Seoul Administrative Court-2017-Gu Partnership-45369 ( April 05, 2018)

Seocho 2016west 1418 ( January 23, 2017)

Bonuses exceeding the limit of remuneration determined at a general meeting of shareholders shall be deemed as losses, and welfare vehicle-related expenses shall not be deemed as earned income.

A bonus exceeding the limit of remuneration determined at a general meeting of shareholders shall be deemed as a loss, and the cost of maintaining welfare vehicles of this case does not constitute wage and salary income according to the operation guidelines and the employee survey, etc., and the incentive paid to a seller is not determined in accordance with supply conditions, and thus does not constitute a discount excluded from the value-added tax base.

Article 19 (Scope of Losses) of the former Corporate Tax Act

2018Nu45369 Revocation of Disposition of Imposing corporate tax, etc.

also

Appellants

KoreaAAAA(State)

BB Director of the Tax Office

Seoul Administrative Court Decision 2017Guhap62570 decided April 5, 2018

September 21, 2018

November 23, 2018

1. All appeals filed by the plaintiff and the defendant are dismissed.

2. The costs of appeal shall be borne by each party.

1. Purport of claim

The defendant's attached Table [Attachment] attached to the plaintiff on each date stated in the "Disposition Date" is revoked both the imposition of corporate tax (including additional tax; hereinafter the same shall apply), the imposition of withholding tax, and the imposition of value-added tax as stated in the "Amount of Tax" column.

2. Purport of appeal

[] The part against the plaintiff in the judgment of the court of first instance shall be revoked. The defendant's disposition of imposition of each corporate tax and the imposition of value-added tax shall be revoked on the date of each entry in the "Disposition Date" column.

[Defendant] The part against the Defendant in the judgment of the first instance is revoked. The Plaintiff’s claim corresponding to the revoked part is dismissed.

1. Partial cite of the reasons for the judgment of the first instance;

The reason for this judgment is as follows, and is the same as the reason for the judgment of the first instance, except for the determination of addition under Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

In the last 8th page, "(the same shall apply even if ratification has been made by a resolution of the ex post facto general meeting of shareholders of one shareholder)" is added.

○ 16. 13. The following shall be added to each other:

Of the officers and employees of departments classified as employees in the week, KimCC appears to have actually used the instant vehicle for the purpose of business by various employees, such as using approximately 100% of the vehicles of the company for about 12 times a month from the survey conducted by the Plaintiff and responding to the use of the company at least 10 times a month from the business trip conducted by the Plaintiff.

○ 16. The following shall be added to the 19th page 19:

“and liquor payment is not provided by a certain amount by class or by a corporation card within a certain limit by class, but is paid from KRW 0 to KRW 10,243,720 per year for each executive or employee, and its standard is unclear. Furthermore, considering the fact that the head of the personnel department head who has used a lot of liquor payment as above is using the company vehicle at 10% during a business trip, it is difficult to exclude such liquor payment from the possibility of compensating for actual expenses rather than the wage and salary.”

○○ 17 pages 4, “Plaintiff’s assertion”, as “Defendant’s assertion.”

○ 24 pages 19 is "The former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 28640, Feb. 13, 2018)".

2. Additional matters to be determined;

A. The plaintiff's assertion

In imposing corporate tax of this case, even if the amount exceeds the limit of the executive's remuneration determined at the general meeting of shareholders, the bonus shall not be deemed to have been included in the calculation of losses within the remaining scope after deducting the basic salary from the limit of the executive's remuneration, and the remuneration paid to the executive shall, as much as possible, be preferentially deducted from the limit of remuneration determined at the general meeting of shareholders, or at least be determined in proportion to the bonus and the basic salary ratio.

B. Determination

Article 19 of the Corporate Tax Act refers to "ordinary expenses generally accepted in relation to business," and Article 26 subparagraph 1 of the Corporate Tax Act provides that personnel expenses deemed excessive or unjust as prescribed by Presidential Decree shall not be included in deductible expenses. Article 43 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 28640, Feb. 13, 2018) delegated by the corporation provides that bonuses paid by the corporation to its executives by the disposal of profits shall not be included in deductible expenses, and Article 43 (2) of the former Enforcement Decree of the Corporate Tax Act provides that where bonuses paid by the corporation to its executives exceed the amount paid according to the standards for payment of wages determined by the resolution,

In full view of the above relevant laws and regulations, only with regard to ordinary expenses or profits directly related to the corporation’s business, the purport of including only those related to the corporation’s business in deductible expenses is to be construed as a provision to recognize the remuneration paid to officers as deductible expenses as much as possible. Therefore, the Plaintiff’s assertion starting from the different premise cannot

3. Conclusion

Therefore, the part of the Plaintiff’s claim seeking revocation of the tax collection disposition of wage and salary income tax of this case shall be cited for reasons, and the part seeking revocation of the tax imposition disposition of this case and value-added tax shall be dismissed for reasons. The judgment of the court of first instance is justifiable in conclusion, and both the Plaintiff and the Defendant’