purchase costs shall be calculated in a reasonable manner in accordance with the ordinary accounting principles.

The purchase cost to be deducted from the business revenue amount at the time of the estimated corporate tax assessment refers to the purchase cost for the sales of the relevant taxable year, which shall be calculated in a reasonable manner without errors in ordinary accounting rules.

Article 66 of the Corporate Tax Act

2016Guhap62580 Revocation of Disposition of Corporate Tax Imposition

○○ Co., Ltd.

○ Head of tax office

June 16, 2017

August 11, 2017

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the costs of lawsuit.

Cheong-gu Office

The Defendant’s disposition of imposing corporate tax of KRW 000 against the Plaintiff on October 0, 2015 is revoked.

1. Details of the disposition;

A. The Plaintiff purchased raw and secondary materials from abroad (B, etc.) and entrusted processing to a foreign (CC, etc.) and sold the completed clothing to a foreign country (DD, etc.). On October 0, 2004, the Plaintiff was established and closed on October 0, 2013.

B. From October 0 to October 0, 2014, the head of a tax office requested the Plaintiff to submit books and evidential documents necessary for calculating the amount of income while conducting the Plaintiff’s consolidated investigation of corporate tax for 20 XX business years from October 0, 2014. However, the Plaintiff failed to submit them.

C. In accordance with Article 66(3) of the Corporate Tax Act and Article 104(1)1 and 104(2)1 of the Enforcement Decree of the same Act, the Defendant calculated the corporate tax amount of 00 won (including additional tax of 000 won) by revising the Plaintiff’s corporate tax base for 20 XX business year, and notified the Plaintiff of the correction on October 0, 2015 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1 and 2, Gap evidence 3-1, 2, Eul evidence 2, 3, 5, and 6, the purport of the whole pleadings

2. Relevant statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The Defendant, while rendering the instant disposition, deemed that the purchase cost of the Plaintiff’s 20 XX business year’s profit and loss statement is 000 won from the business revenue amount of 20 XX business year (see Article 104(2)1(a) of the Enforcement Decree of the Corporate Tax Act), and excluded 000 won from the purchase cost. However, the above basic inventory amount was paid at the end of 20xx year, but it was the purchase cost corresponding to the sales of the 20 XX business revenue amount of the 20 XX business year. Accordingly, the instant disposition is unlawful.

B. Determination

In full view of the following circumstances, it is reasonable to regard only the purchase cost per 20 XX business year as the purchase cost deducted from the business revenue amount of 20 XX business year when considering the respective statements in Gap evidence Nos. 4, 5, 6, 10 through 20 (including each number), Eul evidence Nos. 4, 12, 13, and 14 as the whole purport of the pleadings or as the total amount of the pleadings, and it is reasonable to regard only the purchase cost per 20 XX business year as the purchase cost, and it cannot be viewed as the purchase cost of KRW 00 of the basic inventory amount of the business year claimed by the plaintiff.

(1) The purchase cost that is deducted from the business revenue amount in the business revenue amount in the relevant taxable year shall mean the purchase cost for the relevant taxable year, which shall be calculated in a reasonable way without any error in the ordinary accounting rules. In order to add the basic inventory amount for the relevant business year 20 XX as alleged by the Plaintiff, the basic inventory amount and the end inventory amount for the relevant business year shall be able to accurately calculate the purchase cost, and the end inventory amount for the relevant business year shall be excluded from the purchase cost (in the case of the income tax estimate taxation, the purchase cost shall be added to the basic inventory amount for the pertinent taxable year, and the purchase cost shall be calculated by deducting the basic inventory amount for the relevant taxable year, and the basic inventory amount or the end inventory amount for the relevant taxable year shall be calculated without consideration if the basic inventory amount or the end inventory amount for the relevant taxable year cannot be calculated. Such a method shall be deemed reasonable in the calculation of the tax base.

② Through the data on the basic inventory amount submitted by the Plaintiff, only can it be confirmed that the Plaintiff paid the price to the customer at the end of 20x year, and it is difficult to accurately verify whether such inventory amount was the cost of sales in a certain taxable year. The Plaintiff’s submission of inventory account books cannot alone verify the flow of inventory assets, and there is no other data that can accurately calculate the basic inventory amount in a 20x year.

③ If the Plaintiff deemed that the remittance from the end of 20x year to the end of 20 XX business year was received, the remittance amount for the end of 20 XX business year shall be deemed not to be the purchase cost for the end of 20 XX business year, and shall be included in the end of 20 XX business year, deeming that the end of 20 XX business year was not the purchase cost for the end of 20 XX business year. However, the Plaintiff asserts that the end of 20 XX business year’s financial statements include 0 won, and the end of 20 XX business year’s remittance amount to the end of 20 XX business year’s sales amount to 0 billion won due to a change in the business method, and that the end of 20 XX business year’s sales amount to the end of 20 XX business year’s sales amount to the end of 20 XX business year’s sales amount to the end of 20 billion won. However, in light of the fact that it can not be seen that the end of 20 XX business year’s sales amount to the end of 20 billion won.

④ As can be seen, this case’s assertion that the basic inventory amount and the end inventory amount for 20 XX business year cannot be calculated, and it is reasonable to view that the purchase cost for 20 XX business year as the original purchase cost for 20 XX business year as the Defendant. While the Plaintiff asserts that even if part of the basic inventory amount for 20 XX business year is confirmed to have been transferred to sales for 20 XX business year, it should be included in the purchase cost for 20 XX business year, the part that is confirmed to have been transferred to sales for 20 XX business year should not be included in the purchase cost for 20 XX business year, not excluding the last inventory amount for 20 XX business year, at the same time, as the purchase cost for 20 XX business year’s basic inventory amount for 20 XX business year, is included in the purchase cost for 20 XX business year’s basic inventory amount for 20 XX business year, it cannot be said that it is a method of taxation recognized by the Corporate Tax Act.

4. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.