Appropriateness of the disposition that excludes special tax reduction or exemption for small and medium enterprises from real estate supply business

A real estate business in the Korean Standard Industrial Classification is not a direct construction activity but a real estate business in the sale and sale of a house after constructing a house under a contract, and thus a real estate business in the Korean Standard Industrial Classification is not subject to special tax reduction or exemption.

Article 7 of the Restriction of Special Taxation Act (Special Tax Abatement or Exemption)

Article 2 of the Enforcement Decree of the Restriction of Special Taxation

1. The plaintiff's claim is dismissed.

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

Each disposition of KRW 380,746,930, corporate tax for the year 2002 imposed on the Plaintiff on May 1, 2007, and KRW 102,230,30,300, respectively, shall be revoked.

1. Details of the disposition;

A. From March 1, 1995, the Plaintiff was a corporation that runs a business such as the civil engineering construction business from March 1, 1995. Road packing and other construction business, the mid-term automobile maintenance and lease business, the sales business of soil materials, and the manufacture and sales business of concrete products. From April 20, 201 to January 29, 2003, the Plaintiff newly built and sold apartment units on the ground of ○○○○○-dong, 505, and 9, and December 26, 2003 from December 22, 2006, ○○○-dong, 152-24 and 82, respectively.

B. On March 31, 2003, when filing a corporate tax for the business year of 2002, the Plaintiff: (a) deemed the main business as a construction business; and (b) reported and paid the amount of special tax reduction and exemption for small and medium enterprises under Article 7 of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter the same shall apply) by reduction of KRW 91,374,961.

C. According to the Korean Standard Industrial Classification under Article 2(3) of the former Restriction of Special Taxation Act (amended by Act No. 8387, Apr. 27, 2007; hereinafter the same), the Defendant issued a revised notice on May 3, 2007 against the Plaintiff of KRW 380,746,930, corporate tax of KRW 102,230,30,300 for the business year 2002, on the ground that the Plaintiff’s main business is deemed eligible for the special tax reduction or exemption under Article 7(1) of the former Restriction of Special Taxation Act, not the E construction business.

D. The plaintiff appealed and filed an appeal with the National Tax Tribunal on July 30, 2007, but was dismissed on October 26, 2007.

[Grounds for Recognition] Facts without dispute, Gap 1 to 4, 14, Eul 1 (including each number), the purport of the whole pleadings

2. Whether the disposition of this case is lawful;

A. The plaintiff's assertion

(1) Since it is unclear whether a portion of the Korean Standard Industrial Classification pertaining to the real estate supply industry, which is excluded from the real estate supply business that is subject to national tax reduction or exemption, constitutes a construction business subject to tax reduction or exemption due to entrustment or contract to a certain extent, it goes against the principle of clarity. Therefore, the application of tax-related

(2) The plaintiff, after registering as a housing construction business on March 1, 1995, employed a Class 1 construction engineer from November 17, 200 to directly conduct industrial activities such as building planning, design, approval, and construction process management, etc., such as building planning, construction, extension, reconstruction, and reconstruction. This constitutes a building construction business, and thus, the plaintiff's business constitutes a real estate supply business. Thus, each of the dispositions of this case, which held that the plaintiff's business constitutes a real estate supply business, is unlawful.

(3) If the Plaintiff’s business type is excluded from the construction business due to the new establishment of Article 2(3) of the former Restriction of Special Taxation Act, and thus does not fall under the category of business subject to special tax reduction or exemption, it is similar to that of the time when the Plaintiff becomes not a small or medium enterprise due to the amendment of the attached Table of the Enforcement Decree of the Framework Act on Small and Medium Enterprises (amended by Presidential Decree No. 19329 of Feb. 9, 2006). Thus, it is unlawful to impose each of the instant dispositions without such postponement, even in the case of the Plaintiff’s grace period for the taxable year to which the date on which the ground for the allocation occurred belongs and the taxable year following the third taxable year thereafter.

