Early High Court Decision 2013J 4678 (O1, 2014)

bad debt tax deduction due to the failure to meet the requirements for bad debt tax deduction

The plaintiff's executor's assertion that the plaintiff's executor's business is discontinued and non-property is not insolvent, and it is possible to deduct the bad debt tax amount for part of the claim, but the burden of proving the specific amount of the bad debt tax that can be deducted is against the plaintiff

Bad debt tax deduction under Article 17-2 of the former Value-Added Tax Act

2014Guhap2854 Disposition Rejecting Value-Added Tax Correction

○ Kim

○ Head of tax office

October 22, 2015

November 26, 2015

1. The plaintiff's claim is dismissed.

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

On June 17, 2013, the part concerning KRW 1,332,979,129 among the disposition of refusal to correct value-added tax for the second period portion of value-added tax for the Plaintiff on June 17, 2010 and the disposition of refusal to correct value-added tax for KRW 445,841,864 for the second period of value-added tax for the year 201 is revoked, respectively.

1. Details of the disposition;

A. The debtor ○○○ Development Co., Ltd. (hereinafter referred to as the "○○○○ Development") provided construction services to ○○○, a corporation engaged in a new construction and sale of housing, and issued a tax invoice. However, the amount of the construction outstanding amount was KRW 14,62,00,00 on the ground that ○○○ was not paid the construction payment from ○○○○○ Development, but issued a tax invoice for construction services to AA Development (hereinafter referred to as “AA Development”), but the amount of the construction outstanding amount was KRW 10,692,00,000 on the ground that ○○○○ Development was not paid the construction payment from AA Development, and the amount of the construction outstanding amount was 10,692,000,000. The ○○○ Development did not comply with the above request for correction on the ground that the bad debt debt of the said ○○○ Construction became final and conclusive, and the Defendant did not request for correction on the ground that ○○○ Development was subject to a tax credit for 2010.

F. Meanwhile, ○○○ Development was declared bankrupt by the Seoul Central District Court on August 7, 2014 (No. 2014Hahap132), and the Plaintiff was appointed as a trustee in bankruptcy.

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

A. The plaintiff's assertion

In the second half of 2010, ○○ Construction was in fact in a state of suspension or discontinuance of business in the first half of 2011, and all of its assets were insolvent due to the lack of assets under its own name at the time. Therefore, since the amount of each of the above accounts receivable receivable for construction cannot be available, the bad debt tax amount on the amount of each of the above accounts receivable for construction should be deducted from the output tax amount for each taxable period.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

Unlike income tax and corporate tax, value-added tax is the total value of the transaction tax imposed on the external appearance of transaction, which is not a substantial income, and thus, the tax base of value-added tax is the total value of the supply of goods, etc. In addition, if an entrepreneur fails to receive the price for the reason of bankruptcy or bankruptcy, etc. after the entrepreneur supplied goods, etc. on credit, the entrepreneur suffers economic loss as well as the value-added tax paid by the State. Article 17-2 of the Value-Added Tax Act provides for a system of bad debt tax deduction that deducts the amount equivalent to the value-added tax not paid by the other entrepreneur from the output tax amount to be paid later, i.e., bad debt tax amount from the output tax amount to be paid later. Thus, Article 17-2(1) of the Value-Added Tax Act provides for "if the entrepreneur supplies goods or services subject to value-added tax, it can be deducted from the output tax amount for the taxable period to which the date when bad debt becomes final belongs" and Article 17-2(1)2) of the Enforcement Decree of the Income Tax Act provides for the reason to be abolished.

In addition, since the bad debt tax deduction system is an exceptional system to prevent the economic loss of the taxpayer of value-added tax, the taxpayer is liable to assert and prove that the taxpayer has bad debt tax in order to get a refund of value-added tax by applying for a deduction of bad debt tax. Whether it is impossible to recover the value of the goods, etc. should be objectively determined in accordance with social norms by comprehensively taking into account the following circumstances: (a) the specific details of the transaction; (b) the debtor’s assets situation; and (c) the debtor’s payment ability. However, according to the above relevant laws and legal principles, each of the evidence, evidence, evidence, evidence, evidence, Nos. 1 through 3, 2-1 through 4, 4, 5-1, 2, 6, 7-1 through 4, and 10-1, 7-1 through 4, and 10-1, and all of the arguments are revealed as follows, and there is no evidence to acknowledge that the outstanding debt amount for the development of ○○○○ and A-A development is insufficient.

(1) From January 20, 201 to December 31, 201, 201, ○○○○○○○○-dong ○○○○-dong ○○○-dong 201, 302, 3030, 304, 305, 206, 305, 200, 206, 305, 200, 306, 305, 200, 206, 30, 300, 205, 206, 30, 200, 306, 306, 205, 30, 306, 206, 30, 206, 306, 200, 306, 306, 300, 306, 205, 200, 306, 306, 3006, 3000.

(4) In addition, as of December 30, 201, AA development owned each land of ○○○○ Dong, ○○○-dong, ○○-○, ○○-○, ○-○, ○-○, and ○-○○○○○ as of December 30, 201, and on the land of ○○○○○○-dong, ○-○, the maximum debt amount of which is KRW 260,000,00, and on the remaining land, AA development owned several parcels of real estate as of December 30, 201, and the ○○○○○ Development could have been partly repaid the outstanding amount of AA development through the said real estate.

The plaintiff asserts that if part of the claim is bad debt and it is impossible to recover, it is possible to deduct the bad debt tax for the part. However, even if it is possible to deduct the bad debt tax for the part of the household, the taxpayer also has the responsibility to assert and prove the specific amount of bad debt tax that can be deducted, but the evidence submitted by the plaintiff alone is insufficient to determine the specific amount of bad debt tax which can be deducted, and it is difficult

3. Conclusion

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