Seocho 209west 1743 ( October 07, 2010)

The disposition imposing corporate tax on the aggregate of the total acquisition value of all shares of merger is legitimate.

Whether the requirements of Article 122 (1) 2 (b) of the former Enforcement Decree of the Corporate Tax Act are met should not be determined on the basis of the whole shareholders who transfer combined shares, not on the basis of the group of shareholders of the merged corporation. Therefore, the disposition imposing corporate tax by adding the total acquisition value of the entire shares to the total cost of merger

2011Guhap426 Revocation of Disposition of Corporate Tax Imposition

CCC, Inc.

O Head of tax office

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing KRW 1,041,953,230 for the business year 2008 against the Plaintiff on December 10, 2008 is revoked (the phrase “written claim” in the written complaint appears to be a clerical error on December 18, 2009).

1. Details of the disposition;

A. On January 4, 2008, the Plaintiff (formerly: BBB) merged CCC with a stock company operating the Internet broadcasting service business, and changed its trade name to CCC (hereinafter “CCC corporation before the merger”); (b) “CCC merged with the Plaintiff.” On May 2007, the merged corporation received 2,984,901 shares in total from the merged corporation’s 5,565,000 shares issued by the merged corporation’s shareholders, 2,984,901 shares as total sales value, 23,618,017,00 won, 30% of the total sales value, 30% of the shares issued by the merged corporation’s total sales value, 30% of the shares issued by the merged corporation’s 23,618,017,912 won, 30% of the total sales value per share, 301,7016, 3016, 307, 30616, 406, 7506, 7, 17,2040.7 shares shares issued by the merged corporation.

C. On October 10, 2007, the merged corporation entered into a merger contract with the merged corporation and merged on December 31, 2007 with the joint date, and issued new stocks of the merged corporation on January 23, 2008 after completing the merger registration on January 4, 2008.

D. A surviving corporation sold KRW 6,238,80,000 of the total purchase price to five persons, other than GGG investment securities, acquired around October 2007 for the purpose of securing funds, etc. in the process of such merger.

E. At the time of the merger, the merged corporation issued 4,249,904 shares of the merged corporation (50 won per share, 2,124,952,00 won, appraised value, 2,952,00 won) to the shareholders other than the Plaintiff among the shareholders holding the shares of the merged corporation at the time of the merger, as listed in the following table. No separate merger subsidy was paid. Shares 1,945,101 shares of the merged corporation they owned (=2,984,901 shares acquired on October 2007 - 1,039,80 shares sold to the shareholders other than the Plaintiff).

F. On April 4, 2008, the Plaintiff reported corporate tax on liquidation income of the merged corporation, and assessed the value of the combined shares (the shares of the merged corporation acquired by the merged corporation within two years prior to the merger) 2,984,901 shares (hereinafter “the combined shares of this case”) included in the cost of the merger in the amount of KRW 12,330,000 as listed below, and reported the amount of liquidation income as KRW 952,00,000.

G. From October 1, 2008 to November 2, 2008, HHH National Tax Service conducted a tax investigation with respect to the Plaintiff, and notified the Defendant of the taxation data. On December 10, 2008, the Defendant assessed the acquisition value of the instant aggregate stocks as KRW 15,462,00,000, and calculated the liquidation income amount as KRW 3,594,00,000,000, and issued a disposition stated in the purport of the claim.

[Reasons for Recognition] The entry of Gap evidence Nos. 1 and 2 in the evidence No. 1 and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The parties' assertion

1) The plaintiff's assertion

Whether the requirements under Article 122(1)2(b) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20619, Feb. 22, 2008; hereinafter referred to as the “former Enforcement Decree”) are met shall be determined by the shareholders of the merged corporation. The FFF investment association has acquired the total amount of transferred stocks (referring to the stocks newly issued by the merged corporation) of the merged corporation within seven days after transferring the stocks of the merged corporation to the merged corporation, and thus, it satisfies the requirements under Article 122(1)2(b) of the former Enforcement Decree of the Corporate Tax Act, and thus, the face value of the stocks of the merged corporation acquired by the FFF investment association shall be added to the total amount of the price for the merger.

