Interest income that a non-profit domestic corporation has not reported as a tax base by the filing deadline for corporate tax shall be subject to separate taxation.

The purpose of Article 62 (1) of the Corporate Tax Act is to grant the authority to choose whether to be subject to preferential taxation measures to non-profit domestic corporations, and to restrict the selection period until the time of filing a tax base return is to determine the tax law relationship between the taxpayer and the tax authority at an early stage and to grant legal stability.

Article 29 of the Corporate Tax Act / [Inclusion of Reserve Funds for Business Start-Up in Loss] Article 62 of the Corporate Tax Act /

2014Guhap50972 Revocation of Disposition of Rejecting Corporate Tax

AAA Mutual Aid Association

Head of the District Tax Office

April 18, 2014

June 13, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's rejection of the request for correction by the OOOO and the OOOOOOO for the business year 2009, which was made against the plaintiff on June 5, 2013, shall be revoked.

1. Details of the disposition;

A. In order to stabilize the employment and promote welfare of construction workers, the Plaintiff is a non-profit domestic corporation established on December 9, 1997 pursuant to Article 9 of the Act on the Employment Improvement, etc. of Construction Workers for the purpose of conducting mutual-aid projects, such as paying mutual-aid money to construction workers as beneficiaries.

B. On May 25, 2012, the Plaintiff filed a correction claim stating that the amount of interest from the OOO members was refunded at the time of filing the tax base return on May 25, 2012, and was not included in the deductible expenses as the reserve fund for non-profit domestic corporations’ proper purpose business under Article 29 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same).

C. Accordingly, under Article 62(1) of the former Corporate Tax Act and Article 99(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010), the interest income for which a corporation has not filed a tax base return cannot be included in the tax base by filing a revised return, filing a return after the due date, sexuality, etc., and the Plaintiff refused a request for correction on May 25, 2012 on the ground that it cannot be included in the tax base and deductible expenses because the Plaintiff did not report the amount of the above interest income at the time of filing a corporate tax for the business year 2010. Furthermore, the Defendant erroneously applied the tax base and deductible expenses of the interest income when the Plaintiff filed a corporate tax return for the business year 209 and 2010, and thus, was excessively refunded to the Plaintiff on March 29, 2013, the Plaintiff’s additional tax amount refunded O200 won + O200 won.

See Table 3 of the Court Decision

E. On the grounds that the Plaintiff was unable to report interest income due to the failure to receive a withholding tax receipt for the interest income from a financial institution by the new deadline for corporate tax for the pertinent business year on March 29, 2013, the Plaintiff shall include: (i) the 2007 business year as to the interest income reported by including the tax base and deductible expenses for the business year 2009, (ii) the aggregate of the OOOO members reported by including the tax base and deductible expenses for the business year 2010, and the corporate tax base and deductible expenses for the business year 2007; (iii) the application for rectification seeking the refund of OO members shall be included in the deductible expenses for the business year 208, (ii) the amount of the interest income reported by including the OO members in the tax base and deductible expenses for the business year 2009, 2008, 2010, 209, 200, 209, and 200.

F. Accordingly, on June 5, 2013, where a non-profit domestic corporation fails to file a report on interest income as the tax base by the deadline for filing a corporate tax return, the Defendant rejected the Plaintiff’s request for correction as of March 29, 2013 on the ground that the taxation procedure cannot be completed by the separate taxation procedure and that the request for correction cannot be filed ( Of them, the disposition rejecting correction for the business year 2010, sought by the Plaintiff, which was sought by the Plaintiff), and (g) The Plaintiff appealed to the Tax Tribunal on July 10, 2013, but was dismissed on October 25, 2013.

[Reasons for Recognition] Facts without dispute, entry in Gap evidence Nos. 1 through 16 (including all defenses; hereinafter the same shall apply), the purport of the whole pleadings

2. The plaintiff's assertion

The Plaintiff omitted interest income of the Plaintiff in the business year 2009, and omitted interest income of the Plaintiff total amount of the OOO members in the business year 2010. However, since the Plaintiff reported the interest income in the business year 2009 and the interest income OO members in the business year 2010 and included in the deductible expenses, the omitted interest income shall be deemed as the interest income reported as the tax base and shall be included in the deductible expenses as the reserve for its proper purpose business. Accordingly, the instant disposition rejecting the Plaintiff’s request for correction is unlawful.

3. Judgment on the defendant's main defense

1) The defendant asserts that the grounds for illegality alleged by the plaintiff are not about the instant disposition, but about the illegality of the first disposition, and that it is unlawful since the plaintiff did not go through the procedure of the previous trial on the first disposition.

