Whether the capitaling car paid to a foreign corporation that does not have the place of business in the Republic of Korea is subject to corporate tax.

In the event that an importer in Korea imports goods from an exporter who is a foreign corporation and has not opened an import letter of credit until the agreed date in accordance with the import contract, and that the seller pays the amount calculated by applying the rate of the number of delayed issuance of the letter of credit and the agreed rate to the foreign corporation, i.e., the seller, the foreign corporation does not have a place of business in Korea and sells goods in Korea, not in Korea, but in Korea, the foreign corporation's capitalization of the paid foreign corporation does not fall under any of the subparagraphs 11 of Article 55 of the Corporate Tax Act, Article 122 (5) 1 and 7 of the Enforcement Decree of the Corporate Tax Act, which provides for one of the domestic source income of the foreign corporation, and thus, it cannot be subject to corporate tax.

Article 5 subparag. 11 of the Corporate Tax Act; Article 122(5)1 of the Enforcement Decree of the Corporate Tax Act; Article 122(5)7 of the Enforcement Decree of the Corporate Tax Act

[Defendant-Appellee] Defendant 1 and 3 others (Attorney Park Jong-soo, Counsel for defendant-appellee)

The Director of the National Tax Service

Seoul High Court Decision 84Gu543 delivered on October 4, 1985

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

When an importer in Korea imports original parts from an exporter who is a foreign corporation, the amount calculated by applying the ratio of the number of delayed issuance of the credit and the agreed rate to the contract amount to the foreign corporation, which is the seller, due to the failure to issue an import credit by the agreed date in accordance with the import contract. In other words, where the seller pays the so-called capitaling tea, the seller's foreign corporation does not have a place of business in Korea but sells goods such as original parts, etc. in Korea, if the foreign corporation does not have a place of business in Korea, it shall not be subject to corporate tax, as well as insurance money, compensation or damages received in connection with real estate in Korea or other assets in Korea or business operated in Korea under Article 122 (5) 1 of the Enforcement Decree of the Corporate Tax Act and Article 122 (5) 7 of the Enforcement Decree of the same Act.

Under the above view, the court below held that the defendant's taxation disposition of this case was unlawful on the premise that the plaintiff is liable to withhold corporate tax on the ground that the payment was not a domestic source income of the above US company since it was not a domestic source income subject to the corporate tax of the above US company, and it did not have an obligation to withhold corporate tax on the plaintiff, even though the plaintiff imported the source of credit in the United States from the foreign corporation that was not a domestic corporation that had no domestic place of business in the Republic of Korea, and paid each amount to the above U.S. company as a loan because it was not an import letter of credit until the agreed date due to financial standing, etc.

The so-called so-called so-called so-called theory is that the place of an importer's non-performance of obligation under the import contract of the plaintiff corporation is domestically located in the Republic of Korea, and thus, the claim for damages is related to the above claim for damages, which is an asset in the Republic of Korea, and therefore, the U.S. company's compensation from the plaintiff is related to the above claim for damages, which is an asset in the Republic of Korea. Therefore, it is argued that it constitutes a domestic source income under Article 122 (5) 1 or 7 of the Enforcement Decree of the Corporate Tax Act. However, although the ground for the occurrence of the so-called gallon is not based on the import contract itself, it is not based on the importer's non-performance of obligation under the import contract, but it

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 Lee Jin-Post (Presiding Justice)