Cho Jae-hoon 2016 Mine1390 (29 June 2017)

The revised content of Article 13(1) of the Corporate Tax Act is difficult to view that it is contrary to the principle of equity in taxation or prohibition of retroactive taxation, and it cannot be viewed that the reporting act is void as a matter of course.

Article 18(1) of the Framework Act on National Taxes takes into account the equity of taxation as well as the unity of the pertinent provision in the interpretation and application of tax-related Acts. Since the amendment of the Corporate Tax Act of this case is to clarify the deficit that can be deducted by a report, etc. on the loss brought forward in consideration of legal stability, etc., the unity of the provision is recognized.

Article 13 subparag. 1 of the former Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009); Article 4 of the Addenda (Application Cases concerning Tax Base); Article 18(1) of the Framework Act on National Taxes (Standards for Interpretation of Tax-Related Acts and Prohibition of Retroactive Taxation)

Gwangju District Court-2017-Gu Partnership-12803 Revocation of Disposition of Rejecting Corporate Tax Correction

AA

000 director of the tax office

on October 10, 2018

on 06 October 07, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On December 31, 2015, the defendant revoked corporate tax for the business year 2013 that the plaintiff made to the plaintiff 】 】 disposition rejecting the correction of the plaintiff 】.

1. Details of the disposition;

A. The plaintiff is a local government-invested public corporation established by a Metropolitan City through full investment in accordance with Article 49 of the Local Public Enterprises Act, and is implementing a "joint innovation city development project" (hereinafter referred to as the "project in this case") since 2007.

B. From June 19, 2007, the Plaintiff has been paying interest on loans or bonds issued by financial institutions each year (hereinafter “interest of this case”) in order to appropriate funds to cover construction expenses, etc. incurred in implementing the instant business.

C. The Plaintiff reported and paid the tax base and tax amount of corporate tax for each business year from the business year of 2007 to the business year of 2012 to the Defendant, with the knowledge that the instant interest may be treated as the cost included in the sales cost only when the land subject to the instant business was sold and sold in the future, and instead did not include the instant interest in the deductible expenses, and added the interest paid on the loan required for the construction of fixed assets for business (hereinafter referred to as “interest on construction fund”) under Article 28(1)3 of the Corporate Tax Act and Article 52(1) of the Enforcement Decree of the former Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) to the capital expenditure of the construction cost of the instant business.

D. While the Plaintiff reported and paid corporate tax as above, it became aware that the instant interest could be included in deductible expenses by including the cost for acquisition of inventory assets, not the construction funds, in the process of undergoing a regular tax investigation from November 5, 2013 to December 3, 2013 by a regional tax office.

E. However, the Plaintiff did not correct the amount of corporate tax paid in excess of the amount of corporate tax pursuant to the aforementioned periodic tax investigation. On March 11, 2014, the Plaintiff filed a claim for correction of the corporate tax base and tax amount from the business year of 2008 to the business year of 2012, stating that the interest of the instant case was included in deductible expenses.

F. On March 25, 2014, the Defendant notified the Plaintiff of the purport that “A request for correction of the tax base and amount of corporate tax for the business year 2008 and the amount of corporate tax for the business year 2009 shall not be justifiable for correction after the lapse of three years prescribed in Article 45-2(1) of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014).”

G. The Plaintiff reported the tax base and amount of corporate tax for the business year 2013 】 (2008 x (2009 x (2009 x (2008 x (2009) x (2008 x (2009 x (3) x (2009 x (209 x (2009 x (20) x (2009 x (2009 x (2)) x (3) x (3) x (4) x (2009 x (i) x (209 x (b) x (f) x (f) x (f) x (f) x (f) x x (f) x x (f) x x x (f) x x b)) . as losses for electric error revision.

