. Since the Defendant did not make a refund decision on the application for refund of this case, it cannot be deemed that the Plaintiff is obligated to make a refund decision under the above provision on the ground that the corporate tax for the business year immediately preceding 1998 was imposed on the Plaintiff, and (3) the refund by retroactive deduction of losses is premised on the payment of corporate tax for the business year immediately preceding

B. Regarding this, the plaintiff (1) even if the corporate tax imposed after the end of the reporting period of the corporate tax for the business year 1998 is subject to the refund by the retroactive deduction of the deficit for the business year 1999, (2) if the plaintiff submits an application for retroactive deduction of the deficit within the reporting period of the business year 1999, it satisfies the requirements for retroactive deduction of the corporate tax for the business year 1998, and the refund amount at the time of the application for retroactive deduction of deficit does not necessarily have to be the amount (e.g., the amount). (3) If the plaintiff did not impose corporate tax for the business year 1998 immediately before the filing of the application for retroactive deduction of deficit for the business year 199, it shall be deemed that there was a decision to refund the amount of tax to 0 won. If the defendant issued the disposition of imposing corporate tax for the business year 1998, the amount of tax to be refunded should be deducted pursuant to Article 110 (6) of the Enforcement Decree of the Corporate Tax Act.

3. Relevant statutes;

It is as shown in the attached Form.

4. Whether the rejection disposition of this case is legitimate

A. Part of the rejection disposition of reduction and correction of corporate tax amount for the business year 1998

First, we examine the claim for correction of this case from the corporate tax amount of 1998 to the effect that the losses for 199 business year would be deducted from the corporate tax amount of 199 business year. Under the former Corporate Tax Act (amended by Act No. 6558, Dec. 31, 2001; hereinafter the "Act"), losses refer to the excess amount where the total amount of losses for each business year exceeds the total amount of earnings for the business year (Article 14(2)). If losses for a business year occur, the method of deduction which is deducted from the corporate tax amount for 5 years thereafter (Article 13 subparag. 1) and the method of a retroactive deduction to the extent of the corporate tax amount imposed for the immediately preceding business year (Article 72(1)). Under the presumption of no taxation without the law, the plaintiff's grounds for the imposition and imposition of taxes and calculation items shall be based on the law, and the plaintiff's interpretation of tax laws for the business year shall not be allowed without reasonable grounds for the extension of the tax base of 19497.

B. Part of the rejection disposition of correction of refund on corporate tax amount of 1998

(1) The plaintiff asserts that the application for refund of this case was made by the defendant and that the defendant filed a request for correction pursuant to Article 45-2 of the Framework Act on National Taxes. According to Article 45-2 (1) of the Framework Act on National Taxes, the person who filed the return of tax base within the statutory due date of return exceeds the tax base and tax amount to be reported pursuant to the tax law, or the amount of tax recorded in the return of tax base (referring to the tax base and tax amount after the determination or correction where such determination or correction is made pursuant to the provisions of each tax law), or the amount of tax or refund recorded in the return of tax base falls short of the prescribed amount of deficit or tax amount to be reported pursuant to the tax law (referring to the amount of tax or tax amount after the determination or correction is made, where such determination or correction is made pursuant to the provisions of each tax law), the plaintiff can request the head of the tax office to correct the above amount of tax base and tax amount to be reported within 20 years after the statutory due date of return, and it can be viewed that the plaintiff can not request the above tax amount of tax return of 20.

(2) In order to recognize a request for decision under the above Framework Act on National Taxes, an application for refund by a retroactive deduction of losses filed shall be lawful. Thus, in light of the fact that the refund system by a retroactive deduction of losses is an exception to the tax policy purpose to reduce the shortage of funds for small and medium enterprises difficult to operate (see Supreme Court Decision 2001Du10721, Jul. 25, 2003, etc.), it is necessary to strictly interpret the requirements for refund. According to Article 72 of the Act, in order to receive a refund by a retroactive deduction of losses for any business year, the amount of losses must occur in a certain business year, and the procedural requirements for filing an application for refund by a retroactive deduction of losses within the deadline for filing the return of corporate tax base and tax amount for the pertinent business year are all satisfied. Accordingly, the plaintiff filed an application for refund of losses for the previous 198 business year under the premise that the tax base and tax amount of the 1998 business year were either zero or more, and the plaintiff did not have any other reasons for filing the application for refund of this case.

(3) According to Article 110(6) of the Enforcement Decree of the Tax Act, where the corporate tax amount or the tax base amount for the business year immediately preceding the business year, which served as the basis for calculating the original refundable amount, differs after the determination of the original refundable amount, the head of a tax office shall immediately re-determination of the original refundable amount and additionally refund or excessively refund the amount of tax. This appears to be a provision where the corporate tax amount, etc. for the immediately preceding business year is changed after the tax authorities rendered a decision on the taxpayer's application for refund. In this case, as seen above, the Defendant did not make any decision on refund of the Plaintiff's application for refund of this case. Accordingly, even if the Defendant imposed the corporate tax on the initial Plaintiff's application for refund of this case, the Defendant cannot be deemed to bear the duty of re-determination or additional refund under the Enforcement Decree of

(4) Meanwhile, according to Article 72 (3) of the Act, when the chief of the district tax office having jurisdiction over the place of tax payment receives an application under the provisions of paragraph (2) of this Article, the amount of tax shall be determined without delay and refunded pursuant to the provisions of Articles 51 and 52 of the Framework Act on National Taxes. Thus, the main sentence of Article 51 (1) of the Framework Act on National Taxes provides that when a taxpayer erroneously pays the amount of national tax, additional dues, or disposition fee for arrears (in cases where there is any amount of tax to be deducted from the amount of tax refundable under tax-related Acts, referring to the remaining amount after deduction) or there is an amount of tax to be refunded under the tax-related Acts, the amount of overpaid or erroneously paid or the amount of tax shall be determined as the refund of national tax immediately. Article 52 of the same Act provides that the head of the district tax office shall add the prescribed amount of national tax refund to the refund of national tax refund under the provisions of Article 51 of the same Act. Accordingly, the plaintiff's claim for refund of this case is unlawful and without merit.

5. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Noh Man-Gyeong (Presiding Judge)