According to the evidence adopted earlier, the Plaintiff asserted the illegality of the first disposition and sought revocation thereof, instead of claiming for the revocation thereof, on the grounds that the Plaintiff failed to receive a withholding tax receipt for the interest income from a financial institution during the pertinent business year by the deadline for filing a corporate tax for the pertinent business year, filed a claim with the Defendant for refund of the source tax payable for the business year 2007 to 2010, and filed a petition for the instant disposition rejected, but the Plaintiff’s claim was dismissed on October 25, 2013. The Plaintiff’s claim for the instant disposition was dismissed on October 25, 2013, and the purport of revoking the rejection disposition of each of the request for correction by the Corporate Tax OOO or the Corporate Tax OOO for the

Article 45-2(1) of the Framework Act on National Taxes provides that a person who has filed a tax base return by the statutory due date of return may file a request for correction against the tax base and amount of tax recorded in the tax base return or the decision of the tax authority, while Paragraph (4) provides that a person liable for tax payment may file a request for correction within a certain scope of the tax base and amount of tax, and the person liable for tax payment may file a request for correction for correction on the grounds that there are grounds for reduction in the disposition in addition to the method of dispute over the imposition and collection by the tax authority. (2) The tax authority upon receipt of the request for correction has the duty to investigate whether the tax base and amount of tax recorded in the tax base return exceed the objectively legitimate tax base and amount of tax to be reported under the tax law. As such, in a lawsuit seeking revocation of a tax disposition, the lawsuit seeking revocation of the request for reduction is a reason for cancellation of the tax base and amount of tax recorded in the tax base return as well as the lawsuit seeking revocation of the disposition. (See Supreme Court Decision 2002Du961, Aug. 16, 2004).

2) Meanwhile, at the time of filing a tax appeal, the Defendant claimed that the Plaintiff’s rejection disposition regarding the amount of interest income withheld at the time of filing a tax appeal was unlawful, since the Plaintiff did not go through the procedure for trial.

According to the evidence evidence Nos. 3 and 15, the Plaintiff stated in the tax appeal that the amount of the claim for correction filed by the OOO members for the business year 2009 was confirmed to have not been deducted as already paid due to the Plaintiff’s simple mistake, and thereafter the Tax Tribunal determined that the Plaintiff only dispute over the amount of the OO members for the business year 2009 (=OOO members -OO members). However, according to the evidence adopted earlier, the Plaintiff stated in the claim for correction filed by the tax appeal that the rejection of the OO members should be revoked, and that the decision on the disposal of the existing claim for correction was made only to reduce part of the amount of the claim for correction filed by the Plaintiff for the business year 2009, and that the amount was not finally determined to have been reduced.

Therefore, it is reasonable to view that the plaintiff had undergone the pre-trial procedure on the whole amount of the 2009, 201O business year). Therefore, this part of the defendant's assertion is without merit.

4. Judgment on the merits

A. A domestic corporation liable to pay taxes shall report the tax base and amount of corporate tax on income for the pertinent business year within 3 months from the end of each business year (Article 60(1) of the former Corporate Tax Act); and a non-profit domestic corporation may choose not to report the tax base on withheld interest income; and in this case, the interest income that is not reported on the tax base shall not be included in the calculation of the income amount for each business year (Article 62(1)). According to the above provision, if a non-profit domestic corporation fails to report on the tax base of corporate tax within the statutory due date under Article 60(1) of the Corporate Tax Act, it shall not include the withheld interest income in the income for the pertinent business year so that the interest income may not be subject to separate taxation; however, if a non-profit domestic corporation has selected the method of separate taxation under Article 60(1) of the Corporate Tax Act on withheld interest income, and even if such report was filed after the statutory due date of return, it shall not be deemed any different even if it has reported on the withheld interest income after the statutory due date of return.

As such, Article 62(1) of the Corporate Tax Act grants a non-profit corporation the authority to choose whether to be subject to preferential taxation measures and limits the selection deadline to the time of filing a tax base return is intended to grant legal stability by establishing early tax law relations between taxpayers and tax authorities. In light of such legislative intent, even if a non-profit corporation includes interest income in the tax base for the previous business year that cannot be included in the tax base at the time of filing a tax base return, such interest income cannot be deemed the interest income generated in the business year concerned, and it is reasonable to interpret that it shall not be included in the tax standard by filing a revised return, after filing a return, or after filing a return or correction, etc., unless the tax base return is filed on the interest income in the business year concerned, as long as the interest income in the business year concerned is not included in the tax base at the time of filing a tax base. Interpretation of the first-year tax base return to determine that interest income can be included in the tax base at any time within the period of filing

B. According to the evidence adopted earlier, the Plaintiff reported each of the above report, while the Plaintiff reported the total amount of the interest income paid in the year 2007, the total amount of the OOOO and the total amount of the interest income paid in the year 2008, the OOO, the interest income paid in the year 2008, the OOO, and the interest income paid in the year 2009, respectively. However, the Plaintiff’s assertion was omitted from the above report, and the OOOO of the interest income in the year 2009 and the interest income paid in the year 2010 were reported only when the tax base was reported in the year 2010.

According to the above facts, the Plaintiff did not report the interest income to be included in the tax base at the time of filing the tax base for the pertinent business year at the time of filing the tax base for the pertinent business year. Even if the interest income was included in the tax base at the time of filing the tax base for the pertinent business year, it cannot be deemed as interest income for the pertinent business year. Thus, the pertinent business year’s interest income not reported can no longer be included in the calculation of the income amount for each business year, and one taxation procedure is terminated, which became final and conclusive as separate taxation by withholding. The Plaintiff reported that the interest income for the pertinent business year was included in the tax base for the pertinent business year, which cannot be included in the tax base for the pertinent business year. Thus, the Plaintiff asserted that the interest income

5. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.