Whether land-related non-deduction input tax amount related to the construction of golf courses is applicable.

Since the input tax amount for the cost invested for the creation of a golf course is the cost required to change the form and quality of land or to increase the real value of land, the input tax amount is not deducted because it constitutes an input tax amount related to capital expenditure for the creation, etc. of land under the latter part of the provision of this case and

Article 60 of the Enforcement Decree of the Value Added Tax Act

1. The plaintiff's claim is dismissed.

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

On April 13, 2006, the Defendant revoked the decision to dismiss the claim for rectification of value-added tax filed against the Plaintiff.

1. Details of the disposition;

A. The Plaintiff, a business operator running a golf course business from 300-1, the Plaintiff started to build a golf course from 2005 to 300-1. The Plaintiff reported and paid the value-added tax for the first period of 2005, and the Plaintiff did not deduct the input tax amount of 59,682,55 won (hereinafter “the instant input tax amount”) for the expenses incurred in relation to the construction of a golf course, from the output tax amount (hereinafter “the instant input tax amount”) under the latter part of Article 17(2)4 of the Value-Added Tax Act (hereinafter “the Value-Added Tax Act”) and Article 60(6) of the Enforcement Decree of the Act (hereinafter “Enforcement Decree”).

B. On February 14, 2006, the Plaintiff filed a claim for correction on the premise that the input tax amount can be deducted, but the Defendant rejected the claim on April 13, 2006.

C. The plaintiff, who was dissatisfied with the disposition of this case, filed an appeal with the National Tax Tribunal on June 22, 2006, but was dismissed on December 1, 2006.

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 3, Eul evidence 1 to 2

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) In relation to the interpretation of the legal provisions, the latter part of the instant provision, which is the basis for the instant disposition, does not simply deduct the land-related input tax amount, but rather make the tax-free input tax amount as a Daejeon item. In principle, the golf course business is in violation of the basic principle of value-added tax in Korea, which is taking the previous stage tax credit, to not deduct the input tax amount, even though it constitutes a taxable business for carrying on a taxable business. Accordingly, the instant provision of the Enforcement Decree, which is interpreted as such, is invalid in violation of the principle of

(2) If the latter part of the instant provision does not regard the input tax amount for the tax-free business as the Daejeon tax base, but simply provides for the non-deduction of the land-related input tax amount, it is a legislation that goes beyond the limit as the value-added tax as a result of the acquisition of assets, as well as the unconstitutional provision that infringes on the constitutional right to equality, property rights, which goes beyond the limit permitted under the basic principles of value-added tax, and thus, the instant disposition based thereon is also unlawful.

(b) Related statutes;

The relevant Acts and subordinate statutes shall be as shown in the attached Form.

C. Determination

(1) Determination as to the interpretation of the legal provision (the provision of this case and the enforcement decree of this case)

(A) Method of imposing value-added tax in Korea

In principle, in Korea, only the entrepreneur's self-production value added tax is adopted as a way of taxation of value added tax, and the tax amount is calculated by deducting the input tax amount from the output tax amount.However, the input tax amount is not deducted in whole, but there are the input tax amount denied, and this is defined in Article 17 (2) of the Act.

(B) Type of non-deduction of input tax amount

Article 17(2) of the Act provides that the input tax amount under the former part of Article 17(2) shall be deducted based on the basic principle of value-added tax, such as the provision of this case (tax-free input tax related to the tax-free business). Second, the provision of this case provides that input tax amount related to the tax-free business and the land-related input tax amount under the latter part of Article 17(2)1 and 17(2)1-2 of the Act provides that input tax amount related to the tax policy or taxation procedure, such as the input tax amount or the entertainment tax amount related to the tax-free business, shall be deducted (Article 17(2)1 and 1-2 of the Act). The provision of this case provides that input tax amount related to the tax-free business and the land-related input tax amount under the Presidential Decree provides that input tax amount related to the capital expenditure for the creation of the land, which falls under one of the following subparagraphs, shall be deducted based on the basic principle of the tax-free business and the basic principle of the tax-free business, regardless of the final nature of the tax-free business.

