Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 12028 of Dec. 31, 1986) (amended by Presidential Decree No. 12028 of Dec. 31, 1986)

If a foreign-invested enterprise as a non-taxable enterprise under Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 12028 of Dec. 31, 1986) is limited to an enterprise registered in accordance with Article 12 of the Foreign Capital Inducement Act, it is contrary to the tax policy to attract foreign capital in Korea. If a foreign-invested enterprise pays foreign capital and carries out capital registration over several occasions, it is not subject to heavy taxation of the registration tax at all before the registration that occurs, but is excluded from the heavy taxation of the registration tax only after the registration that does not need to pay the registration tax, and it goes against the original purpose of legislation, and thus it is contrary to the original purpose of legislation with the approval of the Minister of Finance and Economy under Article 7 of the same Act.

Article 137 of the Local Tax Act, Article 138 of the former Local Tax Act (amended by Act No. 3878 of Dec. 31, 1986), Article 101 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 1208 of Dec. 31, 1986), Articles 2, 7, and 12 of the Foreign Capital Inducement Act

Korea Security Industry Corporation

The head of the Incheon Metropolitan City North Korea;

1. The Defendant’s imposition of registration tax of KRW 217,152,00 against the Plaintiff on October 4, 1986 and its defense tax of KRW 43,430,390 shall be revoked.

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

The same shall apply to the order.

1. The foreign-capital invested company Gap's capital increase (including Gap's investment authorization and notification) under the provisions of subparagraph 1, Gap's certificate 2, Eul's certificate 3, Eul's certificate 5, and Eul's certificate 1 under the provisions of Article 7 (1) of the former Local Tax Act. The plaintiff's capital increase is within 30 times the total amount of 10,000 won and 10,000 won and 30,000 won which were registered under the provisions of Article 7 (1) of the former Local Tax Act, and the tax rate of 10,000 won which were registered under the provisions of Article 7 (1) of the former Local Tax Act. The plaintiff's capital increase (including 1,00,000,000 won which were registered under the provisions of Article 17 (1) of the former Local Tax Act. The above provision shall also apply to 30,010,000 won which were registered under the provisions of Article 17 (2) of the former Local Tax Act.

2. According to the purport of the above provision of each of the above statutes, the defendant asserts that the above taxation disposition of this case is legitimate because it is not yet applicable to the company that is not subject to the application of heavy tax rate until it is registered with the Ministry of Finance and Economy pursuant to Article 12 of the Foreign Capital Inducement Act. Accordingly, the plaintiff's foreign-invested company under Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act is not limited to the company registered pursuant to Article 12 of the Foreign Capital Inducement Act, but it should be deemed that the foreign-invested company established and participated in the establishment of a foreign-invested company approved by the Minister of Finance and Economy pursuant to Article 7 of the same Act. Thus, the above taxation of this case is unlawful, and even if it is not so, it is so, it is against the principle of trust and good faith that the defendant's imposition of registration tax on the whole amount of the previous investment capital and the registration of capital increase

Therefore, under the purport that a foreign-invested enterprise newly establishes a corporation in a large city or moves into a large city, or establishes a new factory or expands registration tax in a large city, it is prepared to restrain the significant progress in the large city of the enterprise. However, it is necessary to attract foreign capital in Korea due to the economic situation and there is considerable incentive to do so, so, it is necessary to do so. As part of the tax policy (Article 14 through 16 of the Foreign Capital Inducement Act) covering various preferential points for foreign-invested enterprises, the foreign-invested enterprise should be excluded from the registration tax imposed by Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act, so that it can be excluded from the registration tax imposed by Article 101 (2) of the former Enforcement Decree of the Local Tax Act, even if it is established in a metropolitan area, and the foreign-invested enterprise should also be excluded from the registration tax imposed by Article 101 (1) 2 of the latter Enforcement Decree of the Local Tax Act, and the foreign-invested enterprise should also be excluded from the registration tax imposed by the Association.

3. Thus, as seen earlier, the Plaintiff is satisfied by paying the registration tax and its defense tax according to the tax rate stipulated in Article 137(1)1 of the former Local Tax Act rather than the heavy tax rate under Article 138(1)1 of the same Act with respect to the registration of establishment and increase of capital. Thus, the instant tax disposition that the Defendant additionally notified the Plaintiff by applying the above heavy tax rate cannot avoid revocation because it was unlawful without examining the remainder of the Plaintiff’s remaining arguments.

Therefore, the plaintiff's claim of this case seeking the revocation of the taxation disposition of this case is justified, and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition.

Judges Kim Young-jin (Presiding Judge)