Whether the total amount input in a game machine is subject to value-added tax.

Value-added tax is imposed because the disposal of merchandise discharged by a game machine by converting it into dividend rate constitutes game use service.

Article 7 (Supply of Services)

Article 13 of the Value-Added Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax for the first period of October 1, 2006, which exceeds KRW 31,019,210,210, which was made on October 1, 2006 against the Plaintiff, and all disposition dismissing the Defendant’s claim for refund of KRW 36,641,502, which was dismissed.

1. Details of the imposition;

A. The Plaintiff operated an electronic amusement room for adults (hereinafter “instant game room”) in the name of “○○○○○-dong, Seoul, ○○○○-○○○○○○○,” and paid a gift certificate according to its content, if the Plaintiff collected a certain amount at the game cost and the user added the game conditions.” (B) The Plaintiff reported the tax base of KRW 15,500,000 (sales tax amount of KRW 1,550,000) at the time of the final return of the first quarter of 2006, on the basis of the value-added tax base for the remainder of the amount obtained by deducting the gift certificates paid to the users from the amount input in the game machine by the user as gift.”

". On October 1, 2006, the defendant considered 71,00,000 won as the gift certificates amount which was deducted from total purchase amount of KRW 1,185,00,000 for gift certificates of this case from total amount of KRW 474,00,00 for the gift certificates of this case, and confirmed that 646,363,000,000 which was divided by 1.1 (=1,000,000 ± 1.1) was deducted from the output tax amount calculated by calculating the input tax amount of KRW 40,204,238 for the first period of 1,206 by deducting the input tax amount of KRW 35,325,290 for the first period of 2006 (hereinafter referred to as the "disposition in this case"), and confirmed that the return and payment of the additional tax for the plaintiff on February 26, 2007 by the defendant was excessive from total amount of value-added tax amount of KRW 135,7136,75381,75.

E. On January 3, 2007, the Plaintiff filed a request with the National Tax Tribunal for a trial of 2007No174, but the National Tax Tribunal dismissed the said request on April 17, 2007.

Facts that there is no dispute over the basis of recognition, Gap 1, 4, 5, 6, Eul 1, and 4 (including paper numbers)

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Creation of value added;

Value-added tax is imposed on the added value created by the transaction, and since the money input by the customers in the game machine does not create added value as for gambling or speculative acts, it cannot be subject to value-added tax.

(2) Deduction of face value of merchandise coupons

Inasmuch as gift certificates paid by the Plaintiff to a game user are not subject to value-added tax for the transaction of such money or currency substitute securities with monetary substitute securities, taxation transactions subject to value-added tax among goods, which are merchandise coupons provided by the Plaintiff to a game user, and services, which are the use of the game machine, are limited to the provision of services, such as the use of the game machine. Therefore, the part corresponding to the face value of merchandise coupons out of the amount input in the game machine is not subject to taxation transactions, and thus, in calculating the supply value (total sales) related to each disposition of this case, the value

(b) Related statutes;

(c) Fact of recognition;

(1) A game user using the game of this case puts a certain amount of cash into the game machine and puts a game. As such, a game continuing to play a game by crediting the winning points in the game process, the game may continue to be conducted regardless of time or recovery, until the winning points are extinguished.

(2) A game machine user receives free gifts according to the accumulated points of a game. The Plaintiff provided gift certificates purchased from a merchandise coupon supplier as free gifts.

(3) In the instant game room, each game (not at the end of the game) at the time of the game is 95% of the winning points (the winning rate) compared to the points put by the customer.

(4) The Defendant calculated the amount of merchandise coupon payments by multiplying the amount of merchandise coupon payments by the face value of KRW 5,000 per merchandise coupon per merchandise coupon, and at least the amount of money paid for the merchandise coupon is considered to have been invested in the game machine by customers as equal to the amount paid for the merchandise coupon in light of the above merchandise rate, and calculated the value-added tax base by dividing the amount paid for the merchandise coupon payment into 1.1 and calculating the value of supply.

[Grounds for recognition] Gap 1-8, Eul 1-1-4, Eul 2, 3, and 4, and the purport of the whole pleadings

D. Determination

(1) As to the assertion that value added has not been created

Comprehensively taking account of the following circumstances, the money inputs in a game machine is apparent that it constitutes subject to value-added tax as consideration for the supply of goods and services, and it cannot be said that it is for gambling or gambling games, or that it does not constitute subject to value-added tax. Therefore, the Plaintiff’s assertion on this part is without merit.

(A) In light of the circumstances in which the Plaintiff registered the game room business in accordance with the procedures prescribed by the former Sound Records, Video Products and Game Software Act (amended by Act No. 7943 of Apr. 28, 2006) and operated the game room business in this case legally, the Plaintiff’s use of the game instruments by customers at the above legitimate game sites cannot be deemed as gambling or speculative acts.