(4) The Plaintiff’s new apartment on the ○○○○○○-dong, 505, and 9 parcels of land was prepared from around 200 to obtain the approval of the business plan on April 20, 201. However, even though Article 2(3) of the former Restriction of Special Taxation was newly established at the time of planning and selling the above apartment, it was against the prohibition of retroactive taxation under Article 18 of the Framework Act on National Taxes or the principle of good faith under Article 15 of the Framework Act on National Taxes.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Relevant regulations and their interpretation

(A) Article 4(1) of the former Restriction of Special Taxation Act delegates to the Enforcement Decree the scope of the latter’s marks of small and medium enterprises, and Article 2 of the former Enforcement Decree of the Restriction of Special Taxation Act stipulates that a company listed in a large number of businesses such as manufacturing (including manufacturing businesses and similar businesses as determined by the Ordinance of the Ministry of Finance and Economy; hereinafter the same shall apply), mining, construction, engineering, and other business and operating the following businesses as its main business shall be deemed a company meeting all the requirements (Paragraph (1)), and that a business operating not less than two different businesses shall be deemed a main business with a larger business revenue amount by

(B) Meanwhile, Article 7(1) of the former Restriction of Special Taxation Act limits the subject of special tax reduction or exemption, such as corporate tax, to small and medium enterprises engaged in manufacturing, mining, construction, logistics industry, etc., among small and medium enterprises, Article 2(3) of the same Act delegates the classification of the type of business to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea. The Korean Standard Industrial Classification under Article 2(3) of the same Act limits the classification of the type of business to be used in the Restriction of Special Taxation Act, including ① subdivided and classification of the N construction business, the E comprehensive construction business (45), the E building construction business (452), the E building construction business (4521), the E construction business (4521), the E construction business (4521) is defined as the E, and excludes the E construction business directly selling an apartment built after entrusting another construction business with the construction of the E (7012, the real estate supply business).

(C) On the other hand, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds, barring special circumstances, and in particular, it accords with the principle of equity in taxation to strictly interpret the provisions that can be deemed as clearly preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003).

(D) In light of the aforementioned relevant provisions and legal principles, a small and medium enterprise operating a green apartment construction (45212)’sE should be engaged in industrial activities that build a residential apartment in order to meet the eligibility for special exemption from corporate tax. In the event that an apartment is commissioned to another construction enterprise or is built by being awarded a contract to another person and then the apartment is sold in lots, the latter real estate supply business (7012)’sE should be deemed to be engaged in.

(2) As to the plaintiff's first argument

In addition, there have been a lot of tax-related laws, enforcement rules, etc., which provide that the classification of various kinds of business under the Korean Standard Industrial Classification shall be based on the Korean Standard Industrial Classification, even in cases where there are no express provisions, the Supreme Court has conducted the classification of specific types of business according to the Korean Standard Industrial Classification, the prior meaning of classification of different categories of business under Article 17 of the Statistics Act and the International Standard Industrial Classification and Restriction of Special Taxation Act, and other individual provisions under the Korean Standard Industrial Classification under the Korean Standard Industrial Classification Act are closely and systematically examined. In addition, in cases where the "Korea Standard Industrial Classification" entrusts another construction company with the construction of goods or constructs the sales of goods by giving a contract to another person, the "Korea Standard Industrial Classification" is also accepted as a result of the most reliable type of business in Korea and abroad. In addition, in cases where there is no such express provision, the Supreme Court has conducted the classification of specific types of business based on the Korean Standard Industrial Classification. Therefore, the plaintiff's assertion that the concept of apartment construction in the above provision is unclear.

(3) As to the second argument by the plaintiff

Comprehensively taking account of the purport of the argument in the above case, the plaintiff newly built and sold apartment on the ○○○○○-dong 505 and December 26, 2003, and newly built and sold it on the ○○○-dong 152-24 and 82 lots of land on the 205th day from April 201 to January 29, 2003. According to the reasoning of the whole evidence as seen above, the plaintiff's assertion that ○○-○○-dong 152-24 and 25th day from May 22, 2006 constitutes an apartment construction work for the apartment, the plaintiff's remaining construction work for the ○○-Industrial Co., Ltd. constitutes 200,00, 202 and 2005, 205, 306, 205, 205, 205, 307, 2096, 209, 205, 2005.

