Requirements for calculating the transfer income tax based on the transfer margin from the actual transaction value pursuant to Article 170 (4) 3 of the former Enforcement Decree of the Income Tax Act (amended by August 1, 1989)

The provisions of Articles 23(4) and 45(1)1 of the Income Tax Act, and Article 170(4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1989, Aug. 1, 1989) declared that the transfer of assets was converted from the conventional transaction value principle to the standard market price principle in cases where assets are transferred, and thus the transferor of assets declared that the transfer of assets was converted from the conventional transaction value principle. Thus, in order to calculate transfer income tax based on the actual transaction value pursuant to Article 170(4)3 of the Enforcement Decree of the same Act, evidential documents that can confirm both transfer and acquisition shall be submitted to the tax authority at the time of the preliminary return of transfer margin or the final return of tax base, and even if any of the evidential documents is not submitted, it shall be calculated based on the standard market

Articles 23(4) and 45(1)1 of the Income Tax Act, Article 170(4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 12767 of Aug. 1, 1989)

[Plaintiff, Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Gyeong-soo et al., Counsel for plaintiff-appellant)

Builder

Head of Ansan Tax Office

Seoul High Court Decision 90Gu6240 delivered on November 14, 1990

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the Plaintiff’s ground of appeal.

According to Articles 23(4) and 45(1)1 of the Income Tax Act, in principle, the transfer value and acquisition value forming the basis for calculating gains on transfer of assets shall be based on the standard market price, only in exceptional cases prescribed by the Presidential Decree. Article 170(4) of the Enforcement Decree of the Income Tax Act (amended by August 1, 1989) provides that (1) where the actual transaction value at the time of transfer or acquisition is confirmed in transactions with the State, a local government or other corporations, (2) where the actual transaction value at the time of transfer or acquisition can be confirmed in transactions designated by the Commissioner of the National Tax Service as necessary to restrain the transfer or acquisition of real estate, and (3) where the transferor can verify the actual transaction value at the time of transfer or acquisition by means of evidence submitted under Article 95 or 100 of the Act; and (4) Where assets are transferred, even if they are reported on gains on transfer, they can be confirmed at the time of transfer or acquisition under Article 90(1)6 of the Income Tax Act.

The court below held that the defendant's taxation of this case, which calculated capital gains on the basis of the standard market price, is justifiable in accordance with the above purport, unless the plaintiff did not make a preliminary return on the transfer difference under Article 95 of the Income Tax Act or a final return on the tax base under Article 100 of the same Act, since the court below determined that the real estate owned by the plaintiff was sold to the non-party Park Jong-sik by the auction procedure at the Suwon District Court on December 23, 1987 and the ownership was transferred to the non-party Park Jong-sung, and then the successful bidder was not a juristic person, it does not fall under Article 170 (4) 1 of the Enforcement Decree of the above Act, and does not fall under Article 170 (4) 2 of the above Act, and the plaintiff did not make a final return on the transfer price under Article 95 of the Income Tax Act or the final return on the tax base under Article 100 of the same Act. It cannot be deemed that the plaintiff submitted the dividend table of the successful bid price and the copy to the tax office to confirm both transfer and acquisition price.

Therefore, the appeal is dismissed and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-dong (Presiding Justice)