(B) The Plaintiff paid gift certificates, a kind of gift in accordance with the former Standard for Handling Gifts at Game Establishments (amended by the Ministry of Culture and Tourism No. 2006-24, Nov. 1, 2006; hereinafter referred to as the “former Standard for Handling Gifts”) instead of returning cash to the customers who completed the use of the game site, which are the kind of gift certificates, and the former Standard for Handling Gifts is strongly regulating the simplification of gift certificates as seen below. (C) Even though the Plaintiff’s game site business of this case constitutes gambling and speculative acts, there is no provision that the value-added tax is exempted or exempted on gambling and speculative acts in the Value-Added Tax Act, etc., and thus, the Plaintiff’s game site business of this case does not constitute the subject of value-added tax.

(D) The value added pursuant to the Value-Added Tax Act is a simple concept of transaction cost, and there is no ground to conclude that the Plaintiff’s game room business does not create any value added unlike the provision of other services.

(2) As to the assertion of deduction of the face value of gift certificates

In full view of the following circumstances, the Plaintiff’s assertion that gift certificates transactions paid by the Plaintiff to the game service users are not subject to value added tax, and thus, the Plaintiff’s assertion that the amount corresponding to the face value of gift certificates out of the amount input in the game machine should be deducted from

(A) The game user paid cash to the Plaintiff and provided a game without any limit to the number of times using the game machine and received certain prizes according to the result of the game. As such, the Plaintiff’s provision to the game user is a service and merchandise coupon, which is a use of the game machine, and the game machine user pays cash to the Plaintiff as a consideration for this. Therefore, cash paid to the Plaintiff by the game machine user is not a separate payment for each part by separating the provision of goods such as the provision of goods and merchandise coupon, which is a use of the game machine, and the provision of goods such as merchandise coupon, which is a use of the game machine, and a use of the game machine, and it is not a separate payment for each part.

(B) The former standards for dealing with free gifts are strictly limited to the types of premiums which a game business operator may provide, at the same time, to which the matters recorded in all windows other than the user fees and the points obtained as a result of the game are deleted, no one shall trade or sell or purchase them, and no one shall trade or purchase them, and a game business operator shall not trade or purchase them in exchange for money or exchange, arrange for exchange or offer, and strictly limit the use of free gifts in lieu of free gifts. Therefore, it cannot be deemed as cash and a kind of goods that are received by a game business operator from the game business owner. Therefore, the said standards cannot be deducted from the supply price of the game place business owner on the ground that the game place business owner paid free gifts that are not the same as cash to the users of the game, and if there is an input tax amount paid in the course of purchasing the goods, it may be deducted. ( even if an input tax amount can be deducted from the input tax amount, the Plaintiff cannot actually obtain the deduction of the input tax amount, since there was no fact that the Plaintiff submitted a tax invoice related to the payment of the input tax amount.

(C) Gift certificates are goods securities or money substitute securities representing the claim for the delivery of goods along with a bill of lading, bill of lading, warehouse receipt, etc., and are different in their intrinsic nature from the bill of exchange, bill of exchange and check, which are money claim certificates, and thus, the payment of gift certificates cannot be deemed to have been made in cash as in the payment of bills and checks, which are monetary claim securities.

(D) It cannot be said that the payment of gift certificates is the same as the payment of cash by deeming that gift certificates paid in a game room can be easily commercialized at a nearby money exchange. This is because, even if gift certificates are guaranteed, they cannot be viewed as cash because they are only goods until they are exchanged. This is because, in the home game room, goods such as phrases and sys, etc., other than gift certificates, are paid as free in cash and exchanged in cash at the nearby money exchange station, it cannot be viewed as cash because they cannot be viewed as cash.

(E) A game room business operator is entitled to arbitrarily select and provide any pets, phrases, character products, cultural products, tourist souvenirs, liquid books, etc. in addition to merchandise coupons as free gifts based on the result of the game in accordance with the old standard for dealing with merchandise coupons. In a case where merchandises are supplied as goods such as pets, etc. other than merchandise coupons, the value-added tax paid at the time of purchasing the merchandises can be deducted as input tax amount, and the purchase amount of the merchandises can not be deducted from the value-added tax base, which is the value-added tax base. However, there is no ground to view that the value of merchandise coupons can be deducted from the value-added value solely on the ground that the game room business operator paid merchandise coupons as free gifts.

(f) Even if a game room business owner’s payment of gift certificates as gift certificates does not deduct the input tax amount, this does not change the supply value due to the result of the supply of goods for which value-added tax is not levied (the same as unprocessed foodstuffs).

(G) According to the Plaintiff’s assertion, in cases where the gift is paid with goods other than merchandise coupons, the value-added tax paid at the time of the purchase of the goods shall be deducted as an input tax amount, and the price of the goods shall again be deducted from the value of the supply (see, e.g., Supreme Court Decision 2006Da1548, Apr. 2, 201).

(h) The Value-Added Tax Act stipulates items to be deducted from the tax base exceptionally, but does not stipulate that the Value-Added Tax Act, etc. shall deduct the price for the payment of merchandise coupons from the value of supply.

(3) Therefore, the instant disposition is lawful.

3. Conclusion

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