Suwon District Court-2017-Gu Partnership-6257 ( August 29, 2017)

No deductible expenses shall be included in the calculation of losses, if the representative director's interim settlement of retirement benefits is not converted to the annual salary system.

(As stated in the judgment of the court of first instance) In case where an annual salary system was already implemented at the time of payment of interim settlement of retirement allowances for executive officers, it cannot be deemed that “in case of conversion to the annual salary system

Article 26 of the Corporate Tax Act

2017Nu71927 Revocation of Disposition of Rejecting Corporate Tax;

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*The Director of the Tax Office

Suwon District Court Decision 2017Guhap62557 Decided August 29, 2017

November 23, 2017

December 21, 2017

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's disposition of imposing corporate tax of KRW 2,00,000 on the plaintiff on June 23, 2016 exceeds KRW 352,516,000 for the business year of 2014, and each disposition of imposing corporate tax of KRW 24,081,220 for the business year of 205 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of this court's judgment is as follows, except for the dismissal or addition of a part of the following, and thus, it refers to the grounds for the judgment of the court of first instance. Thus, it is accepted in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence

Parts to be removed or added.

The "payment of retirement pay" in the 14th judgment of the court of first instance is considered as "payment of retirement allowance", and the "executive retirement pay" as "executive retirement allowance", respectively.

○ Article 44(1) of the Enforcement Decree of the Corporate Tax Act shall add the following in front of Article 44(1)6 of the first instance judgment.

Article 26 of the former Corporate Tax Act (amended by Act No. 12850, Dec. 23, 2014; hereinafter the same) provides that "the amount deemed excessive or unreasonable, as prescribed by Presidential Decree, among the following losses, shall not be included in deductible expenses when calculating the amount of income of a domestic corporation for each business year," and subparagraph 1 provides that "labor cost".

○ The following shall be added to the fourth 10th of the judgment of the first instance.

The purpose of Article 26 of the former Corporate Tax Act stipulating "non-Inclusion of excessive expenses in deductible expenses" is to enhance corporate competitiveness if expenses, such as personnel expenses, welfare expenses and travel expenses, are arbitrarily appropriated to shareholders and their related parties or other executives, employees, etc., and in relation to the inclusion of retirement allowances in deductible expenses, there is room for corporate tax evasion by arbitrarily manipulating corporate profits and losses. Therefore, it seems that there is a need to impose certain restrictions under the Act on these expenses or method of appropriation.

○ The first instance court's "at all times" in the fourth 11th eth eth eth eth eth eth eth eth eth eth eth.

2. Conclusion

Since the judgment of the first instance is justifiable, the plaintiff's appeal is dismissed as it is groundless.