Seoul Administrative Court 2013Guhap53547

Seocho 2012west 5143 (O2, 2013)

It is reasonable to determine whether the requirements of holding company in Article 18-2(1) of the Corporate Tax Act for the taxable year concerned are met as of the end of the business year.

Article 17-2 (1) of the Enforcement Decree of the Corporate Tax Act that provides for determining whether holding company requirements as of the end of the business year is met is a provision that intends to clarify legal requirements, so it shall be determined at the end of the business year, regardless of deletion

2013Nu51710 Revocation of Disposition of Corporate Tax Imposition

AAA Holdings Co., Ltd.

○○ Head of tax office

Seoul Administrative Court Decision 2013Guhap53547 decided November 12, 2013

April 9, 2014

April 30, 2014

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition of imposing corporate tax of 2010 on the Plaintiff on September 7, 2012 is revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition and related statutes;

The court's reasoning for this part is the same as the corresponding part of the reasoning of the judgment of the court of first instance. Thus, this part of the judgment is cited in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Whether the disposition is lawful;

A. The parties' assertion

1) Plaintiff

The defendant issued the disposition of this case on the ground that the time of determination as to the holding company's dividend income falls under the "holding company" under Articles 17-2 (1) and 18-2 (1) of the former Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008, and amended by Act No. 11128 of Dec. 31, 201) and "the end of the business year" (hereinafter referred to as "the legal provision of this case") which provide for the exclusion of the holding company's dividend income from gross income is "the end of the business year," and thus, the defendant issued the disposition of this case on the plaintiff. However, as of the "the end of the business year," Article 17-2 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) which provides for the exclusion of the holding company's dividend income, it is natural that the provision of this case's dividend income should be interpreted as unlawful.

2) Defendant

The determination of whether a holding company constitutes a holding company for the application of the instant legal provisions ought to be consistent as of the end of each business year, regardless of the deletion of the former Enforcement Decree provision prior to the amendment. In other words, in principle, all the taxation requirements and non-taxation requirements should be determined on the basis of the time when the pertinent tax liability comes into existence. Even if examining the entire legal provisions of this case, there were no special circumstances to interpret otherwise. The term “as prescribed by the Presidential Decree” was deleted on December 26, 2008, and the relevant Enforcement Decree provision was deleted on February 4, 2009, but it is difficult to view that the purpose was to change the time of determining whether a holding company was a holding company, and in light of the fact that the Enforcement Decree provision to determine whether a holding company was a holding company as of the end of each business year on February 2, 2012, the instant disposition of imposition of tax in this case was justifiable.

B. Determination

1) In light of the following circumstances acknowledged by examining the content and purport of the relevant statutes and the structure of the relevant statutes, determination as to whether a holding company constitutes a holding company for the application of the instant legal provisions ought to be based on the end of each business year.

(1) Article 18-2 (1) of the Corporate Tax Act (amended by Act No. 9267, Dec. 26, 2008) provides that "holding companies prescribed by Presidential Decree among those holding companies under the Monopoly Regulation and Fair Trade Act shall receive profits from their subsidiaries," among domestic corporations. Where the sum computed pursuant to subparagraphs 1 and 2 exceeds the amount computed pursuant to subparagraph 3, the excess amount shall not be included in gross income in calculating their income amount for each business year." Article 17-2 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302, Feb. 4, 2009) provides that "holding companies as prescribed by Presidential Decree" in the main sentence of Article 18-2 (1) of the Act means a domestic corporation which has not been reported to the Fair Trade Commission pursuant to the Monopoly Regulation and Fair Trade Act as of the end of the business year. In such cases, the amended provisions of Article 28-2 of the Corporate Tax Act and the amended provisions of the same Act shall also be deleted by the deadline for filing of corporate tax base for each business year.

② In principle, both the requirements for taxation and non-taxation should be determined on the basis of the time when the liability for tax payment was established. Thus, barring any special circumstance, the determination of whether the liability for tax payment was met as of the end of the business year, which is the time when the liability for tax payment was established, in the case of corporate tax. However, in order to determine the corporate tax base, the instant legal provision provides that a part of the amount of revenue earned by a holding company should not be calculated by the method prescribed in each subparagraph thereof in calculating the income amount of a domestic corporation for each business year. Thus, it is natural to determine whether a holding company is a holding company as of the end of the business year, which is the time when the

(3) If it is interpreted that the legal provision of this case is obviously sufficient to meet the requirements of holding company as of the date of receiving dividends, it shall be deemed unlawful, as it is either a taxation requirement not delegated by the law or a reduction or modification of unfairly non-taxation requirement beyond the inherent limit delegated by the law (Article 18-2(1) of the current Corporate Tax Act does not delegate to the Presidential Decree with regard to the time of judgment of holding company). It is difficult to accept such interpretation easily. Furthermore, it is more clearly stated that all of the previous enforcement decree and newly established enforcement decree of this case must meet the requirements of this case as of the end of the pertinent business year, i.e., the meaning of the former enforcement decree and newly established enforcement decree, and further, if the time limit for filing a report on the establishment and conversion of holding company as of the end of the pertinent business year does not reach the due date of filing a tax base return under Article 60 of the Act on the income of each corresponding business year, and it is also consistent with the systematic interpretation of statutes that expand the scope thereof.

④ Furthermore, since the legal provision of this case provides preferential treatment to holding companies, it shall be strictly interpreted. In the case of the interpretation as seen in the Plaintiff, even if a corporation meets the requirements of the holding company at the end of the business year, it shall not be subject to the application of the legal provision of this case if it fails to meet the requirements of the holding company at the time of receiving dividends (it shall be apparent that the legal provision of this case may be applied under the former Enforcement Decree prior to the amendment). Thus, after the deletion of the Enforcement Decree prior to the amendment, there is no particular change in the text of the legal provision of this case, and there is no purport of the amendment. However, even if the Enforcement Decree prior to the amendment was deleted, it is unreasonable to put such unexpected disadvantage to the pertinent corporation, and it is not in violation of

(5) Unlike the end of the business year, the date of receiving dividends can be adjusted at will, so there is a concern that the purpose of legislation will be damaged through the same.

2) Therefore, the instant disposition in the same purport is lawful, and the Plaintiff’s assertion with a different purport is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed due to the lack of reason, and the judgment of the court of first instance is unfair with different conclusions, and it is so decided as per Disposition by the defendant's appeal.