Whether special taxation on capital gains tax on real estate in the designated area is applied.

The plaintiff acquired the land of this case only before the designated date of the designated area, and acquired on November 25, 2004 after the second anniversary retroactively from the date deemed as the date of the public announcement of the project approval, and thus, it does not constitute a special taxation for capital gains tax.

Article 85 of the Restriction of Special Taxation Act (Special Taxation for Real Estate for Public Works in Designated Area)

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

Cheong-gu Office

The defendant's rejection of correction of the transfer income tax belonging to the year 2005 against the plaintiff on 31, 2006 shall be revoked.

1. Details of the disposition;

A. On November 2003, 2003, the Plaintiff acquired and owned 1,319 square meters of ○○○○-dong ○○○○○○-dong ○○○○○○-dong ○○○○○○-dong 1,319 square meters (hereinafter “instant land”). However, on November 15, 2004, the ○○-dong ○○-dong ○○○○-dong 515,116 square meters under the Distribution Complex Development Promotion Act, including the instant land.

○○○○ Distribution Complex was designated as a public notice on November 25, 2004, and the Plaintiff made a public notice on November 25, 2004, and on November 2005, the Plaintiff transferred the instant land to ○○○○ Construction, which is the operator of the distribution complex development project, by agreement pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects for Water Treatment (hereinafter referred to as “Land Compensation Act”).

B. Meanwhile, on the other hand, the Minister of Finance and Economy designated ○○○○○○○○ (other than a house) where the land of this case is located as a designated area under Article 96 (1) 6-2 and the proviso of Article 97 (1) 1 (a) of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same) on February 26, 2004, where the transfer value and acquisition value are calculated on the basis of the actual transaction value pursuant to the proviso of Article 96 (1) 6-2 of the former Income Tax Act (hereinafter referred to as “designated area”).

C. On October 01, 2005, the Plaintiff calculated the transfer value and acquisition value of the land of this case as the standard market price, calculated gains on transfer based on this basis, made a preliminary return on the transfer income, and paid KRW 69,973,020.

D. However, since the Defendant’s land falls under the designated area, it is defective that transfer margin should be calculated based on the actual transaction price, the Plaintiff accepted it and filed a revised return of transfer income tax on December 20, 2005, and additionally paid KRW 23.261.350.

E. In other words, on November 2003, the date on which the Plaintiff acquired the instant land was designated by the Minister of Finance and Economy as the designated area. Thus, the Plaintiff asserted that the instant land constitutes the special taxation for capital gains tax on real estate for public service within the designated area under Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 7839, Dec. 31, 2005; hereinafter the same) and that the transfer value and acquisition value of the instant land should be calculated based on the standard market price. On May 30, 2006, the Plaintiff filed a claim for correction of KRW 23,261,350 out of the capital gains tax for the year 2005 reverted to the Defendant as above.

F. The Defendant rendered the instant disposition rejecting correction by failing to notify the decision on the request for correction within two months, which is the deadline stipulated in Article 45-2(3) of the Framework Act on National Taxes.

G. The Plaintiff appealed and requested a trial on October 02, 2006, but was dismissed on December 13, 2006.

[Based on Recognition] Evidence Nos. 1 to 6, the purport of the whole pleadings

2. The legality of the instant disposition

A. The plaintiff's assertion

The acquisition date of the instant land is prior to November 25, 2004, which is the date of the designation of a distribution complex, and is also prior to the date of designation as an speculative area. As such, even though the transfer margin of the instant land should be calculated based on the standard market price, the Defendant should acquire the instant land before the earlier date between the date of designation of a distribution complex, the date of two years retroactively from the date of public announcement of project approval, and the date of designation as an speculative area, it is unlawful to deem the instant disposition to be lawful.

B. Relevant statutes

Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)

○ Scope of transfer income under Article 94 of the Income Tax Act

(1) The transfer income shall be the following incomes generated in the current year:

1. Income accruing from transfer of land (referring to a lot of land subject to registration of land category in the cadastral record under the Cadastral Act) or buildings (including the facilities and structures annexed to such buildings);

○ Transfer Value of Article 96 of the Income Tax Act

(1) The transfer value of assets as prescribed in each subparagraph of Article 94 (1) shall be the actual transaction value between the transferor and transferee at the time of transfer of the relevant assets (hereinafter referred to as the “actual transaction value”).

6-2. Where it falls under real estate prescribed by the Presidential Decree among real estate located in an area designated by the Minister of Finance and Economy according to the standards and methods prescribed by the Presidential Decree, as the increase in the prices of real estate in the relevant area is higher than the increase in the prices of national consumption, or is likely to rise rapidly

○ Article 97 of the Income Tax Act as necessary expenses

(1) In the calculation of gains on transfer of a resident, the necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets as prescribed in Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of subparagraphs of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18850 of October 31, 2005)

Article 162-3 of the Enforcement Decree of the Income Tax Act

(1) The term “area designated according to the standards and methods as prescribed by the Presidential Decree” in Article 96 (1) 6-2 of the Act means an area designated by the Minister of Finance and Economy after going through a deliberation of the Deliberation Committee on Real Estate Price Stabilization under the provisions of Article 162-4 (hereinafter referred to as the “designated area”) where the Minister of Construction and Transportation makes a request for designation (including a case where the head of central administrative agency concerned makes a request through the Minister of Construction and Transportation) as he deems that there is a possibility of continuing the increase of real estate prices in the relevant area in view of the real estate price trend throughout the country and the regional characteristics, etc. from among the areas falling under any of the following subparagraphs. In this case, with respect to an area which falls under any of the following subparagraphs, but is not requested for designation,

