Whether a small or medium venture enterprise falls under reduction or exemption;

Where a person succeeds to an existing business through the transfer, etc. of a business, he/she shall not be subject to reduction and exemption.

Article 6 of the Restriction of Special Taxation Act

1. The plaintiff's primary claim and the conjunctive claim are all dismissed.

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

The primary purport of the claim is to revoke each disposition of tax amounting to KRW 718,84,698, corporate tax of 2000 against the plaintiff on May 17, 2005; KRW 1,082,943,640, corporate tax of 2001; KRW 1,038,19,310, corporate tax of 2002; and KRW 184,346,380, corporate tax of 2003.

Preliminary Claim: The Defendant’s imposition of penalty tax of KRW 306,822,246, penalty tax of KRW 392,290,811, penalty tax of KRW 195,231,374, and penalty tax of KRW 20,501 among the disposition imposing corporate tax of KRW 200,000 against the Plaintiff on May 17, 2005, is revoked.

1. Details of the disposition;

A. On August 12, 199, the Plaintiff registered the incorporation of a corporation established for the purpose of manufacturing and selling electronic equipment and parts (hereinafter referred to as ○○○○○○○○○○○○ on January 2, 2001, respectively, and changed to ○○○○○○○○○○○○○○○○ on December 27, 2005 and hereinafter referred to as ○○○○○○○○○○○○○○○○○ on December 27, 2005) on the ground that the Plaintiff constitutes a small and medium venture enterprise under Article 6(2) of the Restriction of Special Taxation Act (hereinafter referred to as the “Act”) and filed a report on the tax amount of KRW 2,368,55,426 of the corporate tax calculated during the said taxable period on the grounds that the Plaintiff falls under the small and medium venture enterprise.

B. On May 17, 2005, the Defendant decided and notified the Plaintiff on May 17, 2005 that the Plaintiff’s existing business was not a small and medium venture enterprise under Article 6(2) of the Act because it falls under the Plaintiff’s succession or acquisition of business through a division of company or acquisition of business, and that it does not fall under the small and medium venture enterprise under Article 6(2) of the Act, including KRW 1,172,332,330 for the business year of 200, KRW 1,082,943,640 for the business year of 2001, KRW 1,038,039,310 for the business year of 202, KRW 184,346,380 for the business year of 203, KRW 3,477,821,60 for the business year of 203.

C. On July 19, 2005, the Plaintiff appealed to the National Tax Tribunal. On September 4, 2006, the National Tax Tribunal investigated whether the Plaintiff satisfies the requirements for reduction of special tax amount of KRW 258,987,797 for small and medium enterprises, etc. in the year 2000, and made a decision to partially accept the Plaintiff’s claim and to dismiss the Plaintiff’s remaining claims.

D. On December 21, 2006, the defendant, after a reinvestigation, deemed that the plaintiff met the requirements for special tax reduction and exemption for small and medium manufacturing businesses, etc. as stipulated in Article 7 of the Act, and issued a corrective disposition to revoke KRW 453,487,632 of the corporate tax for 200 business year 1,172,32,330 (258,987,79,835 of this tax and penalty tax amount of KRW 194,49,835 of this tax) against the plaintiff (hereinafter referred to as "the disposition of this case").

[Ground of recognition] Facts without dispute, Gap evidence 2, 3, 5, Eul evidence 1 (including additional number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) As to the main claim

The Plaintiff Company is a venture business under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses, and was confirmed as a venture business under Article 25 of the Act on November 30, 199, which is within 2 years after its establishment, and therefore satisfies the requirements for corporate tax reduction and exemption under Article 6 (2) of the Act, notwithstanding the fact that the Plaintiff is not a small and medium venture enterprise under Article 6 (2) of the Act, and the disposition of this case where the Plaintiff imposed the full amount of corporate tax on the Plaintiff is unlawful

(A) Article 6(4) of the Act newly establishes a new restriction on the concept of "business start-up of a venture business", and the Plaintiff Company was confirmed as a venture business within 2 years after its establishment before Article 6(4) of the Act enters into force and satisfies the requirements for reduction and exemption under Article 6(2) of the above Act, and thus, it is not subject to the above provision under the principle of prohibition of retroactive taxation.

(B) Even if the Plaintiff Company is subject to Article 6(4) of the Act, the Plaintiff Company only acquired or leased part of certain assets from ○○○○○○○○ Co., Ltd. (hereinafter referred to as “○○○○○○○○○○○”) and is entirely separate from ○○○○○○○○, and thus, it does not constitute a case where the Plaintiff Company succeeds to the existing business through a business transfer, etc.

