The appeal is dismissed.

The costs of appeal are assessed against the defendant, including the part arising from the supplementary participation.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Determination on grounds of appeal Nos. 1 and 2

(a)Article 7(1) of the Convention between the Republic of Korea and the Republic of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income provides that "the profits of an enterprise of a Contracting State shall be taxed only in that other Contracting State unless the enterprise runs a business in the other Contracting State through a permanent establishment located in the other Contracting State, unless the enterprise runs the business as described above." Paragraph (2) provides that "if an enterprise of a Contracting State runs a business in the other Contracting State through a permanent establishment located in the other Contracting State, it may only be taxed in that other State on the profits of the enterprise, which may accrue to that permanent establishment."

On the other hand, taxation is required in the revocation lawsuit

The tax authority bears the burden of proving the existence of the facts and the tax base.

Examining the language, text, and purport of the above provisions in light of the aforementioned legal principles, where an Switzerland corporation operates a business through a permanent establishment in the Republic of Korea, only the profits earned by a separate entity independent of the Switzerland corporation, which is traded independently from the ISO corporation, may be reverted to the permanent establishment and taxed in the Republic of Korea, and the tax authority bears the burden of proof with respect to the profits accrued to the permanent establishment.