(4) As to the plaintiff's third assertion

In applying Article 2(5) of the Enforcement Decree of the Restriction of Special Taxation Act, where a company becomes a new small or medium enterprise due to the amendment of the attached Table of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, it shall be deemed a small or medium enterprise from the taxable year to which the date on which the cause thereof occurred belongs, and where the company becomes a small or medium enterprise, the taxable year to which the date on which the cause thereof occurred belongs and the taxable year to which the next three taxable years belong shall be deemed a small or medium enterprise. As such, Article 2(5) of the Enforcement Decree of the Restriction of Special Taxation Act applies to cases where a company becomes a small or medium enterprise due to the amendment of the attached Table of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, which

(5) As to the plaintiff's fourth argument

Article 18(2) of the Framework Act on National Taxes provides that any income, profit, property, act, or transaction in which a taxpayer is liable to pay national taxes shall not be levied retroactively by new tax laws after the establishment thereof. Such principle of retroactive taxation shall not apply to the taxation requirements which are closed before the establishment or amendment of tax statutes, or when there is any change in the interpretation or guidelines of the laws and regulations of the tax authorities, etc. In addition, the application of new Acts and subordinate statutes, etc. to the facts which have been pending before or after the establishment thereof is not limited (see, e.g., Supreme Court Decision 9Du2669, Oct. 26, 199; 9Du2669, Oct. 26, 199); the trust of the parties to the existence of the former law is reasonable and reasonable; and the infringement of the damages or interests of the parties resulting from the amendment of the law, and the legislative branch shall take appropriate measures to protect trust of the parties, such as the establishment of transitional provisions, to the extent that it violates the new principle of trust.

Article 2(3) of the former Restriction of Special Taxation Act, which is the basis provision for each disposition of this case, stipulates that the Korea Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea with regard to the classification of types of business, shall be enforced from January 1, 2002, and does not have any transitional provision with regard to the above amended provision. Therefore, there is room for infringement of the Plaintiff’s trust interest in the continuation of the former Act, which was anticipated to be specially reduced or exempted from the tax pursuant to the Restriction of Special Taxation Act before the amendment, by allowing the amended Restriction of Special Taxation Act (the former Restriction of Special Taxation Act in this case; hereinafter the same shall apply) to classify the categories of business to be classified as the Korea Standard Industrial Classification. However, if the Plaintiff operates construction business as the main business, it is difficult to change the fact that the Plaintiff can obtain special reduction or exemption from tax, and since the amended Restriction of Special Taxation Act applies to the Plaintiff’s ongoing business year from January 1, 202, the amendment of the Restriction of Special Taxation Act for the sake of Public Interest and Protection of Special Taxation Act without the need to be amended.

3. Conclusion

Therefore, each disposition of this case on the premise that the business type the plaintiff conducted in the business year 2002 and 2005 is the "Real Estate Supply Business (7012)" rate is legitimate. Thus, the plaintiff's claim of this case in this case is legitimate, and it is so decided as per Disposition as per Disposition

Related Acts and subordinate statutes

(1) The former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002)

Article 2 (Definitions)

(3) Except as otherwise provided in this Act, the classification of types of business used in this Act shall be governed by the Korean Standard Industrial Classification publicly announced by the Commissioner of National Statistical Office under Article 17

Article 7 (Special Tax Abatement or Exemption for Small or Medium Enterprises)

(1) With respect to a small or medium enterprise operating a manufacturing, mining, construction, transportation (referring to the logistics industry and passenger transport business; hereafter the same shall apply in this Article), fishery, wholesale, retail, value-added network, research and development business, broadcasting, engineering, data processing and computer operation-related business, data processing and computer operation, seed and seedling production-related business, business operating a medical institution under the Medical Service Act (hereafter referred to as the “business for medical treatment” in this Article), a business operating an automobile maintenance plant under the Presidential Decree, a business operating an automobile maintenance plant under the Presidential Decree (hereafter referred to as the “automobile maintenance business” in this Article), a waste disposal business under the Wastes Control Act (including a case of recycling wastes after filing a report under Article 44-2 of the same Act) and a wastewater treatment business under the Water Quality Conservation Act, the income tax or corporate tax on any income accruing from the relevant business shall be reduced or exempted by the amount equivalent to the tax amount calculated by applying the reduction or exemption rate under

1. A small enterprise prescribed by the Presidential Decree (hereafter in this Article, referred to as the “small enterprise”) among the nationals operating a small or medium enterprise within the Seoul Metropolitan area (hereafter in this Article, referred to as the “Seoul Metropolitan area”) and 20/100 (10/100 for the small enterprise operating the wholesale, retail, medical service, and automobile maintenance business); and

2. A national operating a small or medium enterprise in an area outside the Seoul Metropolitan area: 30/100 (10/100 for the small or medium enterprise operating the wholesale, retail, medical service, and automobile maintenance service).