Restriction of Special Taxation Act (amended by Act No. 7839 of Dec. 31, 2005)

○ The date stipulated in any of the following subparagraphs (referring to the date publicly announced by the head of the relevant administrative agency in the Official Gazette or the official bulletin; where the date of public announcement is within 2 years retroactively from the date when the public announcement is made, referring to the date when 2 years retroactively from the date when the public announcement is made; where the date of notification falls after the designation of the designated area under Article 96 (1) 6-2 of the Income Tax Act, and where the date of notification falls after the designation of the designated area under Article 96 (1) 6-2 of the Income Tax Act, referring to the date of designation of the designated area) by a resident of the special taxation for the transfer income tax on the real estate for public works within the designated area under Article 85 of the Restriction of Special Taxation Act or under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor and the proviso of Article 96 (1) 6-2 and the proviso of Article 97 (1) 1 (a) of the Income Tax Act before December 31, 2006:

1. The date of designating the scheduled housing site development area under Article 3 of the Housing Site Development Promotion Act;

2. The date on which the industrial complex is designated under Article 7-3 of the Industrial Sites and Development Act.

3. Date designated for the multi-regional development area under Article 4 of the Balanced Regional Development and Support for Local Small and Medium Enterprises Act

4. Date of public announcement of a compensation plan under Article 15 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (referring to the United States Armed Forces stationed in the Republic of Korea under the Mutual Defense Treaty between the Republic of Korea and the

5. In case of the immovables transferred under other Acts than subparagraphs 1 through 4, the planned area, designation of the development area, a compensation plan, public announcement and other similar days as prescribed by the Presidential Decree for the project area whereto the immovables belongs under the relevant Acts.

Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 19888, Oct. 28, 2007)

○ Special Taxation for transfer income tax on real estate for public service in the designated area under Article 79-2 of the Enforcement Decree of the Restriction

(1) For the purpose of subparagraph 5 of Article 85 of the Act, the term “other dates similar thereto, which are prescribed by the Presidential Decree” means the standard market price under the attached Table 7, and where the standard market price has no tax base date, it means the date of announcement of the plan for compensation pursuant to the provisions of the Act on Acquisition

[Attachment VII] Standard market price assessment basis (related to Article 79-2)

8. The date the distribution complex is designated pursuant to the provisions of Article 6 of the Promotion of Distribution Complex Development Act.

Article 6 of the Promotion of Distribution Complex Development Act, such as Notice of Designation of Distribution Complex

(1) The distribution complex designator shall, when he/she designates the distribution complex or modifies the details thereof under Article 5, publish the matters prescribed by Presidential Decree in the Official Gazette or the official bulletin of City/Do, and send copies of the relevant documents to the head of the competent Si/Gun/Gu (referring to the head of autonomous Gu

Article 15 of the Promotion of Distribution Complex Development Act

(2) In applying the provisions of paragraph (1), when the designation of a distribution complex is publicly notified pursuant to the provisions of Article 6 (1) (referring to the time when the development plan for a distribution complex is publicly notified where the implementer and the detailed items of the land, etc. to be expropriated and used are included in the development plan for the distribution complex after designation of the distribution complex pursuant to the provisions of the proviso of the main sentence of Article 5 (4)), the approval of the project and the public notification thereof pursuant to the provisions of Articles 20 (

C. Determination

Article 85 of the former Restriction of Special Taxation Act provides that the resident may use the real estate within the designated area at the standard market price on the date prescribed in any of the following subparagraphs (referring to the date on which the head of the relevant administrative agency publicly announces it in the Official Gazette or the official bulletin; where the date of public announcement falls within two years retroactively from the date of public announcement of project approval, referring to the date on which two years retroactively from the date of designation of the designated area under Article 96 (1) 6-2 of the Income Tax Act; where the date of announcement arrives after the designation of the designated area under Article 96 (1) 6-2 of the former Enforcement Decree of the Income Tax Act or other Acts on or before December 31, 206, Article 96 (1) 6-2 of the former Income Tax Act and the proviso of Article 97 (1) 1 (a) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that the transfer value and acquisition value of the real estate within the designated area may be determined by the standard market price; where the real estate falls under subparagraphs 1 through 4 through 8 through 7 and 80 of the former Presidential Decree.

Therefore, Article 85 of the former Restriction of Special Taxation Act provides that "if the date of public announcement is within two years retroactively from the date of public announcement, the second anniversary retroactively from the date of public announcement," and "if the date of designation of the designated area arrives after the date of public announcement, the date of designation of the designated area" concurrently. However, the legislative intent of Article 85 of the former Restriction of Special Taxation Act provides that even real estate in the designated area shall be transferred or expropriated for the public interest regardless of the owner's intention, the taxpayer's tax burden shall be reduced by imposing the tax at the standard market price instead of the actual transaction price; at the same time, the taxpayer's smooth implementation of the public service; and at the same time, there is a high probability that the considerable demand for the development profit in the case of the implementation of the project by the field survey that is revealed before the date of public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the designation of the designated area is to prevent the possession of the real estate within the designated and public announcement of the public announcement of the public announcement."

Therefore, the disposition of this case that held that the transfer of the land of this case does not constitute a special taxation of capital gains tax under Article 85 of the former Restriction of Special Taxation Act on the grounds that the Plaintiff acquired the land of this case only before the date of designation of the designated area, and that it acquired the land of this case on November 25, 2002, which was later than the second year retroactively from November 25, 2004, which is deemed as the date of public announcement of project approval.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.