(C) The process of interpretation and legislative resolution concerning the latter part of the provision of this case

However, prior to the amendment on December 31, 1993, Article 17(2)4 of the former Act (hereinafter “former Act”) provides that the input tax amount related to the land under the latter part of Article 60(6) of the Enforcement Decree (hereinafter “former Enforcement Decree”) shall not be deducted from the input tax amount under Article 17(2)4 of the former Act before the amendment on December 31, 1993, and that the input tax amount related to the capital expenditure for the formation, etc. of the land shall be included in the input tax amount under Article 17(2)4 of the former Enforcement Decree without the delegation clause. Since the former Act was newly established on December 31, 191, Article 60(6) of the former Enforcement Decree (hereinafter “former Enforcement Decree”). The Supreme Court held that the provisions related to the tax exemption under Article 9(2)9 of the former Act were inconsistent with the principle of no taxation without the law’s amendment and the provisions related to the tax exemption under Article 99(2)1 of the former Enforcement Decree.

(2) Determination as to whether the provision of this case and the enforcement decree of this case are unconstitutional and invalid

The Plaintiff asserts that the provision of this case violates the Constitution or the Enforcement Decree of this case is null and void against the principle of no taxation without law, on the premise that the latter part of the provision of this case and the provisions of the Enforcement Decree of this case are contrary to the basic principle of no taxation without deducting the input tax amount related to capital expenditures to create

However, in light of the following circumstances: ① Value-added tax on the supply of land, which is the basis of the Enforcement Decree of the Income Tax Act, is not for the supply of the land itself, but for the supply of the services to develop the land as a golf course; however, it is difficult to regard the supply of the land as the output tax amount for golf course after the creation of the land; ② It is merely an interpretation of the input tax amount under the former Act and the former Enforcement Decree that the input tax amount should be collected if it is spent to operate a golf course business, which is a value-added tax, even if it falls under capital expenditure for the creation of the land, and thus, it goes against the basic principles of the tax exemption system that permits the acquisition of the land to be deducted from the tax exemption system under the former Enforcement Decree, and thus, it is unreasonable to view that the aforementioned provision goes against the basic principles of the tax exemption system that permits the acquisition of the land to be deducted from the tax exemption system under the latter part of the Act, regardless of whether the provision was in operation of the tax exemption system.

(3) Sub-determination

Therefore, in the instant case, the input tax amount for the expenses that the Plaintiff invested for the formation of a golf course is the cost required to increase the land’s form and quality alteration or the value of the land. As such, the Defendant’s disposition based on the premise that the input tax amount is not deducted is lawful, since it constitutes the input tax amount related to capital expenditure for the formation, etc. of land under the latter part of the instant provision and the instant Enforcement

3. Conclusion

Therefore, the plaintiff's claim of this case is rejected due to the lack of reason, and it is so decided as per Disposition.

Relevant statutes

/ Value-Added Tax Act

Article 12 (Tax Exemption)

(1) The supply of goods or services falling under any of the following subparagraphs shall be exempted from value-added taxes:

12. Land:

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as "paid tax amount") shall be the amount computed by deducting the following amount of tax (hereinafter referred to as "purchase tax amount") from the amount of tax on the goods or services supplied by him/her (hereinafter referred to as "sales tax amount"): Provided, That where an input tax amount exceeds the sales tax amount, it shall be limited to the refundable tax amount (hereinafter referred to as "paid

1. The amount of tax paid in lieu of the supply of goods or services used or to be used for his own business;

2. The tax amount for the goods or imports used or to be used for his own business;

(2) The following input taxes shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of total tax invoices by customer is not submitted under Article 20 (1) and (2), or an input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties is not entered or entered differently from the fact, from among the entry items on the submitted list of total tax invoices by customer: Provided, That in this case as prescribed by the Presidential Decree, the input tax

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded;

4. Purchase tax amount related to the business of supplying goods or services exempt from the value-added tax (including the input tax amount related to investments) and the land-related input tax amount as prescribed by the Presidential Decree;

【Enforcement Decree of the Value-Added Tax Act

Article 60 (Scope of Purchasing Tax Amount)

(6) The term "in-house input tax amount prescribed by Presidential Decree" in Article 17 (2) 4 of the Act means the input tax amount falling under any of the following subparagraphs, which is the input tax amount related to capital expenditures for the creation, etc. of land:

1. An input tax amount related to the acquisition and alteration of the form and quality of land, factory sites and housing sites;

2. Where a parcel of land on which a building is located is acquired, and the building is removed and only land is used, the input tax amount on the cost of acquisition and removal of the removed

3. An input tax amount related to the expenses forming the acquisition cost of land by practically increasing the value of land.