(2) A national who intends to be subjected to paragraph (1) shall apply for the reduction or exemption under the conditions as prescribed by the Presidential Decree.

Addenda No. 6538, Dec. 29, 2001

Article 1 (Enforcement Date)

This Act shall enter into force on and after January 1, 2002.

Article 2 (General Application Examples)

(1) The amended provisions concerning income tax and corporate tax in this Act shall apply from the taxable year that commences for the first time after this Act enters into force.

/Gu Restriction of Special Taxation Act (amended by Act No. 7577 of July 13, 2005)

Article 7 (Special Tax Abatement or Exemption for Small or Medium Enterprises)

(1) With respect to a small or medium enterprise operating any of the following types of business eligible for reduction or exemption, an amount equivalent to the tax amount calculated by applying the reduction or exemption rate under subparagraph 2 to the income tax or corporate tax on income accrued at the relevant place of business not later than the taxable year ending on or before December 31, 2005: Provided, That if the head or principal office of a domestic corporation is located in the Seoul Metropolitan Area under subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as the “Seoul Metropolitan Area”), the business operator shall be

1. Types of reduction or exemption;

(a) Manufacturing business;

(b) Mining business;

(c) Construction business;

(hereinafter omitted)

2. Reduction rate;

(a) The business place where a small enterprise prescribed by the Presidential Decree (hereafter in this Article, referred to as the “small enterprise”) runs the wholesale business, the retail business, the medical service business, the automobile maintenance business and the tourist business (hereafter in this Article, referred to as the “business place”): 10/100; and

(b) The business place where a small enterprise runs the business of abatement or exemption under subparagraph 1, excluding the wholesale business, etc.: 20/100;

(c) Where a small enterprise runs a business in an area outside the Seoul Metropolitan area, excluding the wholesale business, etc. among the business types to be reduced or exempted under subparagraph 1: 30/100.

5/100 in the case of a business place where a small or medium enterprise other than a small enterprise (hereafter in this Article, referred to as the “small or medium enterprise”) runs a wholesale business in an area outside the Seoul Metropolitan area.

(e) The business place that runs the knowledge-based business prescribed by the Presidential Decree within the Seoul Metropolitan area as a medium enterprise: 10/100.

(f) The business place where a medium enterprise runs the business other than the wholesale business, etc. among the business types to be reduced or exempted under subparagraph 1 of the regional tax books outside the Seoul Metropolitan area: 15/100

(2) A national who intends to be subjected to paragraph (1) shall apply for the reduction or exemption under the conditions as prescribed by the Presidential Decree.

(1) Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19329 of Feb. 9, 2006)

Article 2 (Scope of Small and Medium Enterprises)

(1) The term "the period for the commercial use of a small or medium enterprise prescribed by the Presidential Decree" in Article 4 (1) of the Restriction of Special Taxation Act (hereinafter referred to as the "Act") means the business of manufacturing (including any business similar to the business prescribed by the Ordinance of the Ministry of Finance and Economy; hereinafter the same shall apply), mining, construction, engineering business under Article 5 (6), automobile maintenance factory under Article 5 (8), the business of operating medical institutions under the Medical Service Act, waste disposal business (referring to the waste disposal business under the Wastes Control Act and the construction waste disposal business under the Construction Waste Recycling Promotion Act, including the case of recycling wastes after filing a report under Article 44-2 of the Wastes Control Act; hereinafter the same shall apply), the wastewater treatment business under the Water Quality Conservation Act (hereinafter referred to as the "wastewater treatment business"), the business related to excreta, etc. under the Water Quality Conservation Act, the business of cultivating livestock, scientific and technological services, the business of establishing the foundation for commercial use and entertainment industry for foreigners under each subparagraph of Article 6 of the Tourism Promotion Act (limited to movie and video business, video industry, and video industry, and video industry:

1. The number of employees who ordinarily use, capital, or sales shall be within the scope of the size under the provisions of attached Table 1 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises (hereafter in this Article, referred to as the "standard for small

2. Deleted;

3. The substantial isolation shall meet the provisions of subparagraph 2 of Article 3 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises.