H. Accordingly, on November 12, 2014, the Defendant: (a) as a refund of the amount of corporate tax paid in excess of the fiscal year for the business year 】 (b) the amount of corporate tax to be refunded in excess of the fiscal year 】 (c) the source, additional refund 】 the amount of refund 】 (d) the amount of the corporate tax to be paid by the Plaintiff for the 2013 business year

(i) On November 4, 2015, the Plaintiff filed a request for correction with the Defendant for the amount of loss carried forward of the same amount which was not reflected as deductible expenses for the portion of 2008 business year 】 (the amount of loss carried forward of the same amount which was increased when recognized as deductible expenses 】 (the amount of loss carried forward of the same amount which was deducted when calculating the corporate tax base for the business year of 2013). On December 31, 2015, the Defendant dismissed the request for correction on the ground that the instant interest did not fall under the deficit stipulated in subparagraph 1 of Article 13 of the Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter referred to as the “instant disposition”).

(j) The Plaintiff filed an appeal with the Tax Tribunal, and the Tax Tribunal dismissed the appeal on June 29, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 8 (including additional numbers), Eul evidence No. 1, the purport of the whole pleadings

2. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

A. According to Article 13 subparag. 1 of the Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009; hereinafter referred to as the “Corporate Tax Act of 2009”), the interest in this case could be recognized as losses. However, pursuant to Article 13 subparag. 1 of the amended Corporate Tax Act and Article 4 of the Addenda, the interest in this case could not be recognized as losses because it did not report as losses at the time of filing a tax base return. This is against the principle of fair taxation by discriminating a taxpayer according to the unexpected circumstances, such as a return, etc., and is contrary to the principle of prohibition of retroactive taxation.

B. In filing and paying the tax base and amount of corporate tax for the business year 2008, the Plaintiff did not include the interest of the instant case in the deductible expenses as seen earlier, and filed a return by treating the interest of the construction fund as interest (hereinafter “the instant return”), which is null and void due to significant and apparent defects.

3. Determination

A. Judgment on the plaintiff's first argument

1) Relevant statutes, etc.

In calculating the tax base of corporate tax, the statutes related to deduction of losses carried forward shall be as follows:

(1) The interest on any of the following borrowings shall not be included in the calculation of losses of a domestic corporation for each business year:

3. Interest on loans appropriated for construction capital as prescribed by the Presidential Decree; and

Addenda

The amended provisions of Article 4 (Application concerning Tax Base) shall apply to the first return, revision or determination of the tax base after this Act enters into force: Provided, That where the tax base is reported, revised or determined before December 31, 2009, to deduct losses not included in the tax base reported, corrected or determined, the previous provisions shall apply.

Corporate Tax Act of 2009

Article 13 (Tax Base)

The corporate tax base on the income of a domestic corporation for each business year shall be the amount calculated by deducting the following amounts and income in sequential order within the scope of income for each business year:

1. The amount of losses incurred during each business year within ten years prior to the first day of the current business year which were not thereafter deducted in the calculation of the tax base;

2. Non-taxable income under this Act and other Acts; and

3. Amount of income deduction under this Act and other Acts.

The Enforcement Decree of the former Corporate Tax Act shall apply.

Article 52 (Scope of Interest on Loans Appropriated for Construction Funds)

(1) The term "interest on loans appropriated for construction capital as prescribed by Presidential Decree" in Article 28 (1) 3 of the Act means interest paid on loans used for the purchase, production, or construction of fixed assets used for business (hereafter in this Article, excluding loans the use of which for the construction of fixed assets is unclear) or other similar expenses, notwithstanding any other titles;

(b) Interest paid or expenses under paragraph (1) shall be capital expenses included in the original capital until the date of the completion of the construction: Provided, That interest income arising from the temporary deposit of loans under paragraph (1) shall be subtracted from the capital expenses amount added to the original capital.

Comprehensively taking account of the above laws and regulations, the Corporate Tax Act in 2009 was entitled to deduct losses as losses carried forward in the subsequent business year within the extent not exceeding 10 years even if there was no report, revised report, or revised decision on losses. However, the Corporate Tax Act in 2010 provided that losses may be deducted as losses carried forward in the subsequent business year only if the report, etc. was made by December 31, 2009.

