Cho High Court Decision 2010Du2475 ( December 13, 2010)

If it is not deemed a government of a Contracting State under the provisions of the Korea-end Tax Convention, the interest paid by the other Contracting State shall not be subject to tax exemption.

The fact that the capital of the Malaysia Bank is owned by the Government of the Malaysia, although it is recognized that the capital of the Malaysia Bank is owned by the Government, and unless there is any evidence to prove that the Malaysia Bank agreed between the competent authorities of the two countries as a duty-free agency, the Malaysia Bank cannot be deemed to constitute a "Government" under the provisions of the Malaysia Tax Convention, and the interest paid on the loan does not constitute

2011Guhap598 Revocation of Disposition of Imposing Corporate Tax

literatureA

Head of Ulsan District Office

March 7, 2012

April 18, 2012

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 000 against the Plaintiff on January 14, 2010 shall be revoked.

1. Details of the disposition;

A. On December 2006, the Plaintiff was registered as holding around 897,000 shares (total outstanding shares 00,000 shares, 99.67% shares), from the end of December 2007 to the end of December 1, 2007, 1,697,000 shares (total generated shares 0,000 shares, 99.82% shares) of KoreaCC Energy (hereinafter referred to as “foreign corporation”).

B. Around 2007, the non-party corporation agreed to obtain a loan of USD 000 with Malaysia, and received a loan of USD 000 among them, and remitted the amount of USD 000 (00) which is the interest accrued therefrom to the above bank. The non-party corporation did not withhold tax on the interest income. Around November 30, 2009, the Defendant imposed a corporate tax of KRW 000 and additional tax (00) on the above interest income on the non-party corporation as of November 30, 2009.

C. However, as of January 14, 2010, the non-party corporation failed to pay taxes of KRW 2,000, including the above corporate tax as of January 14, 2010.

D. Accordingly, on January 18, 2010, the Defendant designated the Plaintiff, a shareholder of the non-party corporation, as the secondary taxpayer pursuant to Article 39 of the Framework Act on National Taxes, and imposed the instant disposition imposing KRW 000 ( KRW 000 x9.82%) corresponding to the Plaintiff’s share ratio among the amount in arrears of the non-party corporation.

E. On March 19, 2010, the Plaintiff appealed to the Defendant on March 19, 2010, but the Defendant dismissed the claim on the ground that the property owned by the non-party legal entity alone did not secure the above tax claim and there was no evidence that the Plaintiff was not a beneficial shareholder. The Plaintiff again filed an administrative appeal with the National Tax Tribunal on July 16, 2010, but the claim was dismissed on December 13, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1 to 6 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) 가)「대한민국정부와 말레이시아 정부간의 소득에 대한 조세의 이중과세 회피 와 탈세 방지를 위한 협약」(이하 '조세협약'이라 한다) 영문본 제11조 제4항에서 'Notwithstanding the provisions of paragraphs 2 and 3, the Government of a Contracting State shall be exempt from tax in the other Contracting State in respect of interest derived by the Government from that other State(이는 '제2, 3항 의 규정에도 불구하고 일방체약국의 정부가 타방체약국에서 수취하는 이자에 대하여는 타방체약국에서 면세된다'라고 번역해야 한다)'고 규정하고 있고, 같은 조 제5항에서 같은 조 제4항의 '정부'의 범위를 열거하면서 말레이시아의 경우 한국과 달리 ○○ 은행을 열거하고 있지는 아니하지만, 이는 위 협약 체결 당시 한국○○은행에 해당 하는 말레이시아 ○○은행이 존재하지 않았기 때문이고, 이러한 사정을 보완하기 위한 조치로 같은 항 (a) d)에서 'such institutions, the capital of which is wholly owned by the Government of Malaysia or the Governments of the states or the local authorities(이는 '자본의 전부를 말레이시아 정부, 주정부, 지방공공단체가 소유하는 기관'이라고 번역된다)'라고 규정하는 한편, 이에 이어 'as may be agreed from time to time between the competent authorities of the Contracting States{ 이 는 ' 양 체약국의 권한 있는 당국 간에 수시로 합의되어도(합의해도) 좋은'으로 번역해야 한다}' 이라고 규정하면서 'can(합의될 수 있는, 가능의 의미)'이라는 단어가 아닌 'may{합의 되어도(합의해도) 좋은, 허가의 의미}'라는 단어를 사용하고 있으므로, 자본의 전부를 말레이시아 정부, 주정부, 지방공공단체가 소유하는 기관이기만 하면 양 체약국의 권한 있는 당국 사이에 합의가 되지 않은 기관이라 하더라도 같은 항 (a) d)의 기관에 해당 하고 나아가 같은 조 제4항의 '정부'에 해당한다고 볼 것이다. 따라서 말레이시아 정부의 전액 출자로 설렵된 말레이시아 ○○은행은 조세협약 영문본 제11조 제5항 (a) d)에 의하여 같은 조 제4항 소정의 '정부'에 해당 하므로, 같은 조 제4항에 따라 말레이시아 ○○은행이 소외 법인으로부터 수취하는 이자는 면세되고 따라서 이에 대한 소외 법인의 원천징수의무도 면제된다.