(2) In the application of the provisions of paragraph (1), where a small or medium enterprise falls under the proviso of the part other than the said paragraph due to the expansion of its size, etc. or becomes not a small or medium enterprise due to the excess of the standards under subparagraph 1 of the said paragraph, only the first one taxable year to which the date on which such cause occurs belongs and the next three taxable years shall be deemed a small or medium enterprise; and the period for delay shall be determined by each taxable year after the expiration of the said period (hereafter in this Article, referred to as the "period for delay"), pursuant to paragraph (1):

1. Merger with an enterprise other than a small or medium enterprise under the Framework Act on Small and Medium Enterprises;

2. Where a juristic person is merged with another juristic person during the period;

3. The case that falls under enterprises other than those referred to in paragraph (1) 3.

4. Where the start-up date exceeds the standards for small and medium enterprises as of the end of the leader year within two years from the end of the taxable year.

(3) In the application of the provisions of paragraph (1), where two or more different business operations are conducted, the business with the larger business revenue amount by business shall be deemed the main business.

(4) Matters necessary for the calculation of the number of employees, equity capital, capital, sales and total assets that are ordinarily used under the proviso to paragraph (1) and subparagraph 1 of the same paragraph shall be prescribed by the Ordinance of the Ministry

(5) In applying paragraph (1), if an enterprise becomes a new small or medium enterprise due to an amendment to the attached Table of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, it shall be deemed a small or medium enterprise from the taxable year to which the date on which such a cause occurs belongs, and if it becomes a small or medium enterprise, it shall be

[Korea Standard Industrial Classification (Public Notice of Statistics Korea 2000-1]

F Construction Business (45-46)

1. Summary;

As industrial activities such as blasting, drilling, excavation and suspension for the purpose of creating a foundation through a contract or a self- account, construction and installation, extension, reconstruction, repair, repair, dismantling, etc. of various buildings and structures in the construction site, temporary buildings, prefabricated-type buildings and structures are included. These construction activities are conducted by contractors, contractors, general constructors or specialized constructors.

2. Relation to other industries;

(e) Where real estate (land, mining rights, etc.) other than a building is directly developed and sold, rented, or does not directly perform its construction activities, and a building is requested to be constructed by another constructor and it is sold or sold (701).

45 General construction business

Industrial activities and various buildings that perform the construction works of ground creation works and civil engineering facilities are the industrial activities that are generally responsible for the construction, extension, reconstruction and reconstruction of buildings and perform construction activities.

452 Building construction business

Industrial activities to newly construct, expand, rebuild, and rebuild a building by a contractor or an integrated contractor, and includes the construction activities of a prefabricated-type building.

Foreign Affairs and Trades

Where it is directly sold after entrusting another construction enterprise (7012).

L Real estate and lease business (70-71)

1. Summary;

This sub-classification includes real estate business, industrial activities that lease various machinery equipment and personal or household goods without operators.

(a) Real estate business;

Industrial activities related to the operation, lease, purchase, sale, etc. of buildings, land, and other real estate (excluding cemeteries) owned or leased by the person concerned.

2. Relation to other industries;

A. In the case of the sale and sale of a building directly on its own account: 452: Classification of the period for the construction business of the building;

70 Real estate business

As an industrial activity related to the lease, purchase, and sale of real estate, it includes lease activities of residential and non-residential buildings directly constructed, and development, sale, and lease activities of land and other real estate.

Foreign Affairs and Trades

·Development, supply and lease of cemeteries (93922)

701 Real Estate Lease and Supply Business

7012 Real Estate Supply Business

The term "industrial activities" means industrial activities of selling and selling land, such as farms, housing sites and industrial sites, and buildings constructed by being awarded contracts to others. It includes the resale of purchased real estate without leasing or operating it.

For example, the time limit for such event shall be

·Sale of buildings and sale of land

Foreign Affairs and Trades

Construction of a self-managed building (452)

70121 Supply of Residential Building

It refers to industrial activities that build residential buildings and sell and sell them by entrusting them to a construction company without performing direct construction activities. It also includes the case of resale without leasing or operating residential buildings purchased.