Therefore, if an application for deduction of losses carried forward after January 1, 2010 is filed, the deduction is no longer possible unless there is a report, etc. as losses before it is filed.

2) Article 18(1) of the Framework Act on National Taxes provides that "in interpreting and applying tax-related Acts, property rights of a taxpayer shall not be unfairly infringed in light of the equity of taxation and the purpose of the pertinent provision." This means that in interpreting and applying tax-related Acts, considering the equity of taxation as well as the unity of the pertinent provisions, the purpose of the pertinent provisions should be considered and the taxpayer's property rights should not be unfairly infringed.

In full view of the aforementioned facts and circumstances that are acknowledged by comprehensively taking account of the overall purport of the pleadings, it is difficult to view the instant disposition, which was rendered pursuant to the Corporate Tax Act in 2010, as contrary to the equity of taxation. Therefore, the Plaintiff’s assertion on this part is

A) According to the language and text of the Corporate Tax Act of 2010, which is the basis for the disposition of the instant case, it is evident that only if until December 31, 2009, the report was filed as deficit, it can be deducted as deficit carried forward in the subsequent business year.

B) A taxpayer in the same situation as the Plaintiff under the Corporate Tax Act of 2010 was unable to equally obtain the same deduction when he/she did not file a report as a deficit in the previous business year. Unlike the Plaintiff, a taxpayer who filed a report by December 31, 2009, etc. as deficit, even in the subsequent business year, is still entitled to a deduction as a deficit carried forward, and thus, the taxpayer is different depending on whether the return, etc. was made. Therefore, it is difficult to deem that the corporate tax is contrary to the principle of equity. Moreover, inasmuch as the establishment and confirmation of the taxation requirements are separated in the case of corporate tax, it is difficult to deem that it is contrary to the principle of equity by separately

C) As above, the amendment of the Corporate Tax Act is intended to clarify a loss carried forward that can be deducted in light of legal stability, etc. as a final and conclusive loss by reporting, etc., so it is recognized that the purpose of the provision is recognized, and that the Plaintiff’s failure to deduct the interest of this case as a loss carried forward is due to the Plaintiff’s accounting error, and thus, it is difficult to view that the taxpayer’s property right is unfairly infringed on because the need to protect trust is not much

3) The principle of non-payment of tax statutes or the principle of prohibition of retroactive taxation means that, in the event of the enactment or amendment of a tax statute, or the amendment of a tax authority’s interpretation or guidelines to the statutes, the pertinent statutes cannot be applied to the facts of taxation requirements that have been closed before the validity thereof, and it does not restrict the application of new statutes, etc. to the facts of taxation requirements that have been pending before or after the lapse thereof (see, e.g., Supreme Court Decision 2008Du2736, Oct. 29, 2009).

In full view of the following facts and circumstances acknowledged by comprehensively taking account of the overall purport of the pleadings, it is difficult to view the instant disposition, which was issued under the Corporate Tax Act in 2010, as contrary to the principle of prohibition of retroactive taxation. Therefore, the Plaintiff’s assertion on this part is without merit.

A) The Plaintiff asserts that in calculating the tax base of the corporate tax for the business year 2013 pro rata to the Corporate Tax Act in 2009. However, since the establishment of the corporate tax liability for the business year 2013 pro rata to the Corporate Tax Act was on December 31, 2013, it is difficult to view that calculating the tax base under the Corporate Tax Act for the year 2010, which was in force at the time, is contrary to

B) The Plaintiff’s instant interest paid in the business year 2008 was included in the deductible expenses and did not receive the deduction of losses due to the Plaintiff’s accounting error. In such a case, the Framework Act on National Taxes has procedures for remedy, such as a revised return (Article 45) or a request for correction (Article 45-2).

However, inasmuch as the period is restricted for the stability of tax-related Acts, etc., such period shall undergo the relief procedures within that period, and the tax authority is not obliged to rectify ex officio on the ground that the taxpayer’s negligence failed to properly undergo such procedures. However, as seen earlier, the Defendant accepted the Plaintiff’s request for correction until the exclusion period for the assessment of national taxes (5 years) under the Framework Act on National Taxes or the part within the correction period (3 years from 2009 to 2012) (3 years from 2012) (5 years from 2008) with respect to the portion of 208 business year portion, the Defendant did not deduct all of the exclusion period for the assessment of national taxes and the request period for correction.

