Seocho 2009 Swiss0485 (Law No. 26 May 26, 2009)

church reserve fund for proper business in deductible expenses;

A church which is not registered with the competent authority shall not include a reserve fund for essential business in deductible expenses.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing corporate tax of KRW 138,99,530 against the Plaintiff on August 8, 2008 shall be revoked.

1. Details of the disposition;

A. The Plaintiff reported the amount of KRW 490,797,683 (hereinafter “instant amount”) for the purpose of the dissemination of religion and other edification to the church belonging to the Korean Association of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korean Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation of the Korea Federation

B. The defendant, on the ground that "the plaintiff church shall not be deemed an organization that can include its own purpose business reserve funds in deductible expenses", excluded the issue amount in this case from deductible expenses, and on August 8, 2008, notified the plaintiff church of KRW 138,99,530 of corporate tax for the business year 2007 (hereinafter "the disposition of this case").

C. On February 11, 2009, the Plaintiff church appealed against the instant disposition and filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the said appeal on May 26, 2009.

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

2. Whether the instant disposition is lawful

A. The plaintiff church's assertion

In light of the fact that the legislative intent of the reserve fund for proper purpose business is to promote public service, the Ministry of Culture, Sports and Tourism, which is the competent authority of the religious organization, operates a permit system not to register with the religious organization, most religious organizations manage the property separately from the general meeting to which they belong, and Article 36 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act is amended to include not only the organizations registered with the competent authority on February 4, 2009 but also the organizations under its control as organizations deemed corporations capable of including the reserve fund for proper purpose business in deductible expenses. Even before the amendment of the Enforcement Decree, if the general meeting to which the religious organization belongs is registered with the competent authority through the established rules of the National Tax Service, the religious organization is also deemed to be registered with the competent authority. Thus, the disposition of the plaintiff church in this case should be revoked, notwithstanding the fact that the plaintiff church in this case can be included in deductible expenses as organizations registered with the competent authority under Article 36 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) In light of the principle of no taxation without law, or the requirements for non-taxation or tax reduction and exemption, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decision 2001Du5521, Jul. 26, 2002)

2) In light of the above legal principles, comprehensively taking account of the following circumstances, the Plaintiff church’s “organization registered with the competent authority” under Article 36(1)1(e) of the Enforcement Decree of the Corporate Tax Act, which is a “organization registered with the competent authority” under Article 36(1)1(e) of the Enforcement Decree of the Corporate Tax Act that can include the reserve fund for its proper purpose business in deductible expenses, cannot be deemed as an organization that considers it as a juristic person that can include its purpose and content in deductible expenses

A) Article 29(1) of the Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008) provides for tax reduction and exemption by the method of inclusion in deductible expenses on the premise that a nonprofit domestic corporation sets aside income as a reserve for its proper purpose business to increase role of a non-profit domestic corporation, and uses it for its proper purpose business. However, in the case of an organization deemed a corporation among non-profit domestic corporations, only an organization prescribed by Presidential Decree which is capable of managing and supervising the use of income for its proper purpose business, shall apply. Accordingly, Articles 56(1) subparag. 1 and 36(1) subparag. 1(e) of the Enforcement Decree of the Corporate Tax Act provide that “organization established for religious dissemination or other edification and registered with the competent authority” shall be deemed as a corporation that can include its proper business purpose reserve in deductible expenses. However, the Korean Federation of Doclon and the Korea Foundation for the Maintenance of the Korea Foundation for the Maintenance of the Korea Foundation for the Foundation, although each of the competent authorities is registered.

B) Although Article 36(1)1 (e) of the Enforcement Decree of the Corporate Tax Act was amended to include not only organizations registered with the competent authority on February 4, 2009 but also its affiliated organizations as organizations deemed corporations capable of including the reserve fund for its proper purpose business in deductible expenses, such amendment provisions are applicable to the business year that begins after January 1, 2009, pursuant to Article 2 of the Addenda, and are not applicable to the business year at issue in this case.

C) In addition, even before the amendment of Article 36 (1) 1 (e) of the Enforcement Decree of the Corporate Tax Act on February 4, 2009, the Plaintiff church asserted that, if the general assembly to which the religious organization belongs is registered with the competent authority by the National Tax Service’s established rules, it shall also be deemed that the religious organization is a registered organization with the competent authority. However, the above established rules (income 2601-316, March 7, 199), even before Article 56 (1) 2 of the Enforcement Decree of the Corporate Tax Act was amended on December 31, 2001 and deleted, the “organization that significantly contributes to the dissemination of religion and other edification” was enacted as an organization that regards the unique special purpose business reserve as a corporation, regardless of whether it is registered with the competent authority, it shall not be applied to the business year 2007 at issue in this case.

D) The Plaintiff church is a way to register with the competent authority after obtaining permission for incorporation from the Ministry of Culture, Sports and Tourism, the competent authority for religious organizations.

3) Therefore, the above argument of the plaintiff church on a different premise is without merit.

3. Conclusion

A church's claim of this case is dismissed as it is without merit.