2) The defendant's assertion

Whether the requirements under Article 122(1)2(b) of the former Enforcement Decree are met should not be determined by the shareholders of the merged corporation, not by the merged corporation, but by the whole shareholders who transfer the shares of the merged corporation, including the shares, to the plaintiff. It is merely 56.9% less than 95/100 of the transfer amount, and it cannot be deemed that the requirements under Article 122(1)2(b) of the former Enforcement Decree, since the entire shareholders who transfer the shares of the merged corporation, including the shares at issue, to the plaintiff is merely 56.9% less than 95/10 of the transfer amount, and thus, the total acquisition value of the shares of the merged corporation, including the shares at issue, should be added to the total acquisition value of the total acquisition value of the shares of the merged corporation, including the shares at issue pursuant to Article 80(2

B. Relevant statutes

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

C. Determination

Article 80 (1) of the former Corporate Tax Act (amended by Act No. 9898 of Dec. 31, 2009; hereinafter referred to as the "former Act") provides that "where a domestic corporation is dissolved due to a merger, the liquidation income amount shall be the total sum of the cost of the merger received by the stockholders, etc. of the extinguished corporation from the merged corporation minus the total amount of equity capital of the extinguished corporation as of the date of the registration of the merger of the merged corporation" and Article 80 (2) of the same Act provides that "where the merged corporation has acquired the stocks, etc. of the extinguished corporation within two years prior to the date of the registration of the merger and the stocks, etc. of the merged corporation are not issued by the merged corporation with respect to such combined stocks, etc., the total sum of the cost of the merger shall be the sum of the acquisition of the relevant combined stocks,

Article 122 (1) 2 of the former Enforcement Decree following the delegation under paragraph (4) of the same Article shall be the amount calculated by adding the "acquisition value of combined stocks, etc." to Article 80 (2) of the former Enforcement Decree: Provided, That ① A merged corporation and a merged corporation shall not be a person with a special relationship at the time that the merged corporation acquires combined stocks, etc. under Article 80 (2) of the former Act from the stockholders, etc. of the merged corporation (a) as at the time that the merged corporation acquires combined stocks, etc. under Article 80 (2) of the former Act from the merged corporation; ② A merged corporation shall acquire stocks, etc. (b) equivalent to 95/100 or more of the transfer value of combined stocks, etc. (referring to stocks newly issued by the merged corporation) within 7 days after the merged corporation transfers combined stocks, etc. to the merged corporation (b) of the acquisition value of the merged corporation).

However, the purport of such special exception is that (i) the merged corporation acquires the stocks of the merged corporation first and takes into account the actual situation in which the merger takes place after acquiring the management right; (ii) the merger corporation's stockholders acquire the stocks newly issued by the merged corporation in return for the transfer of the stocks before the merger; (iii) there is no difference between the acquisition of the stocks of the merged corporation and the acquisition of the stocks of the merged corporation at the time of the merger and the acquisition of the stocks of the merged corporation; (iv) it is reasonable to calculate the value of the stocks of the merged corporation in the same way as the liquidation income calculation method at the time of the merger. However, considering the fact that the acquisition price of the stocks of the merged corporation is 10% only if the stocks of the merged corporation are acquired by 10%, the acquisition price of the stocks of the merged corporation and the stocks of the merged corporation should be determined as equal to the acquisition price of the stocks of the merged corporation which is actually the acquisition price of the stocks of the merged corporation (see Article 80(1)2) of the former Corporate Tax Act, and Article 80(2 of the former Corporate Tax Act).

Therefore, as seen earlier, the disposition of this case based on the premise that the total acquisition value of the combined shares, including the stock at issue, should be calculated by adding up the total acquisition value of the total acquisition value of the combined shares, including the stock at issue pursuant to Article 80(2) of the former Act, to the total sum of the merger cost, on the ground that the total acquisition value of the combined shares, including the stock at issue, should be calculated by adding up the total acquisition value of the total acquisition value of the combined shares at issue, under Article 122(1)2(b) of the former Enforcement Decree, is legitimate, since the merged corporation’s shares acquired within seven days from the transfer of the combined shares to the merged corporation.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so ordered as per Disposition.

shall be ruled.