B) ① Article 24(1) of the Tax Convention provides that the two countries’ taxes should be treated equally as the principle of an agreement. On the other hand, the Korean ○ Bank is exempt from tax under the above agreement, whereas the Malaysia bank is not exempt from tax under the above agreement, there is discrimination if the Malaysia bank is not exempt from tax under the above agreement. Thus, the fact that Malaysia does not include the ○ Bank in its tax-free object is also contrary to the above provision.

2. Article 25(1) of the Tax Convention provides that "When a Contracting State or both Contracting States consider that a taxation measure of the Contracting State would result in, or would result in, the result of a taxation inconsistent with the provisions of this Convention on a person of the Contracting State, such person may bring a case to the competent authority of the Contracting State in which that person is a resident, regardless of the remedies provided by the domestic law of the Contracting State, if the Contracting State or its case falls under Article 24(1)." Thus, the defendant, even though taking the remedies under the above provisions prior to the disposition of imposing the corporate tax of this case, did not take such measures and imposed the corporate tax accordingly, is also in violation of the above provisions.

2) The Defendant: (a) deemed that it is impossible to secure a tax claim in arrears with the non-party corporation on the ground that the value of the O000-0,000 square meters of land for a factory owned by the non-party corporation (hereinafter “the instant land”) is smaller than the maximum debt amount of the right to collateral security against the non-party corporation on the ground that the Malaysia bank established on the land was not the mortgagee; (b) however, the non-party corporation is scheduled to raise funds through the support of the ○○ Bank from the Malaysia; (c) thus, it cannot be deemed impossible to secure the Defendant’s tax claim. Accordingly, the instant disposition on the different premise is unlawful.

3) A shareholder who is liable for secondary tax liability is limited to a beneficial shareholder, and a shareholder must make an investment and exercise shareholder's rights in order to fall under a beneficial shareholder. Since the Plaintiff is merely a person who is registered as a shareholder only from the time of incorporation of the non-party corporation, and there was no fact that he actually exercised shareholder's rights, the Plaintiff cannot become a secondary taxpayer.

(b) relevant statutes;

It is as shown in the attached Form.

C. Determination

1) As to the Plaintiff’s assertion

A) First, we examine the argument on the A) argument.

"조세협약의 국문본 제11조 제4항은 같은 조 제2항의 원천지국 과세의 예외로, "일방체약국의 '정부'는 타방체약국의 '정부'에 의하여 발생되는 이자에 대하여 동 타방체약국에서 면세된다"고 규정하고 았으나, 한편 위 협약의 영문본 제11조 제4항은 'Notwithstanding the provisions of paragraphs 2 and 3, the Government of a Contracting State shall be exempt from tax in the other Contracting State in respect of interest derived by the Government from that other State'라고 규정하고 있고 이는 직역하면 '제2, 3항의 규정에도 불구하고 일방체약국의 정부에 의해 타방 체약국으로부터 수취되는 이자에 대하여는 타방체약국에서 면세된다'로 번역되는바, 국 문본과 영문본에 해석상 차이가 있는 경우 영문본이 국문본에 우선하므로, 위 규정에 따라 면세되는 이자는 그 지급주체가 타방체약국의 정부에 한정되는 것은 아니라고 볼 것이다. 그러나 조세협약의 영문본 제11조 제5항 (a)에서 '정부( Government)'란 말레 이 시 아의 경 우 the Government of Malaysia 외 에 'a) the governments of the states, b) the local authorities, c) the Bank Negara Malaysia, d) such institutions, the capital of which is wholly owned by the Government of Malaysia or the Governments of the states or the local authorities, as may be agreed from time to time between the competent authorities of the Contracting States'라고 규정 하고 있는데, 그 중 d)호는 직역하면 그 중 앞부분은 자본의 전부를 말레이시아 정부 ・ 주정 부 • 지방공공단체가 소유하는, 그런 기관'으로, 뒷부분은 '양 체약국의 권한 있는 당국 간에 수시로 합의될 수 있는(또는 합의될지도 모르는), 그런 기관'으로 번역될 것인바, 위 d)에 해당하는 기관은 위 (a) a), b), c)에는 열거되지 않았으나 이에 상응하는 기관을 포함시키기 위한 것으로, 자본의 전부를 말레이시아 정부 등이 소유하는 기관이기만 하면 양 체약국의 실제 합의가 없더라도 이에 포함된다고 볼 경우 대상기관이 지나치게 확대될 수 있는 점, 그 규정의 문구가 'the capital of which is wholly owned by the Government of Malaysia or the Governments of the states or the local authorities I 라고만 되어 있는 것이 아니라 'as may be agreed from time to time between the competent authorities of the Contracting States'라는 부분이 부가되어 있는 점(원고 주장대로 해석할 경우 이 부분 문구가 무의마해진다), 그 규정의 뒷부분에 'can be'가 아니라 'may be'라는 단어가 사용되어 있으나 그 단어들의 통상적인 의미와 용례에 비추어 현저한 의미 차이가 있을 것으로는 보이지 아니하는 점 등에 비추어 볼 때 위 조세협약 제11조 제5항 (a) d)는 자본의 전부를 말레이시아 정부 ・ 주정부 • 지방공공 단체가 소유하는 기관으로서 양 체약국의 권한 있는 당국 간에 면세기관으로 실제 합의 된 기관을 의미한다고 해석할 것이다. 그런데 갑 제5호증의 기재에 의하면 말레이시아 ○○은행의 자본 전부가 말레이시아 정부의 소유인 사실이 인정되나, 나아가 한국과 말레이시아의 권한 있는 당국 간에 말레이시아 ○○은행을 면세기관으로 정하기로 하는 합의가 있었다는 사실 을 인정할 증거가 없는 이상, 말레이시아 ○○은행은 조세협약 제11조 제4항, 제5항에서 규정한 '정부'에 해당한다고 볼 수 없어 면세대상에 해당하지 않는다. 따라서 원고의 위 주장은 이유 없다.",나) 다음 나) 주장에 관하여 본다.