C) The Corporate Tax Act in 2010 reduced the scope of losses that may be deducted in comparison with the Corporate Tax Act in 2009 under certain conditions. The main text of Article 4 of the Addenda to the Corporate Tax Act in order to protect taxpayers’ trust provides that the proviso of Article 4 of the Addenda shall apply from the date of promulgation of the Corporate Tax Act in 2010. Furthermore, the proviso of Article 4 of the Addenda to the Corporate Tax Act in 2009 applies to the portion for which the obligation to pay corporate tax has already become final and conclusive in accordance with the Corporate Tax Act in 2009, by prescribing that the Corporate Tax Act in 2009

Therefore, in the case of this case, the abstract tax liability for the business year 2008 corporate tax already occurred, but only the deficit meeting certain requirements is deducted from the tax base, so it is difficult to deem that the new tax liability is retroactively imposed by strengthening the requirements for recognition of the deficit.

B. Judgment on the second argument by the plaintiff

1) In the case of taxes in the form of return and payment, such as corporate tax, in principle, the taxpayer’s tax base and tax amount are determined specifically by his/her act of filing a return, and the payment act is the performance of specific tax liability determined by the return. Here, as to whether the defect in the act of filing a return falls under the invalidation of abrupt, the purpose, meaning, function, and legal remedies for the act of filing a report should be considered as a basis for the act of filing a report, and the specific circumstances leading to the act of filing a report should be determined reasonably by individually and reasonably (see, e.g., Supreme Court Decision 2012Da69203, Apr.

2) In light of the following facts and circumstances acknowledged by comprehensively taking account of the purport of the entire pleadings, it is difficult to see even if the defect in the instant reporting act can be seen as serious. Therefore, the Plaintiff’s assertion on the premise that the instant reporting act cannot be deemed as null and void as a matter of course, which is without merit, is without merit.

A) Notwithstanding Article 52(1) of the former Enforcement Decree of the Corporate Tax Act, the issue of whether the aforementioned loan is not included in deductible expenses when calculating the amount of income for each business year pursuant to Article 28(1)3 of the Corporate Tax Act as the interest paid on the loan required for the purchase, production, or construction of fixed business assets or expenses similar thereto is determined depending on whether the aforementioned loan, etc. is funds required for the purchase, production, or construction of fixed business assets. The issue of whether the aforementioned loan, etc. used as construction expenses incurred in implementing the instant business is "funds used for the purchase, production, or construction of fixed business assets" cannot be determined easily without confirming specific facts such as the above loan, etc.'s specific purpose.

B) Although the Plaintiff is a local public enterprise that was established by the local government by making full investments in the relevant tax affairs through the accounting office, the Plaintiff reported the tax base and tax amount of corporate tax for the six-year period from the business year of 2007 to the business year of 2012, deeming the instant interest as the construction fund.

C) The Plaintiff failed to verify the defect in the corporate tax base and tax return during the six-year period, including the instant reporting act, prior to the regular tax audit of a regional tax office.

3) In addition, even though the defect in the act of report in this case is serious, if corporate tax is not clear, the act of report in this case does not seriously undermine legal stability even if the act of report is null and void, and thus, it does not seriously undermine legal stability. As the Framework Act on National Taxes was amended by Act No. 12848 on December 23, 2014, extended the period for filing a claim for correction to five years, and corporate tax was reported contrary to established legal principles, and the above loan was used for acquiring inventory assets, etc., and it is remarkably unfair for the Plaintiff to assume disadvantage due to the act of report in this case. Thus, it is argued that the act of report in this case constitutes null and void as a matter of course. However, it is difficult to deem the act of report in

4. Conclusion

Therefore, the plaintiff's claim is dismissed without any justifiable reason, and it is so decided as per Disposition.