(2) As to the conjunctive claim

Article 6 (2) of the Act, which was the basis of the disposition of this case, was newly established on August 31, 199, and Article 6 of the same Act was completely amended with the establishment of the above provision, and despite the enactment and amendment of the above provision, there is no new established rules, etc. as to the interpretation of the above provision, and thus, there is a justifiable reason not to mislead the plaintiff into neglecting his duty. Therefore, the part imposing additional tax among the disposition of this case by the defendant is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) The main claim part

(A) Article 2 subparagraph 1 of the former Support for Small and Medium Enterprise Establishment Act (amended by Act No. 3831 of May 12, 1986) provides that "the scope of a business start-up refers to the establishment of a new small and medium enterprise." Accordingly, Article 2 (1) of the former Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act (amended by Presidential Decree No. 11948 of July 19, 1986) provides that "the scope of a business start-up refers to the case where a business start-up does not fall under any of the following subparagraphs, and Article 3 of the Act and Article 3 of the Enforcement Decree of the Act provide that "a business start-up refers to the case where a business start-up does not fall under the scope of a business start-up and continues to run the same kind of business as that before succession from another person

Meanwhile, Article 25 (1) of the former Support for Small and Medium Enterprise Establishment Act provides that "the corporation tax, income tax, property tax, and registration tax may be reduced or exempted for a founder of a small and medium enterprise and a rural area under the conditions as prescribed by the Regulation of Tax Reduction and Exemption Act", but the Government may provide tax support for a founder and a person who supports the establishment of a small and medium enterprise (Article 25) to promote the establishment of a small and medium enterprise under the conditions as prescribed by the Presidential Decree by the Act No. 489 on January 5, 1995. The former Regulation of Tax Reduction and Exemption for Small and Medium Enterprises (Article 15 (1) of the Restriction of Special Taxation Act amended by Act No. 3865, Dec. 26, 1986; Article 25 of the former Support for Small and Medium Enterprise Establishment Act amended by Act No. 1095, Dec. 29, 195; Article 29 of the former Restriction of Tax Reduction and Exemption for Small and Medium Enterprise Establishment Act, which was newly amended by Act No. 136.

As seen earlier, comprehensively taking account of the developments leading up to the change in the special tax provisions on taxation for the establishment of small and medium enterprises and the legislative intent of the provision on tax reduction or exemption for the small and medium start-up venture enterprises under Article 6(2) of the Act, the tax reduction or exemption provision on the small and medium start-up venture enterprises under Article 6(2) of the Act is premised on the establishment of a new venture enterprise under the former Act on the Support for Small and Medium Enterprise Establishment and its Enforcement Decree, so if a person succeeds to an existing business through a transfer of a business, it shall not fall under the scope of the above tax reduction or exemption, and Article 6(4) of the Restriction of Special Taxation Act amended by Act No. 6297, Dec. 29, 200, it shall not be deemed that the concept of a new start-up business is limited only due to the above provision. Accordingly, the Plaintiff’s assertion that the disposition in this case violates the principle on retroactive taxation is without merit.

(B) Next, according to the argument that ○○○○○○○○○○○○○○○ Company was independent of ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, an affiliated company of ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○. As such, the Plaintiff entered into a transfer contract with the Plaintiff○○○○○○○○○○○○○.

Therefore, the disposition in this case that the plaintiff does not become a small and medium venture enterprise under Article 6 (2) of the Act pursuant to Article 6 (4) of the Act is legitimate, since it is not a small and medium venture enterprise.

(2) Preliminary Claim part

(A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed under the conditions as prescribed by the individual tax law in cases where a taxpayer violates various duties, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intentional or negligent intent or negligence is not considered. However, in cases where a taxpayer’s failure to know his/her duty is not unreasonable, or where there are circumstances where it is unreasonable for the taxpayer to expect the performance of his/her duty to the party concerned, etc., and there is a justifiable reason that it is not attributable to the taxpayer’s failure to perform his/her duty, it may not be imposed, but the land or mistake under the tax law shall not be deemed as a justifiable reason (see, e.g., Supreme Court Decisions 2003Du10350, Sept. 24, 2004; 200Du5944, Apr.

(B) In this case, as seen earlier, the Plaintiff applied for tax reduction or exemption by arbitrarily interpreting the concept of ‘business start-up', which is a requirement for corporate tax reduction or exemption for a start-up venture business. Accordingly, it cannot be deemed that there is a justifiable reason not to cause the Plaintiff’s neglect of duty, and it does not change merely because the relevant legal provision was newly established or amended. Therefore, the Plaintiff’s assertion seeking revocation of the imposition of additional tax is without merit.

3. Conclusion

Therefore, the plaintiff's main claim and ancillary claim of this case are without merit, and it is so decided as per Disposition.