First of all, Article 24 (1) of the Tax Convention provides that "A citizen of a Contracting State shall not be subject to taxes or any related tax or any related requirement, or a more severe tax or any related requirement, with respect to the assertion that: (a) a national of the other Contracting State has the same status as that of the other Contracting State; (b) a national of the other Contracting State shall not be subject to taxes or any related requirements; or (c) a national of the other Contracting State shall be equally against the other citizen and the national of the State without discrimination; (d) on the sole basis of the fact that the capital of the Malaysia bank is owned by the Government of Malaysia, it is insufficient to conclude that the case of the plaintiff and the Malaysia who transacted with the Malaysia Bank of Malaysia and the Export-Import Bank of Korea (which is a government of Article 11 (5) of the Tax Convention) is identical to the case of

(2) As to the following arguments, Article 25(1) of the Tax Convention provides, regardless of the remedies under the domestic law of both Contracting States, where a Contracting State or a case in which he is a resident falls under Article 24(1) (non-discrimination principle), a separate remedy is provided for the competent authority of the Contracting State in which he is a national so that the case can be brought to the competent authority of the Contracting State in which he is a national, and it does not necessarily require the defendant, one of the competent authorities of both Contracting States, to take the remedy under the above Convention before taking advantage of the means provided for in the domestic law.

2) As to the Plaintiff’s assertion

The appraisal value of the land of this case, which is the only property of the non-party corporation, is KRW 000, and the maximum debt amount of the ○○ Bank, which is the senior creditor, is USD 000 (000) does not conflict between the parties. However, the above facts alone are insufficient to readily conclude that the non-party corporation may obtain additional loans from the ○○ Bank, and there is no other evidence to acknowledge it. Thus, it is impossible to pay the tax in arrears with the property of the non-party corporation. Accordingly, the plaintiff's above assertion is without merit.

3) As to the Plaintiff’s assertion

Article 39(1)2 (a) of the Framework Act on National Taxes provides that "any person who actually exercises the rights to 51/100 or more of the total number of stocks issued by the relevant corporation" shall be subject to secondary tax liability. The meaning of the above subparagraph (a) is that all the oligopolistic shareholders who actually exercise the rights to 51/10 or more of the total number of stocks issued by the relevant corporation shall bear the secondary tax liability: Provided, That it is reasonable to view that the scope of liability is limited within the scope of shares owned by the relevant oligopolistic shareholders. Article 39(1)2 of the Framework Act on National Taxes and Article 20 of the Enforcement Decree of the same Act provide that the number of oligopolistic shareholders who actually exercise the rights to 51% or more of the total number of stocks issued by the relevant corporation shall be deemed to have been 30% or more of the total number of stocks issued by the relevant corporation, but shall not be deemed to have been 10/100 or more of the total number of stocks issued by the relevant oligopolistic shareholders, and thus, it shall not be deemed to have been 10/10 or more of the above stocks.

The fact that the Plaintiff was registered as holding from the end of December 2007 to the end of 0,000,000 shares (the total outstanding shares 0,000,000 shares, and 9.82% of shares) in the register of stockholders of the non-party corporation is as seen earlier, and there is no evidence to support the circumstance that the Plaintiff was stolen as a shareholder or registered as a name other than the de facto ownership. Thus, the Plaintiff is included in the scope of oligopolistic shareholders who are capable of exercising rights as a shareholder with respect to shares of at least 51/10 of the total number of outstanding shares of the non-party corporation at any time from the objective point of view, and who actually exercises rights as a shareholder with respect to shares. Accordingly, it is justifiable that the Defendant assumes secondary tax liability for the non-party corporation’s national tax in accordance with the ratio of shares owned by the Plaintiff under Article 39(1)2(a) of the Framework Act on National Taxes. Therefore, the Plaintiff’s aforementioned assertion is also groundless.

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.